Business online, like business offline, always boils down to math: the difference between cost and revenue. If your banner campaign is costing more than its earning, you wont be in business for very long. To figure out how your campaign is doing, youre going to need to know your Cost Per Mille, your Click Through Rate and your Conversion Rate. These are your basic tools. If you dont know them, find out!

Lets say your CPM is $20, your CTR is 1%, and your Conversion Rate is 4%. (So youre paying $20 every 1,000 times your banner is shown, it brings you 10 new users, and you make one sale for every 25 users the ad brings). The question you need to ask yourself is how much are you wasting on the 24 users who dont buy.

Cost per visitor = $20 / 10 = $2 So each visitor costs you $2, but you need 25 visitors to make one sale, so...

Cost per sale = $2 * 25 = $50 ...if your product is worth less than $50, youre making a loss.

Thats pretty simple, and as you can see, theres not a lot of room to maneuver here. Margins are tight on banner advertising and that applies to both the site selling the advertising space and the webmaster buying it.

Of course, hard cash isnt the only way to measure the success of a banner ad, and one reason theyre still popular is that theyre a pretty effective branding tool. After all, advertisers spend millions on billboards without expecting motorists to drive straight through them and make a purchase! On the Web, those advertisers can even be reasonably sure that the people who see their ads will be interested in them. But branding costs moneylots of itwith no guarantee of results. Its usually best left to the big boys.

The banner ads on my sites usually send users to my affiliate partners, and the banner ads I place on other peoples sites usually come from my affiliate programs. They dont cost me anything and as long Im making the sales to pay my affiliate partners, everybodys happy.

If you do decide to purchase banner advertisements though, and if you have a very specific market in mind, make sure they are strategically placedon sites where the traffic will most definitely be interested in your product or service. Find a site that suits exactly your specific product and youre going to be appealing directly to your target market.