The Mobile Banner: A Dog That Won’t Hunt

The “analog dollars for digital dimes” analogy has become mere pennies in mobile. That could be because publishers are still flogging display ads and marketers just aren’t that interested.

Despite the hype perpetuated by mobile ad companies and their PR firms, the fact is that demand for smartphone display ads remains minuscule, at least compared to the supply out there. As a result, the majority of publishers are forced to hand their commoditized media off to third-parties to aggregate and sell for next to nothing and then wonder what happened to their bottom lines.

But some publishers and platforms say their smartphone traffic is monetizing just fine. Twitter makes more money from mobile devices than it does from desktop some days, it says, and BuzzFeed sees higher engagement with its marketer content on smartphones than it does on PCs. Even Facebook’s mobile products — around which many investors have expressed concern — are pulling in more than 10 times the revenue its desktop products are on a per-impression basis, according to reports.

Those companies have one thing in common: They’ve shunned standardized smartphone display units in favor of native or content-driven ones.

“I don’t think brand display advertising has much of a future on smartphones.” said BuzzFeed President John Steinberg. “Proponents of display talk about its ‘beauty,’ but I don’t think people want it in that environment. They don’t want to be interrupted when they’re trying to get to a piece of content.”

The counterpoint is the Mary Meeker slide. It shows the time spent on mobile versus share of budgets spent. The idea is these lines will converge. Not necessarily. The issues with display ads on smartphones are well known: they’re tiny, they’re not well targeted and they’re a poor fit for the experience.

BuzzFeed’s approach to smartphone monetization, as on the desktop, is to make the content itself the marketing message. That basically involves dressing up advertiser content as editorial, marking it as sponsored and having the advertiser pay to insert it in the site’s content stream. According to Steinberg, this approach actually proves almost as successful on mobile as it does on the desktop. Smartphone CTRs on sponsored units are currently around 3 percent, versus 2.3 percent on the desktop. The desktop version features more units, however.

Steinberg’s view may not be entirely objective, of course. After all, BuzzFeed has bet its future on the fact that advertisers want more than just banners.

But ultimately agencies and brands appear to share his sentiments. Unless you’re marketing mobile content or games, there are better ways to reach smartphone audiences, they say. “I’m not bullish on smartphones as a bona fide display ad medium for anything other than driving native downloads,” said Ian Schafer, CEO of digital agency Deep Focus. “The medium is not necessarily built for display advertising.”

Despite the range of mobile display ad solutions on the market, advertisers’ reluctance to invest significant budget in the area could be evidence of this. Even offerings like Apple’s iAd have struggled to gain any real traction in the market, despite a strong start. The smartphone form-factor and the context in which it’s used perhaps just doesn’t lend itself to straight-up brand advertising. Most consumers use their smartphones for utility or social networking and not to consume media the way they would with TV or print.

Schafer pointed to Twitter and Facebook as platforms that have done a better job of integrating advertising into their experiences than most mobile publishers. A year or two ago, agencies were figuring out how to buy mobile display and what type of apps to build. Now, they’re trying to figure out how to put their clients in front of users in ways that are more relevant to how people are using their devices.

Simply put, the priority isn’t display. Rather, Schafer suggested content-like experiences resonate far more successfully with smartphone audiences than display does and, perhaps, ever will. “Smartphones aren’t the type of place you’ll tolerate being distracted like TV, or even on the desktop. I don’t think we can solve a new problem there with an old solution.”