Once you have ad tracking software in place on your site, it’s a trivial matter to discover your real return on investment. In the example above, you know how much it cost to have ad number 486 displayed, and you know how much money you made from those who clicked through to it. Even if you’re not trying to convert sales, but simply get visitors to subscribe to a newsletter or something, you need to be able to evaluate how much it’s costing each time someone clicks through and performs the desired actions on your site.
When you’re tracking ads, you want to uniquely identify not just the banner ad graphic itself, but also keep track of the site or ad network the ad ran on. If you run the “click to win dog food” banner ad on a run-of-network basis, you may only get a .5% click-through, with 5% of click-throughs resulting in sales. Don’t blame the banner, though, because you just targeted the ad poorly. Running the ad targeted at sites for dog lovers may garner a 2% click-through with the same 5% resulting in sales. At this rate, you could afford to pay 4 times as much for the targeted banner impressions and still get the same return on investment. If you only track the banner itself, you’ll never know which network or site is producing the best conversion rate.
Now that you know how to calculate and track the value of your banner advertising, you’ll be able to test different banners, networks, and sites.