Analyzing the value of a paid web banner ad

Every so often I get a call or an email from a client that has just been approached by a publisher or marketing website trying to sell them the banner add.  The jist of the question is something like this:

Do you think this site would be worth advertising on? It runs about $500/yr. with first page placement.  www.websitenamehere.com  He’s telling me that they’ve had 14,000 hits, 3,000 per year, which doesn’t include members.

The first thing I do is check a site like http://www.compete.com/ for some more meaningful and realistic traffic levels.  Hits really mean nothing to a marketer and are are typically used by a webmaster that either doesn't know any better or is trying to make his site look better then it really is.  Basically a hit is registered any time a file is requested on a website.  A typical HTML home page with 3 pictures on it and 1 video on it could easily log 5 hits (3 Photos+1 Video +1HTML file=5 Hits) when viewed by a web surfer.    A site like Compete.com will give you a better estimate of Unique Visitors Per Month- which I will use below in the analyzation process.

So I check out Compete.com and see that the site in question averages about 800 visitors per month.


That's 9,600 visits per year so you are paying 5.2 cents per visitor just for them to see your add.

If you get a 5% click through rate- (That's probably on the high side) That's 480 visitors or over $1.00/Click.

So now the question is would I be willing to pay $1.04/Click for leads from this site?????