There’s a great disconnect in the advertising world right now. On the one hand, everyone agrees that banner ads aren’t working. The click-through rate for banners is still one in 1,000. If you’re like most people, you’ve only clicked on a banner by accident and then cursed yourself for doing so.

On the other hand, banner ads are having a banner year. Analyst eMarketer this month had to double its online ad spending projections for 2011 because banners, a.k.a. display ads, are selling so well. By 2015, eMarketer predicts, display will overtake search ads as the top online ad segment. Facebook is girding for a $100 billion IPO and its business is mostly based on banner ads.

Clearly, the world has gone mad.

The other explanation is that most advertisers are able to see past click-through rates. They also understand that banners work like most advertising, which is to say in a fairly complex manner.

For instance, click-through is actually a poor measure of performance. It’s impossible to click through a billboard ad, for example, but that doesn’t mean it's not effective. If you drive the same way to work every day for a month and see that same billboard for the new Adam Sandler movie, I’d bet you a Happy Gilmore DVD that you remember the name of the movie, know a bit about the premise and have already decided whether you want to see it or not. Yet, if that same ad appeared online, chances are you’d be among the 999 out of 1,000 who didn’t click through to learn more.

The same is true for TV ads. Only a fraction of the commercials you see on TV are so-called "direct response" ads, which include an 800 number or website. The majority don’t have any notable call to action.

For instance, there’s a well-known Skittles ad that goes like this: An older man is sad because everything he touches turns to Skittles. While this sounds great to a young observer, the man points out that he can’t hold his newborn baby boy in his arms or feed and dress himself. Then he goes to answer the phone, which turns into a pile of Skittles.





What is that all about?

Like most advertising these days, the Skittles ad isn’t touting product attributes or trying to get you to run to the store to buy something. Instead, it’s all attempting to build affinity with the brand. If you saw the Skittles ad and thought it was funny, then you might think more highly of Skittles vs. Good & Plenty. Or you might think Skittles is hip, like you, and Good & Plenty is something your parents like.

As the Sandler and Skittles examples show, advertising often has different goals. In the case of the hypothetical (and probably bad) Sandler movie, it was to raise awareness. For Skittles, it was to create a brand affinity. Sometimes you want to get into a consumer’s consideration set (particularly if you’re selling big-ticket items, like cars.) Other times, you want to convince consumers that you’re better than the competition. I didn’t make this stuff up. The purchase funnel is well-known in marketing circles. Now, ask yourself: Can you create awareness with a banner ad? Can a banner ad make you like a brand more? Can it convince you to consider possibly buying a product at some point in the future?

The answer to all the questions is yes, even if you find banners annoying and never click on them. Advertisers know this. That’s why they’re shoveling piles of cash into display advertising. Sure, search advertising works better, but people are doing a lot more than just searching online.

Advertisers also know that banners don’t exist in a vacuum. The TV ad you see builds on the foundation laid by a banner ad plus a billboard and a mention on Facebook. It all works together, and if you’re not running banners online, your competition will.

So, the next time you hear someone bashing banner ads, ask them what the click-through rate is for a TV commercial. If that doesn't work, then feel free to pelt them with a bag of Skittles.

Image courtesy of Flickr, Davichi