eBay says mobile ads are ‘not worth it’, will not feature in its apps next year

While the online ad space is increasingly dominated by voices pushing for advertisers to go mobile, it seems that at least one ecommerce giant is pulling back its in-apps ads, at least for the moment.

eBay’s president of global marketplaces Devin Wenig has confirmed that the company will be removing ads from its mobile platforms in the new year, as they aren’t generating the type of engagement levels it had hoped for. Speaking to AllThingsD, Wenig said plainly that “we aren’t happy with the user experience and we don’t need the money. It’s not worth it.”

He said that the company’s experiments into the mobile ad space had included running display ads inside its iOS app, but the ads tended to distract users and take up too much space on devices with smaller screens. They didn’t mitigate the negative impact on user experience with any type of serious revenue, and eBay is generating enough income from selling products online, so it decided to retire the ads.

It’s a fortunate situation to be in. As Wening notes: “some [companies] don’t have an alternative business model. In this case, it’s better to be lucky.”

The move comes at an interesting time, considering the backlash Instagram has felt since its attempt to lay the legislative framework to introduce ads into its Android and iOS apps. Some users feel the ads detract from the Instagram experience, especially if they’re not aware that what they’re seeing in their feeds is paid to be promoted.

Other attempts into the mobile app ad space haven’t always been overwhelmingly successful either — Facebook recently said that only a “small portion” of its revenue is generated by mobile ads, despite the fact that around 60% of its billion users log in from smartphones and tablets. The social network is still expected to make more than any other US publisher from mobile ads this year, as it’s projected to pull in US$339-million from mobile ads in the States alone.

Other big mobile players, like Angry Birds creator Rovio, use mobile ads, but also make a chunk of their income from other sources, like merchandising and licensing, which accounted for almost a third of the US$106.3-million in revenue it made in 2011.

Wening doesn’t say if eBay will try a different ad strategy aside from more traditional display ads, but the company’s mobile offerings still seem to offer serious value — after all, it expects to generate around US$1-billion from mobile sales this year, and saw its biggest ever mobile shopping day in early December.