Microsoft exec: mobile banner ads extinct in three to four years

The use of mobile banner advertising is predicted to decline in the next decade and probably will not exist at all in three to four years, according to a speech given at this week’s Advertising Week Europe by Tejal Patel, Director of Consumer Engagement for Microsoft. Industry officials, including AOL’s Graham Moysey, agreed that the millennial need for greater privacy is likely to be the precursor to this decline, with Ms. Patel forecasting an increased reliance on native and social media fed advertising. Patel also stated that in-app ads were ineffective and dated and indicated Microsoft would not be adopting location-based advertising as high costs make it unattractive from a return on investment perspective.

Tejal Patel speaking at Advertising Week Europe 2016. Getty/ Luca Teuchmann

Banner advertising on mobile is not going to last into the next decade, according to Tejal Patel, director of consumer engagement at Microsoft.

"Millennials ... are likely to sacrifice their privacy. However, they're not going to do that for banners. Why would you? There has to be a value exchange there: good contextually relevant content," Patel explained at Advertising Week Europe in London on Monday.

"I think this whole word 'banner' shouldn't exist, and probably won't exist in three or four years, maybe less than that," she added.

The head of international for AOL, Graham Moysey, who was hosting the session, agreed.

After asking members of the audience to put their hands up if they agreed that banner ads would not be around in a few years, Moysey said: "Me too, by the way."

Instead, Patel predicted that increasingly there will be a reliance on native advertising and ads that exist directly within social media feeds.

In-app advertising looks like it is 'from the beginning of the digital era.'

Patel also discussed the (lack of) effectiveness of ads within apps.

She said: "Thinking about it from a consumer point of view, I'm really unimpressed with in-app ads. I can’t believe it. It feels like it is from the beginning of the digital era still. Someone please show me something really creative in in-app. I haven't seen it yet."

"What’s the stat? People might download 100 apps a year, but they're only using four or five. So let’s not get too distracted with in-app (advertising,)" Patel added.

Patel was pretty accurate, the latest comScore report says that, in the US, most people only use three apps frequently.

Location-based advertising has not yet proved itself yet

Tejal Patel speaking at Advertising Week Europe 2016. Getty/Luca Teuchmann

Microsoft's Patel was also not very encouraged by the results of location-based advertising.

Patel explained that Microsoft had tested location-based ads in some markets, including the US.

However, she said the link between purchases and these ads was "very tenuous." A combination of the weak link and the high cost of this type of advertising means that location-based ads are not worthwhile for Microsoft.

"The ROI [return on investment] isn't really there for us at the moment," Patel said.

"That doesn't mean it won't work," she added. "Maybe for certain things like events" location-based ads could work.

Microsoft exited the display advertising business last year, shifting more than 1,000 Microsoft Advertising employees to AOL, which absorbed the direct sales of Microsoft's content sites, including MSN. Ad tech company AppNexus expanded its role in selling ads programmatically for Microsoft across the majority of its international markets.