Mobile advertising is growing by leaps and bounds. With recent acquisitions from Google and Apple, it’s clear that the potential is large. However, today, mobile advertising is ineffective at best and has a negative ROI at worst.

Why Mobile Advertising is Ineffective:

Compared to web advertising, mobile ads are still primitive. Advertisers have to take into consideration the smaller screen size as well as technology differences, most notably the lack of Flash on Apple devices. While these 2 factors are certainly a hinderance, advertisers and ad networks (including Google) haven’t taken proper initiatives to make these ads highly visible. If you browse any website with mobile ads, you’ll realize that the ad disrupts the browsing experience. Furthermore, people browse the web less frequently on a mobile device and for a shorter period of time as compared to desktop devices.

People also browse the mobile web to gather information or to entertain themselves. Not to purchase products. Specifically, not to purchase high-value products. If you do a Google search for “Digital Media” on the iPod touch, Google displays the following ads: an ad for Google AdWords, an ad for HP Media Centers and a Best Buy ad for TVs.
Even as an agressive user of the mobile web, I’m very reluctant to purchase anything after clicking on a mobile ad.

A Negative ROI:

Continuing the scenario above, pay-per-click advertising means that an advertiser pays once someone clicks on their ad. As a user, I would definitely click on an ad to gather more information. However, the likelihood of purchasing the advertised product is close to zero. In other words, an advertiser will get a visitor. But, a tiny fraction of those visitors might even consider following up on that ad.

Improving Mobile Advertising:

With mobile advertising, the potential is large, especially when it comes to highly targeted location-aware ads. In the case above, if the ad indicates that a Best Buy is less than a mile away, I might walk into a store to check out the item.

Take a look at another scenario below — the first set of results are nearly useless to me because I haven’t provided my location to the search engine. However, the second set of results are extremely useful because most of these places are within walking distance.

Apart from location aware advertising, mobile ads also need to be creative. Today, most mobile ads are poorly designed and are being repurposed. Mobile is an entirely different platforms and as such requires different messaging.