Will 2017 Kill-off banner ads?

10 years into the mobile revolution, and we are still carrying around this dead weight.

Yes, the banner ad. The most notorious ad unit out there. If you’re in the mobile ad tech industry, 300X50 and 320X50 are no strangers to you. They are the default option for every app that has no alternative monetization strategy, but also the choice of a lot of apps that do. After 10 years, will 2017 finally kill-off banner ads? Or, will they live forever in the bottom of our pages?  

Banner ads should be kept alive because…

  • They go well with the web, mobile web and in-app. Most blogs and written content sites use banner ads that are shown to all users, including desktop users, creating an identical ad experience on every device.
  • They are easily implemented – short amount of code, same look in every screen and years of experience with these types of ads are still contributing to their popularity.
  • Can be shown throughout the in-app navigation, from the menu until exit, contrary to other ad units that can only appear at a certain time (interstitials), place (native ads), or time & place (rewarded videos).
  • They are a pretty solid ad unit for brand recognition. If you’re in the business of showing your brand to as many people as possible, the vast amount of impressions this ad unit generates make them a good option.

Kill Banner ads because they…

Are the most problematic ad type out there, which is the main reason for their forecasted demise. Some of their main issues are:

  • UX/UI –Banners are often considered an aggressive and intrusive form of advertising, interfering with the user experience and layout of the app/website
  • Very low eCPM – The eCPM for banner ads are as low as they go. They simply don’t make enough revenue to sustain the “damage”.
  • Retention – at the end of the day, retention is the main hurdle for apps. A new survey by quettra shows it quite well, with a breakdown of the 5000 top chart apps:

 

retention curve

Source: https://andrewchen.co/

Banner ads damage not only the UX but impact retention in a very negative way, leaving a lot of apps with poor retention rates and a negative growth rate.

As the number of users continues to rise, it seems that there should be endless opportunities for apps to enjoy this growth. However, studies show that the opposite is true – with over 3 million apps in the app store, discoverability is the biggest challenge for apps. In fact, while the number of available apps and games grew exponentially, users still use a limited number of apps every day.

installed apps

With competition getting so fierce, the quality of and user experience is more important than ever. For this reason, most developers choose to work with alternative options.

The leading ad types

Interstitials – Often have a high eCPM. This format can interfere with UX but is usually implemented in between pages.

Video ads – Are similar to interstitial. They have a high eCPM with high relevance for brands and not limited to app install campaigns. They are usually harder on the CPU and have a heavier SDK.  

Rewarded videos – the hottest trend in mobile games in 2016. Rewarded videos have a high eCPM and a mechanism that actually supports retention instead of decreasing it.

Native ads – wear many shapes and forms, and generally blend into the user experience, sometimes being presented as genuine content. While they don’t always generate the highest eCPM, they do have a very little negative effect on the user experience.

Related content: Mastering In-App Monetization – Native & Rewarded Video Formats

The general notion is that while in-app purchases are used by as little as 3% of the users, in-app ads are commonly used by most of them.  However, a new research by Soom.la shows quite the opposite:

ad revenue

This data explains that in many ways, ad engagement behaves just like IAP engagement, with only a selected bunch of users engaging with it thus creating decent revenue. If that is the case, this is a very good reason for the decline of banner ads popularity, as this ad type possesses the lowest engagement rate out of all ad units. On the other hand, banner ads still play a very big part in website and mobile web monetization models, and in many cases are simply irreplaceable, especially in operations lacking technical knowledge and manpower. When it comes to mobile apps the situation is a bit different. The combination of low revenue and poor user experience make banner ads a dying breed.

Dead or Alive?

Out of 3 Million apps (in each store), there will probably always be apps who use this ad unit as a method to generate some meaningful revenues, but, the options available today are better, sexier and have a  promising financial outcome.  The ad-tech industry is changing and putting the user back where the user belongs, first.  Some ads have joined the revolution and will most likely survive 2017 while outdated ads like banner ads may stick around only to suffer a long and painful death. Time will tell,

Do you think banner ads will survive 2017? Let us know in the comments below.

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