Summary: Web users are highly goal-driven, and ads that interfere with their goals will be ignored. To succeed, ads must work with the medium, as well as with the user's aims and mindset.
There are many reasons why advertisements don't work well on the Web, but it is most unsettling when an ad actually portrays something relevant to users and still fails. Why would this occur? Well, to start, we must consider why text ads work so well on search engines.
Each user has a goal - perhaps it is to learn about digital cameras, perhaps to purchase a book. In either case, users' attention is focused on whatever gets them to their goal; they ignore everything else. When users enter search queries, the targeted ads that the engine returns relate directly to what users are after. Hence, they look at and follow the ads. Indeed, such advertisements probably have an advantage over the plain search results because they show both that the advertiser is competent and has a direct interest in serving consumers.
Targeting User Goals
So, the secret to success is to make an advertisement fit with the user's goal. To this end, text-only ads are superior because they get right to the point. Fancy graphics exist to attract viewers, but with targeted ads, the viewer's attention is already guaranteed. You should thus forget the extraneous flourish and simply deliver the sales pitch - along with a link to a specific page of detailed information. The landing page (with product or payoff information) should serve to close the sale; expecting to provide enough information in the ad itself to do so is impractical. Those designs that try to squeeze an entire user interface into a tiny ad are missing the entire point of hypertext.