Google has recently introduced banner ads for their adsense program, so perhaps all the talk about how text ads perform better is not true.
You could argue that banner ads are a different thing, that they are richer media and thus brand advertising. But the difference is that Google’s image ads do not pay publishers on an impressions basis, but for clicks, just like current contextual text ads.
Adwords works. People click on text ads which are relevant to a search because they are actively looking for something. But perhaps when ads are served alongside static content, the conversion rate is lower, and perhaps people are starting to ignore them now that the novelty has worn off. So maybe in your face image ads are back, for good reason.
The problem for Google is that image ads are not only ‘in your face’, they are very much in the face of a website. With the renewed confidence that content publishers now have, my guess is that CPM impressions based advertising will be back. If publishers have leverage they will want the guaranteed revenue that being paid for traffic gives them.
Google got rid of all CPM advertising making a big bet on the best of both worlds CPC model that sits in between an advertiser and publishers needs. If CPM is back is that bad news for Google?