• It takes a certain amount of work to get them set up and keep them running, although with an ad network, this work is minimal.
• Like any other graphics, banner ads take time to load, thus making your pages slower and discouraging some visitors.
• Ads clutter up your pages. Who wouldn't rather have a page without ads?
• Ads send a certain number of visitors away. Many of those who click on a banner ad won't return to your site.

Before you consider any of the ad options described here, you need to ask whether these trade-offs are worth it. If the primary purpose of your site is not to sell ads, then the answer is likely to be no.

Banner advertising programs take several forms. Let's look at each in turn.

Traditional Advertising Campaigns

This is what the big boys do. An advertiser, usually working through an ad agency (or more than one), purchases a certain number of banner "impressions," to be delivered over a specified period of time. To sell ads this way, a site needs to have a banner ad management system, which rotates different ads and generates reports of impressions and clickthroughs. Ads are sold by the impression (how many times the ad appeared), and the success of different campaigns is judged by the clickthrough rate (what percentage of viewers clicked on the banner), so a site needs to be able to report these figures accurately. The days when one just hard-coded a banner into a page and got paid by the month are long gone.

Ad management systems range from simple shareware scripts to six-figure systems that require a team of consultants to run (and often aren't much more reliable than the shareware options). In the big leagues, ads are usually sold in lots of 100,000 impressions per month, and clients expect that to represent only a fraction of a site's total traffic. If your site generates less than a half-million impressions per month, you aren't likely to elicit the interest of an ad agency.

This doesn't mean that small sites can't sell traditional banner campaigns. It's not impossible to find clients that are interested in running small campaigns, and are willing to deal directly with a Web site owner. Barter deals can be especially tempting for newer companies with small ad budgets.

However, the process of selling, running and billing for ads is pretty involved and time-consuming, and the small amounts of money involved mean that it just isn't practical for most small sites. For example, if you can charge a $10 CPM ("CPM" means "cost per thousand impressions, and $10 is, sadly, pretty typical for a general-interest site), and you sell 20,000 impressions, that's only 200 bucks. Hardly worth a couple of hours work. That's why most small sites go with an ad network instead.

Ad Networks

An ad network does all the work of selling ads, running ads, and collecting money from clients. Typically, all you do is insert their HTML code into your pages, and wait to collect a check. There's no hard-and-fast distinction between an ad network and an ad agency, but generally an agency deals with individual ad campaigns that run on specific sites. A network may have dozens, or hundreds of member sites, and when a client buys an ad, it generally runs on all of them. As a site owner, you have no direct contact with ad buyers at all. The network runs whatever ads they choose, and pay you whatever they can get away with.

Sound like an ad network is a can't-lose proposition? Well, there's one little catch: there are lots of them out there, but the vast majority are useless. Some are honest attempts that never get off the ground, some are successful at selling ads but less organized when it comes to paying member sites, and a few are simply out-and-out frauds. Worse yet, you can typically expect a time lag of at least three months before getting paid for ads you run, so if the ad network you pick is a loser, you won't even know about it for months.

In the ad business, it's caveat vendor! Let the seller of online ads beware. The advertising business is a jungle. Even long-established, reputable ad agencies make a habit of paying very late, and only after repeated entreaties. The small fry are much worse. I strongly recommend that you not sign on with any ad network unless you have at least a couple of positive references from existing member sites. Adbility (http://www.adbility.com) is a great resource. They have a pretty comprehensive list of all the ad networks out there, and a lot of other ad-related information.

Unlike traditional ad agencies, ad networks use various different pricing schemes. A campaign may be sold by impression, by clickthrough (you only get paid when someone clicks on an ad), or even by "action" (you get paid when someone actually buys something). Prices offered to clients are very low, and commissions taken by the ad network are high. Even if your ad network is successful, the amount of cash you receive will be very small. How much depends on many factors, but it's safe to say that for a site with less than 100,000 page impressions per month, the monthly amount you get from an ad network won't come anywhere near 3 figures.

Banner Exchanges

A banner exchange works just like an ad network, but member sites aren't paid in cash. Instead, you earn credit towards having your banner displayed on other member sites. Usually, it's around a 50/50 split, so if you display 1,000 banner ad impressions, your banner will be displayed 500 times on other member sites.

There are hundreds of banner exchanges, but there are two that have been around a long time, and have good reputations: LinkExchange (http://linkexchange.com) and HyperBanner (http://hyperbanner.com). Both let you target your ads to a certain extent (that is, you can choose what category of sites you want your ad to appear on - very important), and let you view statistics, so you can see how much traffic they're generating for you.

For most small sites, a banner exchange is a better deal than an ad network. Banner exchanges are proven to build traffic, and they also give you a chance to learn how to create good banners and monitor the results. Especially if your site is just getting started, ncreased site traffic is far more valuable to you than a tiny trickle of cash.

But aren't banner exchanges the mark of a small-time, amateur site? Not really. True, large, established sites don't use them, but that's because their banner ad space is a valuable commodity that they can sell for cash. There's usually nothing impressive or prestigious about the advertisers that an ad network will display on your site, so the choice is basically between a small but sure increase in traffic, and an uncertain and tiny smidgen of money.

Informal, site-to-site banner exchanges are also popular. Other non-competing sites with subject matter related to yours may well consider exchanging banners with you. If you have some sort of banner ad rotation system, as mentioned above, you'll have far more chance of "selling" the idea to other sites. Individual swaps like this can be far more effective than a mass banner exchange network, because you can target them only to sites that are closely related to yours.

Affiliate Programs

An affiliate program is an advertising program which pays you a percentage of goods sold, rather than a fixed rate for ads. The best-known, and most successful, is the one run by Amazon.com. Here's how it works: You place a link on your site, which can be a graphic or a text link. The link contains special code that allows the system at Amazon to know which visitors came from your site. If a visitor who came from your site buys a book, you get a piece of the action. The neat thing about the Amazon program is that it allows you not just to link to their home page, but to pages that sell individual books. Thus, if you have an article or review about a particular book on your site, you can have a link that lets visitors jump right over to Amazon and order the book.

The Amazon program is not only a potential source of revenue for you, but also a useful convenience for your site visitors. The catch is that it's only useful if your site actually has to do with books (or CDs, or anything else that Amazon sells). Slapping an Amazon link on a page that has nothing to do with books will generate just about zero interest. Also, like most of the other ad-sales options discussed here, the amount of money you will get is likely to be very small. How small? To put things in perspective, consider our experience at The Web Developer's Journal, which has been an Amazon affiliate for several years. We have over 100 reviews of computer books on the site, each with a link to Amazon. We calculate that the amount of money generated over the years is just barely enough to compensate us for the time it took to install the Amazon links.

The Amazon affiliate program is very well-executed, and the company has an excellent reputation. Other affiliate programs are less so, to say the least. There are thousands of them out there (See http://refer-it.com for a list), and like everything else on the Web, most of them are complete wastes of time. When considering these programs, remember two things: First, they are only worthwhile if the product or service they're selling relates to your site somehow. Second, in order for you to receive credit, there must be a way of keeping track of where visitors come from, and it must be coded into the link itself. If you just put up a simple link to a site, there's no way of knowing which visitors came from your site. Be sure to ask how the system keeps track of this.

Also, don't forget that an affiliate link is nothing more or less than an ad. The only difference between an affiliate link and a banner ad is that the former pays you only when your client makes a sale. Impression-based banner ads are far more likely to bring you cash (but far harder to sell, of course).

Conclusion

Sound like a dismal prospect for the small site owner? It is. If the average Web site could sell ads for a good price, then we'd all be rich. Whichever of the above options you choose to explore, your chances of making any cash from ads as a small (less than 100,000 page impressions per month) Web site owner are tiny. But look on the bright side - your operating costs are probably small, too. If you can generate enough money to pay your monthly hosting bill, you may consider that a good deal. Furthermore, there are hundreds of ad-supported sites out there, and they all had to start somewhere. Good luck, and do watch out for the sharks!

Further Reading

Web Developer's Journal Internet Advertising Section
Links to various articles about the pros and cons of online ads, as well as reviews of ad management software.

Internet Advertising Report
In-depth information and analysis of the Web advertising and marketing industry.

Ad Resource
Advertising and promotion services for the Web.