Is Digital Banner Advertising Dying With The Diminishing Effectiveness Of Banner Ads?

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Digital banner advertising has been a staple of the World Wide Web since the 1980s when it was first used by IBM owned Prodigy to advertise Sears products online. They have played a pivotal part in the rapid development of paid internet advertising. They have also pervaded every corner of the mobile web. However, recent research indicates that banner ads may have outlived their usefulness.

Are Banner Ads No Longer Effective?

A recent report by Vpon finds that 77% of mobile advertising in the APAC region came through banner advertising. Native ads were a distant second with an 11% share, followed by interstitial ads with 10% of the share. This clearly demonstrates that banner ads still make up the bulk of internet advertising. However, a deeper look paints a much more grim picture for the future of banner ads.

Poor click through rates and user engagement levels have plagued banner ads for a while now. According to Smartinsights, the overall click-through rates for banner ads across all formats is lowly 0.05%. This is exacerbated by the fact that up to 50% of clicks on mobile ads are accidental!

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Another concerning issue is the lack of viewer interest and trust generated by these ads. A study by Infolinks revealed that only 2.8% of people think that the ads on websites are relevant to them. Also, 54% of users avoid clicking banner ads because of a low level of trust.

Mobile Ad Blockers: A New Enemy

With the effectiveness of banner ads already at an all-time low, a new enemy has emerged. This new enemy has even got companies like Facebook and Google worried. I am referring to the rise of mobile ad blockers.

The use of mobile ad blockers has experienced a meteoric rise over the past few years. As we previously reported, the use of mobile ad blockers rose by nearly 90% from January 2015 to January 2016. This is an especially big issue in the APAC region, with Pagefair claiming that 94% of global mobile ad blocking in 2016 occurred in the Asia-Pacific region. In fact, it has become a common practice for many smartphone manufacturers in this region to ship their phones with preinstalled ad blocking software.

For example, India, which is the largest mobile ad market in APAC with 23.3% of the total biddable inventory, has a smartphone ad blocker adoption rate of 59%. These are very damning facts for the mobile digital advertising industry and suggest a need for a shift in strategy.

The Rise of Native Advertising

The declining effectiveness of banner advertising can be juxtaposed with the rising popularity of native advertising. Native advertising follows a new and state of the art marketing approach. This new approach is much less obtrusive, almost integrating into the content itself. Dazeinfo shows that 30% of viewers are liable to notice native ads more than banner ads, and the viewing frequency of native ads is more than 50%.

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Native ads are also less susceptible to ad blocking software and have exclusive access to vast and ever-growing audiences of key social media platforms like Twitter and Instagram. All of this has to lead to a significantly greater ROI for companies that have adopted the practice of native advertising.

Banner Advertising Is Not Dying Anytime Soon

It does not seem that mobile banner advertising will die out anytime soon, despite the multitude of problems it is facing at the moment. Advertisers have found a safe haven in the mobile app space, which is still largely unaffected by ad blocking software. Companies are increasingly encouraging customers to use their apps with exclusive offers and features. However, this is not always effective since the split between mobile web and apps varies a lot in different regions of APAC, with the figure being as high as 82% in Japan and as low as 9% in Indonesia.

Some companies are also employing the use of anti-ad blocking software such as Adtoniq, allowing publishers to recover lost revenue.

However, the future for banner advertising lies with programmatic buying. These are data based and highly targeted automatic ad purchases which can achieve higher levels of user engagement. This approach not only leads to higher revenue for publishers but also helps the advertisers reach their targeted audience. Contextual ads which are optimised for the users’ location are also much more likely to get clicked. This new approach is vital in ensuring that banner advertisement remains relevant in the mobile advertising world.

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