Days are numbered for the mobile banner

Mobile advertising is a tough business to be in. Then again, it was never an easy one.

Advertisers have never really been excited by mobile ads the way they have been about other opportunities like desktop display or video. Big brands are willing to pay a premium for a home page takeover on the New York Times or to appear alongside video content on Hulu, but when it comes to mobile ads, they generally don’t see the appeal.

For publishers, that means an uphill battle if they are to survive the mass migration of their audiences from desktop devices to smartphones and tablets. They need to figure out a way to flog more than 320 x 250 banner ads if they hope to make ends meet. Mobile’s combination of poor targeting and tracking capabilities and lackluster creative opportunities have given advertisers no real reason to invest in the medium.

“Measurement and ad formats are the top reasons brands have been slow to get on board in mobile,” explained Phuc Truong, who heads up Havas Media’s mobile division, Mobext.

It is these problems products like Apple’s iAd were intended to address by “making mobile ads suck less,” as Steve Jobs famously claimed. The problem is, they didn’t. The iAd price tag put advertisers off, and the ads themselves were essentially still glorified banners.

According to Truong, banners themselves are largely to blame for mobile’s ad difficulties. “I could argue banners were based on a false promise,” he said, in reference to the fact they are becoming increasingly abundant, and arguably less effective, across the desktop Web.

It also doesn’t help that the mobile ad market has grown up alongside the advertising technology one. Programmatic ad technology is driving down the price of display advertising across the digital media landscape, but in mobile, the trend is even more pronounced. Large portions of mobile ad impressions are sold through exchanges and networks because for many publishers that inventory isn’t worth the effort of selling direct.

But even through programmatic channels demand for mobile ads is minimal. According to data collated by ad tech vendor Turn, the average eCPM price of programmatically traded mobile display inventory plummeted 40 percent between January 2013 and January 2014. That’s not a good sign for publishers selling those formats.

“When it comes to mobile, we’re generally not looking for banner ads,” said one Chicago-based media buyer. “We’re doing more on the content side, and with Facebook and Twitter.”

Some publishers are noticing that shift, and moving away from mobile banners entirely. Yahoo, for example, says it is now focused on selling in-stream ad formats instead, and will likely not be selling any mobile banners by the end of the year. Meanwhile, BuzzFeed has shunned display ads for years and claims its sponsored content approach works just as well on mobile devices as desktops. According to Twitter, 75 percent of its revenues came from mobile devices during the final three months of 2013. It doesn’t sell display advertising.

Therefore, the future of the mobile banner appears bleak. Big-brand advertisers simply don’t want to buy banners, and they garner little in the way of revenue for publishers as a result.

The takeaway for publishers? Try something new, agencies say. There’s little to lose at this point.

“I don’t think publishers have put enough time into really thinking about it,” Truong concluded. “They need to experiment more.”