Banner advertising

Today, the average click-through rate of a display banner is around 0.05 to 0.1 per cent, depending on format and industry. This figure shows the whole tension: banners are cheap, have a huge reach and have been declared dead, and they still work, just differently than before.

Banner advertising means graphic advertising spaces on websites, in apps and in social networks. They consist of an image, text, often animation and a clickable link that leads to a landing page. The terms display advertising or display ads are often used as synonyms, although strictly speaking the banner is the individual format and display is the overarching discipline.

Where banner advertising belongs in the marketing mix

Banners are not a performance miracle. Anyone who expects the same direct conversion from a display banner as from a search ad will be disappointed. The reason is the user's intention. With a search ad, someone actively types in what they are looking for, so the purchase intention is already there. With a banner, you interrupt someone who is doing something completely different. This interruption can attract attention, but it rarely meets a spontaneous readiness to buy. Its strength therefore lies elsewhere: in reach and in building brand awareness. A user who is reading an article is not looking for your product at that moment. But they notice your brand, and that is exactly the purpose.

In the classic funnel, banner advertising therefore sits at the top and in the middle: generating attention, making the brand known, arousing interest. Other channels usually close the deal. An important exception is retargeting, which we will come to shortly and which really does work close to conversion.

For online retailers the calculation is often this: banners are cheap in terms of cost per thousand impressions. You reach many people for little money. The price for this is wastage. You also pay for impressions among people who would never buy. Good targeting limits this wastage but never eliminates it completely.

It is worth understanding the difference between visibility and attention, because this is where most campaigns are measured wrongly. An impression does not mean that someone has seen the banner. The industry standard is so-called viewability: a display banner only counts as visible when at least half of its area has been in the visible part of the screen for at least one second. A considerable proportion of all banners served never reach this threshold because the user scrolls past or never scrolls that far down the page. Anyone buying banner advertising should therefore not optimise for pure impressions but for viewable impressions, and actively demand this metric from the ad network.

How banner advertising works technically

Behind a banner that is displayed, there is almost always an automated auction process today. The most important building blocks:

• Ad networks and platforms. By far the largest is the Google Display Network, which according to Google covers millions of websites and apps. There is also Meta for banners on Facebook and Instagram, as well as numerous specialised networks.
• Programmatic advertising. Ad spaces are auctioned in real time. In the fraction of a second in which a page loads, advertisers bid automatically on the impression for the specific user. This is called real-time bidding.
• Targeting. Ads are served according to criteria such as interests, demographic characteristics, pages visited or the content of the current page (contextual targeting). Since many third-party cookies have disappeared, contextual targeting has been gaining importance again.
• Billing models. Common ones are cost per mille (CPM, you pay per thousand impressions), cost per click (CPC, you pay per click) and, less often, cost per action (CPA, you pay per conversion).

Common banner formats and their dimensions

The Interactive Advertising Bureau standardises banner sizes so that the same ad fits on many sites. A selection of the formats you will come across most often in everyday practice:

The official specifications are maintained by the IAB in its ad portfolio. If you have banners produced, these dimensions are the safe starting point, because almost every ad network accepts them.

Retargeting: the special case that really converts

By far the most effective variant of banner advertising for online shops is retargeting, also known as remarketing. Here, users who have already visited your shop but not bought are shown banners. These people already know you. They have shown interest. That is exactly why their click-through and conversion rates are considerably higher than with cold reach.

A concrete scenario: a customer puts an espresso machine for 449 euros in her basket in a Shopware shop but drops out at checkout. She is tagged via a retargeting pixel. Over the following days she sees banners with exactly this machine on news sites and in social networks, perhaps supplemented by a small note about free shipping. Some of these abandoned baskets come back this way. With basket values in the three-digit range, this pays off quickly, even if only a few per cent of those addressed actually return.

Shopware can be prepared for exactly this mechanism: tracking pixels and conversion tags from Google Ads or Meta are integrated, and dynamic retargeting then automatically shows the products viewed most recently. Data protection is important here; more on that shortly.

A second lever closely related to retargeting is lookalike audiences. Here the advertising platform takes your existing buyers as a template and looks for people with similar characteristics in the large pool of users. Instead of spreading coldly in all directions, you reach people who resemble your best customers. In combination, this results in sensible staging: lookalikes for initial attention, retargeting for winning back those who dropped out, and clearly separate banners and budgets for both. Anyone who lumps everything together and shows the same banner to everyone gives away most of the potential.

One limit should nevertheless be kept in mind with retargeting: frequency capping. If the same user is followed twenty times with the same banner, the effect tips from reminder to nuisance. Set an upper limit on how often a person sees the same ad; otherwise you burn budget and goodwill at the same time.

What makes a good banner, and where most fail

Banners have one second, maybe two. In that time it must be clear who is advertising, what for and why it should interest the user. A few principles that hold true:

1. One message, not five. A banner is not a brochure. One clear benefit, one clear call to action.
2. Brand instantly recognisable. Logo and colours have to be right at first glance, because most of the effect comes from mere perception, not from the click.
3. A legible call to action. "Discover now", "Get 20 per cent off". Concrete beats vague.
4. The landing page matches the banner. Anyone who clicks on an espresso machine wants to land on the product page, not on the home page. A break between banner and landing page costs every second conversion.

And now the uncomfortable reality: the biggest opponent of banner advertising sits in the user's browser. Ad blockers filter out a considerable proportion of all banners before they even become visible. On top of this comes banner blindness, the learned habit of looking away from advertising spaces. Together, these explain the low click-through rates. Anyone who measures banner advertising by click-through rate is measuring it against the wrong goal.

Data protection: not optional

Retargeting and user-based targeting access personal data. In the EU you generally need prior, informed consent for this via a consent banner that complies with the requirements of the GDPR and of the German Telecommunications Digital Services Data Protection Act (TDDDG). Anyone who fires tracking pixels without consent risks warning letters and fines. This is not legal small print but a common mistake in practice. Plan consent management from the very beginning; otherwise you build a campaign that you are not allowed to run in a legally compliant way.

Is banner advertising still worthwhile?

Yes, but with clear expectations. For pure sales performance on cold audiences, banner advertising is rarely the first choice; search ads and well-maintained SEO are usually more efficient for that. For brand building, for reach at a low cost per thousand impressions and above all for retargeting users who are already interested, it is still a solid tool.

A sober look at measurement is part of this; otherwise you will get bogged down. If you evaluate a pure reach campaign by the last click before the purchase, you will always consider it useless, because the conversion almost never comes directly from the banner. Models that also recognise indirect contributions make more sense: view-through conversions, for example, count purchases that came about after a banner impression without a click. And for the brand effect there are brand lift studies, which use surveys to measure whether awareness in the targeted group has increased. Both are more elaborate than a click report but reflect what banners actually achieve.

A concrete tip for getting started: separate budgets and metrics cleanly by campaign goal. A retargeting campaign may and should be measured by revenue, because it works close to conversion. A reach campaign is measured by viewable contacts and the brand effect. If you throw both into one report, one will always look bad and the other undeservedly good, and you will make decisions on the basis of mixed figures.

The honest assessment: banner advertising is an amplifier and a reminder, not a salesperson. It ensures that your brand stays present and that buyers who dropped out come back. Anyone who looks at it in isolation and only at the click-through rate considers it dead. Anyone who understands it as one building block working together with search, social and a clean shop gets out of it what it can really do. For most online retailers, the right question is therefore not "banners, yes or no" but "at which point in the funnel and with which goal".