Eyeblaster, an NYC based firm that gathers statistical information through online ad monitoring estimates the average click-through rate for banner ads across the entire worldwide web to be near 0.20%., or just 1 click for every 500 impressions. Considering the average conversion rate for online merchants in general is between 1% and 3%, that equates to 50,000 impressions per sale.

Now, just to be clear, the ads we’re describing are the ones that typically appear in a fixed location on a website, often near the top or side of a page. They’re sold in quantities of ‘1000′ at a time, and are for the most very untargeted. An exception to this general description would involve placing a banner ad for a very specific product or service on an equally specific website. For example: an ad for microscopes on a site that rates and reviews microscopes–pretty targeted.

But the fact is, people are beyond desensitized to banner ads. The problem is that for so long, these ads have been irrelevant to the subject matter at hand. Someone reading about acne cures isn’t likely to care about a banner ad for a cell phone plan.

What about targeting?
Obviously, the biggest knock on traditional banner ads is that they are untargeted and therefore largely ineffective. But Google and many other search engines offer contextual banner ads on a pay-per-click basis. So, for example, a user types in the keyword “Software” and then visits a website that appeared in the list of search results. The ad is then displayed somewhere on the corresponding page.

Does this type of contextual ad cost more?
Yes, these types of ads will be more expensive even when they’re purchased on a pay-per-click basis simply because the space they take up could otherwise be sold in smaller ad units for greater profit. Some math has to be done to determine the viability of a banner ad campaign. The best way to start is small. Test, deploy, re-test.