The launch partners for the Android platform include AccuWeather, TapJoy, and Jirbo. According to AdMob, the new advertising units will also be able to use Android's GPS to deliver location based advertising.

What About Google?

Google has shown relatively little interest in doing advertising for mobile applications so far. It will be interesting to see if the advertising giant is going to hand this market over to other providers, or if Google will release its own solution in the near future. So far, Google only lets advertisers target AdWord ads on mobile sites for the iPhone and G1, but doesn't provide a solution for mobile apps yet.

It does look like Meebo is indeed trying to implement some of its earlier ideas about what advertising on the site would look like. Meebo already features a number of ads on its site and has estblished partnerships with various large content producers, but starting today, Meebo will also feature ads from the San Francisco-based advertising network VideoEgg. These new ads will range from "sponsored games to video trailers to product configurators." Some of the ads will be sharable, while others will come with associated wallpapers and buddy icons. Some ads will also automatically expand if a user hovers over them for more than 3 seconds.

Transparency in Advertising

When we first wrote about advertising on Meebo, we asked if ad agencies could make ads that don't suck. It does indeed look like Meebo has been putting a lot of thought into this process (the original partnership between Meebo and VideoEgg was announced almost a year ago) and is devoting quite a few resources to getting its advertising model right. It will be interesting to see how Meebo's user will react to these expanded monetization efforts.

According to the IAB, the glory days are here. "Marketers large and small have come to accept digital media as the fulcrum of any marketing strategy," says Randall Rothenberg, President and CEO of the IAB. That seems like a real exaggeration to me. In fact, Google reported Q3 revenues of $4.3 billion just by itself, that up 57% from Q3 2006. The vast majority of that is in advertising sales, so industry growth is based on Google growth, apparently. Either someone's numbers are off or we're all insane trying to make a living in this industry. All of us but Google, that is.

As time on the television continues to drop and time online rises, I think we've only seeing the beginning of the online advertising economy. It's hard to get too excited about the health of the industry, however, when one company's own growth makes up so much of the story.

There have always been privacy concerns around personalized advertising, though the topic only recently became more of a mainstream issue when the U.S. Congress started an inquiry into the implications of this. As part of this inquiry, Congress asked 33 online advertisers if they offered the option to opt out of these customized ads.

Yahoo goes to great length in its letter to defend customized advertising and explains why advertising on the net is so important, not just as a way for Yahoo to make money, but also because it allows Yahoo to offer free tools to consumers and small businesses.

In the letter, Yahoo also stresses that it does not customize advertising based on potentially "sensitive interest categories" and specifically mentions searches for adult sites and sexual health information.

Will Users Care?

For advertisers, customized ads are obviously a far more effective way of reaching potential customers than regular ads. However, the real question will be if users will indeed chose to opt out of customized advertising. Yahoo's letter mentions that only 75,000 people visited its current opt-out site in July, which is a very small number when compared to Yahoo's overall reach.

Most mainstream users probably don't worry about the privacy implications of these customized ads too much. And those who do worry about it probably already run some form of ad-blocking software and have opted out of online advertising altogether.

Overall, this seems like a great publicity move by Yahoo, even if most users won't make use of the opt-out feature.

On the other hand there are now two online advertising companies in the top 10 in the 2006 list - ValueClick (#5) and aQuantive (#7). Digitas comes in at #54 and two Chinese online advertising companies - Sohu.com (#32) and Sina (#52) - are in the top 100.

BusinessWeek notes that the Internet ad market grew to $12.5 billion last year, a 30 percent increase from 2004. All other reports I've been reading indicate that there is much more growth to come. 

Digitas is currently the market leader in online advertising. It creates online ad campaigns for big clients like American Express and GM, "which together accounted for nearly half of '05 sales". The second biggest player in this market is aQuantive.

The Chinese market is obviously one to watch - "Web advertising is growing three times faster in China than in the States; Sohu is the top seller, with rights to represent the '08 Olympics in Beijing."

Unlike the standard full page ads, though, the AdBriteunits aren't passive Flash commercials - they are like an iframe or a redirect directly to the advertiser's live, interactive website. Advertising pays the bills, and thank goodness for it, but I usually find these kinds of ads cause to feel pity for the website owner running them; do they have to hit me over the head with it? It's certainly a better ad type than those wretched double underline link ads.

You can test out the unit and see how it works at www.adbrite.com/fullpagead.

Winksite Launches Mobile Ads with 100% Rev Share

In related advertising news, mobile page publishing service Winksite has launched an advertising feature that lets publishers retain 100% of ad revenue for either AdSense or AdMob mobile ads. That's a formula also being used by Facebook ad network Lookery, a new company founded by serial entrepreneur Scott Rafer. Rafer is the chairman of Winksite.

In your browser or on your phone - the ads are coming. Cynicism aside, it's a good thing for publishers to be able to make a living. We'll see if all the rhetoric about new advertising models is just hot air.

For smaller widget creators or those whose widgets are strictly content-based, selling in widget advertising may be a good way to monetize widgets, especially if ads are kept unobtrusive. But many of Clearspring's largest widget publishers are using widgets as ads already. That is, widgets are mainly being used as marketing tools to promote a specific product or service (such as a movie). Will consumers really stand for advertising inside advertising?

The in widget advertising can be delivered via flash animated "peels" or "flips" (which essentially replace the widget's content with that of the ad after being triggered by a user action), or via video (pre-, mid-, or post-roll) or text. The flash animated ads aren't particularly intrusive, but all of the formats take up some widget real estate, which is at a premium given the limited size widget designers already have to work with.

In a separate, related announcement, Clearspring is hooking up with Pointroll, to offer widget distribution from within IAB standard ads. Though Pointroll is responsible for some of the most annoying ads on the web (i.e., the kind that automatically expand to cover or move content you're trying to read if you so much as slide you mouse over an ad), this announcement makes a lot of sense.

As previously mentioned, many advertisers are already using widgets are part of their marketing efforts, and allowing users to install widgets from within the other pieces of their advertising campaigns is a good idea. These "SnaggableAds," as Clearspring is calling them, put widget distribution on any page that accepts Pointroll's ad formats and lets advertisers have more control over their widget marketing campaigns. There are demos of "SnaggableAds" at this link.

Apparently, the market is still strong for selling ads based on future press coverage about your ad sales. Livingston has already scored press at TheStreet.com, Young Money Magazine, and The National Association of Student Financial Aid Administrators, and lined up sponsors through May. (He's also gotten press on this blog -- yes, I realize the irony here.)

There appears to be such a market for wacky ads, that a site like Body Billboardz, a marketplace for people willing to sell ad space on their bodies, currently has nearly 50 people willing to sell themselves to corporations.

I'm somewhat amazed that these advertising schemes keep working. And it's hard for me to believe that the ads really garner any sort of return for the companies that place them -- this is about as untargeted as you can get in advertising, and the people visiting these sites are really more interested in marveling at the tremendous luck of the people behind them then at checking out the companies willing to put up the cash for advertising. But as Livingston says in his press release, "Hey, it's worth a shot, right?"

"Today, we're starting to understand that the Internet is going to fundamentally alter the way businesses promote their wares to prospective customers. So the entire online ad business is getting snapped up at (literally) any price. Even though the buyers have no clue what it is they're trying to buy. All they know is that if they don't buy it, someone else will.

What they're really trying to buy into is the webification of advertising."

Phil rightly notes that before the Web came along, advertising was a totally disconnected activity. But now, the Web enables personalization of marketing messages and the ability to track the success of that. The companies that are being snapped up - DoubleClick, aQuantive and others - have built online advertising solutions that have achieved a certain amount of network effects. But Phil argues that they won't scale as much as the "over-inflated" prices that Google, Microsoft et al paid for them indicate.

"There's value in interpreting the information, but to realize that value they have to share the information rather than walling it in. There was an insightful article on Read/WriteWeb the other day, discussing the potential to build an open ad network on the Web.

This is not only Google's vulnerability, it's the prick that is set to burst all the over-inflated deals of the past few weeks."

I think Phil has a point there. The Web has always been good at cutting out the middleman - and the likes of DoubleClick and aQuantive are quintessential middlemen, of the online advertising age. An open advertising network, such as Sean Ammirati suggested, is one way of routing around the middlemen.

Also let's not forget that online advertising is so far the only proven business model for most startups. That's no doubt fueled some of the recent feeding frenzy between Internet bigcos over online advertising companies. But the Web has yet to fully embrace alternative business models - subscriptions, micropayments, etc.

As for the big question, is the recent acquisition fever a sign of a bubble? There's definitely a whiff of panic about the recent deals - or more accurately, fear of Google (who started the feeding frenzy by buying DoubleClick last month). It also seems like a game of Follow The Leader, which is of course Google. As Sean suggested and Phil backed up, there is potential for an open network to disrupt the online advertising industry. And I wouldn't discount the rise of alternative online business models either, even though they haven't been successful so far. What do you think?

Until now, online music advertising has been a somewhat unsolved - sometimes controversial - problem. Today Lirix unveiled at DEMO an intelligent and elegant solution to the problem, called AdLirix. It is a smart, context-sensitive advertising solution that will allow musicians to make money off their music in a fair way.

The ads are inserted between tracks, never interrupting the user experience. But more importantly, the ads are contextual - because they are based on the lyrics of the songs! The advertisers bid to place ads in an auction fashion, but they are not charged unless their ad is played. The system also rewards artists, because even if their music is pirated - they will be paid because ads play. All and all it seems like a well thought through and elegant solution.

Here is what DEMO staff said about Lirix:

‚ÄúProtected by a recent patent, Lirix‚Äôs dynamic ad-insertion platform delivers targeted, dynamic advertising in streaming music and enables interesting new business models for over-the-air digital music services. The Lirix platform offers particular benefits to MVNOs, which can now supplement branded phone service with a potentially richer ad-supported music service offering as well.‚Ä?

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Back in 2005, though, we called Bloglines the "Google of RSS," and even today, Bloglines is still slightly ahead of Google Reader in terms of its user base.

Also in 2005, a number of long discussions about advertising on Bloglines and in RSS aggregators in general kept the blogosphere quite busy. Back then, many publishers protested when Bloglines announced that it was planning to put contextual ads next to their content, and in the end, Bloglines backed off from the idea and did not feature any advertising on its site until today. This early controversy around advertising in RSS aggregators probably also led most of Bloglines' competitors like Newsgator or Google Readerto shy away from putting ads on their services as well.

For Now, Ads on Start Page Only

The difference this time, however, is that Bloglines is only putting the ads on the start page, where Bloglines only displays information about the service itself and doesn't feature any external content. According to a post on the Bloglines blog, Bloglines is also pursuing other monetization options within the feed reader, though the post does not go into any specifics.

It's important to point out that a large part of AdEngage's business comes from adult sites (2112 out of 3577 currently active sites are classified as adult). This is probably the main reason why Technorati decided to let AdEngage continue to operate under its own name for now.

Self-Serve Advertising

Technorati will first launch the new advertising network as a private alpha, focusing mostly on text ads. Next month, the site will launch publicly and Technorati will add 125x125 image ads as well.

Bloggers are always looking for new ways to monetize their traffic and having another option from a large and respected company like Technorati should draw in quite a few publishers. Most small blogs currently rely on Google AdSense for their income, but a lot of bloggers have also been complaining about the low income they receive from running these ads. Judging from what we have seen so far, Technorati's offering might be a compelling alternative to Google's AdSense, especially for smaller sites.

Google's History in Advertising

Sheryl started by providing a little history on Google's approach to search advertising. She said that "before Google advertising was focused on the advertiser," but when Google was developing their advertising model they started by "focusing on providing useful information to users." In other words, they "wanted the ads to be just as useful as the search results."

Regardless, Sheryl gave a good example of sponsored results being more relevant that organic results, when she talked about searching for "Sunday NY Times Subscription." This is a query that implies a very clear user intent. In her example query, both the first organic link and first commercial link pointed to a web-page allowing her to get a subscription to the Sunday Times. However, the ad included a special 20% promotion that the NY Times was running.

Extend to Content Network

After successfully delivering ads with their search results, Sheryl explained that Google extended its advertising model to a network of non-Google content. However, they continued to try and ensure the ads were valuable for users by contextually matching the ads to the content. For example, if you are visiting a car site, then the AdSense ads should be about cars. I've written before about how vulnerable a source of revenue I think this is for Google.

What Next in Online Advertising?

Sheryl then highlighted two big changes to the way that individuals are consuming content, neither of which will be surprising to regular readers of Read/WriteWeb:

• Social networks play a great role in user's context
• Individuals going beyond consuming content to also creating it

She shared three key points for the future of online advertising:

• Advertisers need to get better at creating a 1:1 experience for their users. As an example, she cited the work that Cadillac did with their MyCadillac campaign.
• Advertisements need to continue increasing personalization. This was surprising to me, given that I don't believe Google has publicly announced any plans to incorporate behavioral targeting into their ad delivery system.
• Users are demanding the delivery of information to be an experience and advertising must respond to it, just like content needs to.

Conclusion

While I generally agree with all three of Sheryl's points about where online advertising is going, I think the the use of experience is a very loaded concept. It is important to point out that one of the things that ended up being so key for Google, and other search engine advertising programs, was that the ads were text.This made it much more efficient for ad agencies to create ranges of ads, ensuring that relevant ads were consistently delivered. In fact, in some cases the internal marketing department was able to create the text ads. To the extent that improving the experience requires rich media ads, it may be a very difficult process to personalize those ads - due to a more limited inventory.

What do you think about where the online ad business is heading?

Also, according to Steve Ballmer, Microsoft will be providing an API to Facebook which will allow them to create a "rich search experience for the Facebook users and that is something that they will launch in the fall working with us. And it will carry both our web results, as well as our page search advertising."

This deal would mirror the one Google did with MySpace last year. In that deal, Google guaranteed MySpace $900 million in shared ad revenue for the next three years. However, it's worth noting that the Google/MySpace deal has not been a huge success for Google. Users do not typically initiate a lot of searches from within social networks and monetizing advertising in social networks has turned out to be even hard.

We are trying to confirm more details of this story and will update this post as we get more information.