Big Bucks in Banner Ads
By Paul Beakley
Have you tapped your Web site’s revenue-generating potential? Many associations are enjoying a steady stream of non-dues revenue by offering banner advertising on their association Web sites and MLS public home-search sites.
"Between our association Web site and our MLS Web site, our banner ad revenues were in the mid-$40,000s in 2004," says Tricia Chirco, marketing and communications director for the Long Island Board of Realtors® in New York. And Chirco expects 2005 results to be even better. "We’re getting two to three times the inquiries we used to get from people asking about banner ad opportunities,” she says. “Small and large businesses alike are realizing if they put all their advertising dollars in print and radio, they’re missing out. Advertising on the Internet is more popular than ever."
Love them or hate them, banner ads are definitely having a resurgence. According to Jeremy Warner, vice president of Mile Post Zero, a Scottsdale, Ariz.-based company that develops online marketing programs and Web sites for real estate professionals, "Companies are receptive to the idea of including online marketing in their total marketing strategy. They see the Internet isn’t going away and that the dot-com bust wasn’t the end of online advertising."
Ad plans and big bucks
The Long Island Board charges $200 a month for banner ads on the association Web site and $250 a month for banner ads on the MLS Web
site. Banner ads from mortgage lenders, title companies, rug cleaners, painters, and other services related to home selling and home buying are popular on the association site. It’s becoming popular for members to advertise on the MLS site, too.
The Long Island Board's banner ads rotate on the site every time a new visitor loads the page. This allows the site to look fresh, and lets multiple advertisers get a home page exposure. The Long Island Board’s Web site also offers very sophisticated clickthrough tracking to its advertisers through software called ADSTATS. “Our advertisers have 24/7 access to their advertising data,” Chirco explains. “They can see the number of times their ad has appeared for any period of time, and how often someone has clicked on that ad.”
Chirco says her association could make as much as $60,000 on banner ads in 2005. “Most of that money is earmarked for improvements to our Web site,” she explains. “Upgrades and functionality we couldn’t normally afford are paid for through our banner ads.”
Wyndi Ballard, marketing director of the Southeast Valley Regional Association of Realtors® in Mesa, Ariz., recently started the association’s first banner ad program. Rather than sticking to the traditional rectangular banner size (468 x 60 pixels), the Southeast Valley Association will offer square (220 x 210 pixels) site sponsor ads for $75 a month and small banners (166 x 60 pixels) for $84 a month. Unlike the Long Island Board, though, the Southeast Valley Association’s decision to implement a banner ad program had little to do with revenue. “Our banner ad program is just another opportunity for our affiliate members to get their name in front of our members,” Ballard says.
Sometimes, banner ads aren’t a direct revenue stream, but are part of a larger affiliate membership incentive program. Maureen Caires, events and communications coordinator for the Northeast Association of Realtors®, says its four-year-old banner ad program makes about $1,000 a year on banners that cost just $99 for three months. Her association sends out solicitations for banner ads to its affiliate members two months before their dues are up, and offers a sliding discount on dues, banner ads, and a whole menu of sponsorship opportunities based on the total expenditure for the year.
E-mail newsletters are another electronic advertising opportunity. Some associations sell banners in their HTML-formatted e-mail as if they were traditional Web pages; others allow affiliates to sponsor an issue of the newsletter in return for a small mention in the newsletter.
The Southeast Association’s weekly Fast Facts e-mail will soon offer sponsorship for three cents per e-mail for a one-time sponsorship. With a mailing list of more than 7,000, the sponsorship of a single newsletter comes to around $210.
Deanna Devey, communications director for the Utah Association of Realtors®, handles advertising in her association’s weekly e-mail newsletter a bit differently. Instead of coding and mailing HTML, she actually lays out the newsletter in a traditional print-friendly style and saves it as two .jpg images. The images display seamlessly in most e-mail readers, such as Outlook and Eudora, and readers are able print the newsletters easily.
Devey does not offer tracking of the ads placed in her two-part graphic-file newsletter, mostly because the ads are not clickable in the e-mail. “I’d like to offer better tracking in the future, but right now, all we can offer is a count of who is receiving our newsletter,” Devey says. The association makes about $2,400 a year on the sponsorships, which goes toward covering the mailing costs of its monthly magazine.
If your association wants to introduce banner ads as a viable revenue source, you’ll need to have (or direct advertisers too) someone to design the ads, someone with the technical expertise to place them, as well as someone dedicated to selling them.
There are two ways to place banner ads: 1) by hand on a regular schedule, or 2) on an automated and randomized rotation. Inexpensive software like Spinbox (www.spinbox.com) will rotate random ads into the Web page every time a user views it.
“I would say the biggest hurdle is to have someone on staff who is able to design and maintain the banner ads,” says Long Island’s Chirco. Her association includes free banner ad design in the cost of the ad. She explains that her average advertiser doesn’t have a banner ad or the software to create one. “If you’re going to sell the space, you need to direct advertisers and prospects to a place where they can have the ads made,” Chirco says.
For a small association, staff and technical expertise hurdles may be overcome by forming partnerships and developing revenue-sharing agreements with more experienced entities such as your Web site designer or hosting company, local colleges with graphic arts departments, or local online publications that manage advertising, such as or local newspaper. Also, seek volunteer members or form a revenue committee to approach companies about advertising.
No matter what your association size or technical sophistication, your Web site may be a wellspring of revenue waiting to be tapped.
Tax Implications of Advertising Revenue
Nonprofit associations know that revenue from advertising in their magazines and newsletters is usually subject to taxation as unrelated business income. But what about revenue from advertising on Web sites and in e-mail newsletters?
While the Internal Revenue Service has not issued direct guidance on this subject, it has responded in a private letter to an organization that had written in for specific direction, saying that banner ads would be subject to unrelated business income tax (UBIT), and by implication, e-mail ads would be, too. Sponsorships may be a different issue altogether, though. Again, while the IRS has not issued direct guidance, it has written that sponsorship payment would not be subject to UBIT when an organization simply acknowledges the sponsor—whether it’s in an e-mail newsletter or on a Web site.