A few months ago I posted about the impressive efficacy of iPhone ads with 50% of AdMobs traffic coming from iPhone apps which comprised 1/6th of their overall distribution. (When I asked AdMob why they thought it was so high, they mentioned a deeper level of engagement, etc. Curious to see if this trend continues.) The remaining 5/6th was from mobile sites.

Recently, research has shown us that mobile ads have an abysmal click-through rate – especially on the iPhone. Mobile users, in general are half as likely to click on mobile ads than terrestrial Internet users and while iPhone users comprise 66% of the overall hits, they only make up .30% of the clickthroughs.

So ads within iPhone apps do well but ads in mobile sites don’t. Until the iPhone, the mobile Internet was primarily focused on tasks. “Where is that restaurant?” or “What is the phone number for the book store?” Limited screen real estate made it a basic tool that you could also download wallpapers and ringtones for. Kind of a digital hammer with the ability to change the color of the handle.

Then the iPhone happened, with its focus on usability. (I spent 45 minutes today surfing the mobile web on my iPhone. Never did that with my Blackberry.) Now that I actually have the Internet in the palm of my hand, I can actively ignore ads more than ever! I ignore them on online. Why would this be any different. And as we can see it is different. It’s worse. There are several reasons for this. Again; screen real estate does not make ads more palatable. Also, with mobile devices becoming an extension of ourselves, which only increases with a smart phone; I don’t want ads “on me”. Unless of course I ask for them.

The most successful piece of mobile advertising is search based ads, which currently accounts for 24% of mobile ads and is expected to go to 73% by 2013; that’s 73% of a $3.1 billion market for those of you keeping score at home. I’m starting to understand this whole Android thingy and why Facebook partnered with Nokia back in September.

Search is the safest bet because presenting an offer when someone is actually looking for something makes sense. Much safer than magically delivering them a coupon when entering a store. Why would I turn down a coupon for something? I know many people that avoid sales; even on the smallest of items. They assume there is something wrong with the product and business is trying to get rid of it. Also, what if I’m giving them a discount on something they were prepared to pay full price on? I may lose money when I may already have loyalty. Not to mention, the level of interruption that one feels when the phone goes off — for any reason. Of course this is not always true but there is an inherent gamble in sending somebody ANY information. Even after they have opted in. Remember, the experience must not be disruptive and the user should be able to turn ads off. I tried to address these concerns when I posted about a  mobile ad search service. The focus would not be supplying an ad with a search result but specifically on searching for advertisements (most likely coupons).

As I reread what I’ve written it seems to all boil down to user behavior. As we all know, user behavior is difficult at best to predict, especially when the behavior is responsive. That is why businesses must partner with their customers. This is even more important on a mobile device for the reason I mentioned above. It’s an extension of that person. (This is why mobile social is going to explode.)

I’ve been wrong before. (It’s true.) I think it’s extremely unlikely mobile advertising, outside of search is going to prove very successful with current strategies, even if technologies get much better. Now conduit marketing is another story!