Clickable World Wide Web banner ads and content sites

Some businesses entice visitors to their Websites by offering entertaining or useful information, or content. Similar to radio and television models, advertising revenue supports the firms providing this free information (Hoffman & Novak, 1996). When a visitor clicks on a content site's advertising banner, the visitor leaves the content site for the advertiser's site. While clicking on a banner can create revenue for the content site, it can also reduce additional revenue had the visitor not clicked on the ad. The webmaster therefore faces a dilemma as to how many clickable banner ads to have, or even if such ads should appear on the site. This paper explores these decisions, the optimal answers to which naturally depend on the clicking behavior of consumers arriving at the site. Our empirical results suggest that a webmaster with a single ad on a page can safely add a second banner to that page without impacting the clickthrough rate on the first ad.