When’s the last time you tapped on a banner ad on yourphone, not including the time you tried to hit the tiny “X” in the top right corner but missed?

If you said “never,” you’re in the majority. Industry wide, mobile display advertising click through rates are somewhere between 0.1% and 0.5% (depending on the source), and this includes accidental taps. In other words, almost nobody engages with banner ads.

On the desktop or laptop, banner ads are a bit annoying, but we’ve all been trained to simply ignore them. On the phone, though, they are downright disruptive, as they commandeer valuable real estate on an already small screen.

Yet, most of the ad inventory in mobile is in the banner form, and this needs to change. There are a lot of innovative ad tech companies working on improving ad targeting and relevancy, but the delivery format is, more often than not, a banner ad. 

For example, hyper-local advertising is the current rage. Show an ad to consumers when they are near your retail location, so you can drive foot traffic. Sounds great at a high level, but not so great when you dig into the details. Users need to be near your store, they need to be in a mobile app or website that is working with your ad network or media buyer while they are near your store, they need to notice your banner ad in that app or website (and not be looking away when the banner ad shows for a few seconds), and they need to tap on your banner ad to see what the offer is. That really, really narrows the funnel.

Targeting and relevancy will continue to improve on mobile, and I actually think location-based advertising holds promise, as daily location/ commute patterns can only be deciphered via mobile. However, advertisers should seek ad unit formats beyond banners. No matter how relevant an ad is, the advertiser doesn’t get much value if users don’t engage with it. 

I think you’ll see advertisers increasingly focusing on engagement with ads (clicks/taps, continuing through to advertiser website or Facebook page, downloading a coupon, locating a store, etc.) vs. “impressions,” which are difficult to value. Advertisers can decide how much they should pay each time a user locates their nearest store on Google Maps or clicks through to their website. I think it’s more difficult to justify paying for passive eyeballs that may or may not have noticed “impressions.” 

I’m excited about ad platforms that are finding ways to reach mobile consumers via ad formats that are more engaging than banner ads.

There are a few innovative models out there. 

One example is a value exchange model, in which users choose ads they want to engage with in order to unlock premium content. So instead of seeing banner ads that likely aren’t relevant to you, overlaid over the content you are consuming, you choose which ad you want to engage with when you want to access certain content.

If I’m shopping for a car, I might choose an ad showing me the features of the new Nissan; if my cell phone contract is coming up, I might watch a video on the new Lumia.

Psychologically, a consumer would remember Nissan or Nokia in the context of unlocking free content, instead of disrupting their content with banners. So, advertisers get true engagement, publishers can monetize without disrupting the user’s experience, and consumers get ad-sponsored premium content for free.

Advertising isn’t inherently bad. TV commercials make network content free, and they can make us laugh or alert us to relevant products or offers. Many people tune in to the Superbowl just to watch the commercials, and some of these commercials even win awards.

Digital and mobile offer even more promise than TV commercials, as ad platforms can target ads to boost relevancy and enable users to choose which ads they engage with. Moreover, if users are interested in an ad they can immediately click through to learn more, locate a store, or even make a purchase. And, advertisers can directly track all of this engagement in mobile and digital formats, which isn’t possible in TV advertising. But all of this is predicated on choice and engagement, which banner ads don’t offer.

When’s the last time a banner ad captured your attention or heightened your affinity towards a product or brand? Mobile banner ads are cheap and inventory is plentiful, but they are not the future.


Salil Shah is Director of Business and Corporate Development at Tapjoy. The thoughts represented here are his own.

Flite's Guest Blogger series features the industry's top thought-leaders to share insights on display advertising, agile marketing, and innovation.