Are banners a waste of $$$$?

Targeting amps up clickthrough rates
BusinessWeek
Facebook's likely move to an ad-targeting system based on its users' demographic profiles reflects in part the waning appeal of untargeted banner ads, according to this article. "Targeting will come in to rescue all forms of digital advertising," said Kevin Lee, co-founder of Didit.

I'm not one to disagree...
I don't think banners are the most effective form of online advertising. A wastage rate for a static ad of 99% and above is ludicrous.

We could compare banner ads to TV broadcast. You just flood the market with your ad, because if they're there, the chance is they will see it. However the key difference remains that TV is a passive medium, not to mention your content stops whilst the ad runs.

Online is interactive. There is content all over the page as well as ads. Banner blindness is a common phenomena. If you don't like a takeover, you simply close it, just as you would change a channel if you didn't like an ad.
It isn't a tangible thing. You click away from a dynamic ad unit and it's gone. Even with a magazine you can come back to it and see an ad you've previously seen.

Online is hard and I don't think it has yet found the right way to monetise advertising. Engagement and interactive are definitely key and that's why we are seeing rich banner ads have higher engagement rates.

It still isn't enough. I think there are much better ways to integrate advertising online. And the way forward appears to be through functionality and utility.