Smartphone display ads are two inches wide and one-third of an inch tall, not much room for effective advertising. “Size absolutely does matter,” says Christine Chen, director of communication strategy at Goodby Silverstein & Partners,. “If you look at the real estate available on a smartphone, it’s really sad compared to not just banner ads on the Web, but also to TV, print and outdoor advertising.”
Advertisers are also limited by what type of information they can learn about their customers. For starters, it's not technically possible to use cookies with smartphone apps. On the Web, cookies can capture user information for use in personalization and aggregated to the brands. “What makes Web ads so attractive to advertisers is the ability to track actions and optimize accordingly,” Ms. Chen says. Because a smartphone cannot use the same technology, she says, “your ability to track and optimize is much more blunt, or in some cases nonexistent.”
Another reason smartphone ads come up short is that users tend not to click on them when using their phones. “It’s [using a smartphone] an activity you do for a short burst of time,” Ms. Chen says. “It’s very functional.” That is not a good time to try to make users stop what they are doing and give their attention to an advertiser’s message.
Phones do have some benefits. The biggest one is the ability to serve up ads based on location. Geofencing, is directed only at nearby prospects, and it has proved to work well, says Doug Ray, president of Carat North America, a media planning and buying firm. “Knowing where you are geographically and delivering a contextually relevant offer has been effective in driving conversions and sales,” he says. “Geofencing is not possible with a desktop PC.”
Three companies that are doing well with mobile advertising: Pandora, Twitter and Foursquare. But each of these is fortunate to be in a business where it doesn’t have to contend with “banner blindness” among users.
Pandora inserts audio commercials into its music stream, Twitter puts sponsored ads into tweet streams and Foursquare lets advertisers try out geofencing. But display ads still don't work. Ads need to be large enough to be noticed, but not so large as to be an interruption. And they must be chosen to match a user’s interests.
