• by Hjalmar Winbladh , April 29, 2013

Steve Jobs said it three years ago, and it's still true: mobile ads suck.

The best of mobile advertising today -- essentially mini versions of traditional display ads -- simply doesn't work on our mobile screens.

Advertisers and agencies got to the heart of the problem last month in the OMMA session "Teaching Gadgets to Market at SXSW" in Austin: No one likes being interrupted on their phones. No one wants to squint at half-inch-high banners. And no one wants to be treated like a faceless consumer on the most intimate device we have for connecting to friends, family and co-workers.

To add insult to injury, recent analysis by mobile app marketing platform Trademob of 6 million mobile ad clicks served across 10 different ad networks found that 40 percent of paid-for mobile clicks were totally worthless because they were either accidental or fraud.

And according to a study by search marketer Marin Software, conversion rates -- the percentage of people who bought something or did something else the marketer wanted them to do after they click an ad -- are lowest on phones by a considerable margin: just 2 percent, compared to 4.9 percent on tablets and 5.2 percent on computers.

Nevertheless, brands continue to pump growing mountains of money into these failing formats.

Mobile ad budgets in the U.S. were worth $4.2 billion in 2012, according to market intelligence firm IDC -- and are now expected to nearly double this year, reaching over $7 billion by year end -- for the simple reason that more and more of us are spending more and more of our waking hours staring at our mobile screens.

Marketers at big and small brands alike are not fools. They know they have to shift their marketing efforts to where the consumers are -- if for no other reason than to get board members off their back and put an end to the quarterly questions about what they’re doing on mobile and social.

So, if using old-school ad formats to close the gap between ad spend and where consumers are spending time isn’t going to work, what is the solution?

According to Sunil Gupta, head of the marketing unit at Harvard Business School, the best way for marketers to communicate with consumers through mobile is with apps. Apps -- which consume 82 percent of consumers’ mobile minutes -- will trump traditional ads in part because consumers don’t perceive them as advertising, he says.

Instead of buying tiny banner advertisements, says Gupta, marketers should create apps that add value to consumers’ lives and enhance long-term engagement with their brands.

Now we’re talking.

And better yet for brands, if those apps can inconspicuously incorporate some means of amplifying word-of-mouth recommendations between friends -- what is increasingly being called friend-to-friend marketing -- they will leverage the millions of hours spent every day on social networks and place the brand in a positive dialogue between people in a social graph, which is in turn seen by their hundreds of mutual friends, adding even more value to the initial brand recommendation.

Everyone knows the value of word of mouth. If I tell one of my friends that Nike is great, it’s worth so much more than if Nike tells them directly.

In a recent Nielsen Global Survey consumers were asked to rate the level of trust they placed on a host of marketing methods, from text and banner ads to magazine and television ads. Ninety-two percent of respondents around the world said they trust earned media, such as word of mouth and recommendations from friends and family, above all other forms of advertising.

It’s high time for advertisers and agencies to do something new. Change the game. Do something that consumers appreciate -- something that enhances the consumer experience instead of interrupting it. Prove Steve wrong.