Display ads have very low click-through, yet that hasn't stopped advertisers from breaking new records in terms of $$ spent. Research shows there is a subset of internet users that click on stuff all the time- 80% of clicks are from 10% of users (that's after filtering out click fraud etc).

Beyond click-thru (which is what most web app developers will focus on), display ads/paid search serve the important function of an awareness vehicle for brands - which is what the major advertisers care about more than click-thru anyway.