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.

Of course, all this data is only based on AdMob's network of advertisers, but it correlates well with the overall trends in mobile web use we have seen this year, including a recent study (PDF) by Nielsen Mobile, which saw the number of mobile Internet user in the U.S. grow from 30 million in May 2007 to 40 million in 2008.

One other interesting data point in AdMob's report is that in June, 24.3% of its ads were served to smartphones, up 22.4% since May. While Apple's iPhone is not the leading phone for mobile Internet use by far, it definitely has made a lot more people aware of the possibilities of the mobile web and encouraged them to consider buying smartphones over regular phones. For now, though, the most popular device for accessing the mobile web in the U.S. is still the Motorola RAZR.

Overall, these are encouraging numbers for anybody who is developing for the mobile web. While there used to be regular discussions if the mobile web could ever become a mainstream phenomenon, the last year has clearly shown that users are becoming increasingly interested in using the Internet on their mobile devices and as more users are shifting towards smartphones, this trend will surely continue for the foreseeable future.

So the mobile web is likely going to be a significant part of our future, which is good news for advertisers because there's one other thing we've been learning about the mobile web: people using the web on mobile devices are much more likely to interact with advertising. According to one publisher average click through rates are 2-8% for banner and text ads. But more creative ads are seeing response rates as high as 29% on average.

Even though full web content is now 77% of that accessed on mobile (as opposed to under a quarter of mobile content via WAP), it seems clear that the type of traditional advertising that works on the web, isn't the best fit for the mobile platform. Which brings me back to my original point: to beat Google, you have to beat Google at its own game. No, not search -- well, okay, maybe search too -- you have to beat Google at advertising. With so much advertising projected to shift to the mobile web over the next few years, the company that can corner the mobile web ad market is going to be able to go toe-to-toe with Google. Right now, it's still wide open.

Do you use the mobile web? Remember to vote in our poll below.

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.

Lest you think the entire endeavor is completely altruistic on AOL's part, the Open Mobile Platform is also the unified "software module" that AOL hinted at last September, which the company hopes will push its services and APIs onto as many mobile devices as possible. The platform is designed to play nice with third-party APIs, as well as those from AOL including AIM, AOL Mail, AOL Video, MapQuest, Userplane, Truveo, and Winamp. AOL is counting on developers to create mobile applications that lean on AOL services and can be deployed across multiple mobile device operating systems.

The platform is also about pushing AOL advertising services onto the mobile web, as well. "The AOL Open Mobile Platform will also give developers the ability to monetize their mobile applications by utilizing advertising resources, such as clickable banner ads, provided by AOL's Platform-A," wrote the company in a press release.

Some have suggested that the real battle for online supremacy will be fought on mobile devices, and that Microsoft's recently rebuffed bid for Yahoo! has as much to do with mobile as with competing on search or text advertising. With AOL's name dragged into the fray as a possible alternative for Yahoo!, their mobile efforts become that much more interesting.

A related deal could put Windows Mobile in places that Google Android could be, as well, and the decision will come down to money more than it will quality of service for users. We like a lot of what Microsoft is doing these days, but we prefer the Google search experience and are hopeful for Android-driven innovation. Thus we hope that Microsoft can't pay its way into the center of hundreds of millions of more phones.

Mobile Search

Dan Frommer reported this summer that Google was working on a deal that would put their search bar on the top of Verizon mobile screens and he reported again this fall on a study that showed Google already has huge dominance in the mobile search market. (Yahoo is a distant second, Microsoft is nowhere to be seen in that study.)

Now the Wall St. Journal says that Microsoft may win a Verizon deal because "the software giant is offering significantly better financial incentives" than Google. As users, we prefer using Google for mobile search.

Mobile OS - Paying to Lock Out Android?

Microsoft is also negotiating a deal to put Windows Mobile software on more Verizon devices, according to the same reports. We like Windows Mobile but would love to see the even more open Google Android get a fair chance on Verizon phones. Of course there are huge sums of money on the line, but it's just one more part of the twisted picture of mobile carrier control to think of what a deal like this could do to the open mobile web that Android is aiming to create.

Get Ready for More Mobile Ads!

Mobile advertising is already big and is only going to get bigger. According to a recent study from mobile social networking company Limbo and GfK Technology:

40 percent of mobile phone users in the U.S., about 100 million people, recalled seeing an advertisement on their phone during 3Q08 (about two-thirds of the ads were text messages; the other one-third were display ads).

We're sure those numbers are only going to increase, and while we could care less who's serving up those ads - ad deals are intimately tied to search deals and in this case would presumably influence mobile Operating System deals as well.

While we honestly admire many of the things that Microsoft is doing of late and have serious concerns about Google's control over the general information universe - we're hoping from an innovation and quality of service perspective to see more Google and less Microsoft on hundreds of millions of phones.

International Expansion

While its focus has been mostly on the U.K. and the U.S., AdMob has also seen a lot of growth in India, Europe, and a number of African countries, including South Africa. As Jason Spero, AdMob's VP of Marketing pointed out to us today, this international growth has been driven largely by AdMob's self-service advertising platform. However, the company is also planning to invest most of its newly raised money to establish and expand its staff and services in Western Europe, India, and South Africa. The company already has offices in London and Mumbai.

Downturn is Not Affecting Mobile Advertising (Yet?)

While speaking to Spero this morning, we also talked a bit about AdMob's reaction to the current economic downturn. Spero pointed out, that AdMob is not seeing any major cutbacks in mobile advertising spending so far, and that a number of companies are actually planning to expand their mobile advertising budget in 2009.

Android

AdMob is also quite bullish about Google's Android platform, though Spero also noted that any phone with a good user-experience for the mobile web is going to be a positive for the mobile advertising market. One handset Spero highlighted is Samsung's Instinct, which did not get a lot of hype from the tech press, but is doing very well on AdMob's advertising network.

The Right Time to Grow

While Sequoia has been quite downbeat about the economic downturn, this new round is drawn from its Growth Fund, which is geared towards later-stage companies. As Jason Spero pointed out to us, AdMob's partners think this is the right time to grow the company aggressively and tackle the international market more directly.

But there are plenty of potential hangups. Take the deal that CBS announced this morning with mobile social network Loopt. CBS plans to use Loopt's GPS technology to deliver location based ads to CBS mobile users. These aren't exactly like the scenario I announced above, since CBS will be displaying location-aware ads on top of mobile content rather than deliver them via text message. That actually highlights the first problem with location based advertising.

It would take a perfect confluence of events in order for many ads to make sense. Not only do you have to be near the thing that is being advertised, but you also need to be viewing the CBS mobile site. For entities like Starbucks that exist on every street corner, that might not be an issue, but in practice how often do you think you'll be in the proximity of one of CBS' advertisers while you're viewing the site? It'll happen, sure, but it drastically cuts down on the number of opportunities to deliver location aware mobile ads when you have to be viewing a specific mobile web page at just the right time to receive an ad.

CBS can, of course, deliver more general ads fixed to your location -- but is that really taking advantage of the GPS capabilities that Loopt offers? Yeah, it's neat to see ads for things in the city I am traveling in, but not as neat as seeing ads for the businesses on the street I'm walking down.

The fix for that, of course, is to deliver the ads by text message, triggered by proximity to the advertiser's storefront. We questioned in December whether mobile ad startup Fluc would be able to fill inventory for a similar type of ad scheme (though is isn't clear if Fluc is actually targeting ads by GPS or if they're just asking users where they are located). "If the GAP knows you're near a mall where they have an anchor store, and they know from your Fluc account that you fit their consumer profile, then they might pay to send you an ad," we wrote. "That's a lot of 'ifs,' though."

Further, ads like this have to be opt-in. Not only is there a privacy issue involved, but text message ads are also the least likely to be trusted by consumers, according to a Nielsen Internet survey. The CBS-Loopt ads are opt-in.

Another hangup with the idea of location-based ads is reach. Right now the CBS ads are only available to customers using a GPS-enabled phone on a network that Loopt has a partnership with -- so far that means just people on Sprint Nextel or Boost Mobile. Loopt's CEO predicts that by the end of 2008 there could be 50 million mobile phones in the United States equipped to receive this type of advertising, but for now the audience remains relatively small.

Even so, location based advertising is a tantalizing vision for the industry. Google CEO Eric Schmidt said last week that location based ads are the future and will lead a revolution in mobile advertising. Last year Google launched a mobile version of AdSense and their own mobile OS. I think we can expect location aware ads from them in the near future. And whatever Google does in the world of advertising, you can bet others will follow suit.

The ad scenario I described above is possible (and it can get even spookier and more finely targeted when mashed up with other data -- say, your social networking profiles), but it's probably not quite here yet. At least, I haven't seen it. The question is -- do we even want that? Should we potentially trade more of our privacy for more relevant advertising? What does a dollar off a latte mean to you?

Analyst Frost & Sullivan predicts that the mobile advertising market will reach $2.12 billion in the US by 2011. Worldwide, the outlook is even rosier: $10 billion per year by 2010 says the Shoesteck Group, while EJL Wireless Research estimates a $9.5 billion yearly global mobile ad market by 2011.

The thirteen countries that will see the initial roll-out of AdSense for Mobile in the next few weeks are the United States, England, France, Italy, Germany, Spain, Ireland, Russia, Netherlands, Australia, India, China, and Japan.

Google's AdSense for Mobile comes in two formats: single and double. Google's AdSense publisher terms don't appear to have been updated, so theoretically, mobile publishers could place up to 3 ad units on their content (i.e., up to 6 ads). I wonder whether text ads will have the same sort of success on the mobile web that they have had on the general Internet. Clicking on links often requires more work on the mobile web and screen real estate is so limited that ads might be seen as more invasive.

Also making mobile ad news yesterday was Nokia, who acquired Enpocket, a Boston-based mobile ad provider. Red Herring looks at Nokia's purchase as a reflection of the company's announcement last month to transform itself into a software and services company.

The main conclusion the report draws is that advertisers can reach iPhone users with mobile campaigns more easily than with other platforms.

Some other interesting findings from the study include the following (see below).

Seeing Ads

• One in ten mobile phone users in the U.S. used a location-based service such as a map, friend or restaurant finder in Q4, 2008. The 25 - 34 age group saw the highest levels of interest in this type of offering, with 22 percent penetration. 
• One in seven mobile phone users visit a mobile Web site, the second most popular response; this rises to one in five for iPhone users

Recalling Ads

• iPhone users are four times as likely to recall LBS (location-based service) ads as non-iPhone users.
• 33 percent of mobile consumers recall seeing mobile advertisements this quarter, compared to 41 percent of iPhone users.
• One in three consumers that recall seeing a mobile ad responded in some way; this rises to one in two for iPhone users
• While men and women are equally likely to recall mobile advertising, women are 85 percent more likely to respond to ads than men

Responding to Ads

• Calling a toll free phone number published in the ads is the most common means of response; iPhone users called twice as much as non-iPhone users
• One in seven consumers reported buying a product or visiting a store as a result of seeing a mobile advertisement; for iPhone users, more than one in four bought something as a result of seeing an ad

Exposure or Conditioning?

For the most part, this report comes to the sorts of conclusions we already knew - although we didn't have the numbers to back up our gut feelings. iPhone owners are going to see more ads because the use their phone to do more stuff. They surf the web, launch applications, play games, check their email, text their friends, and more. With the amount of time they spend engaged with their device, as opposed to someone who has a Razr for example, it's only natural to think that they will come across more ads.

What is interesting about these findings, though, is the recall rate for these ads when comparing iPhone users with others. Although it would have been a much more interesting survey had they compared iPhone owners just to those who owned other smartphones, it's still interesting to see how engaged they are with the mobile advertising they are subjected to . Among those that remember seeing an ad, half of iPhone users responded compared to one out of three mobile phone users. Why is that?

Could it be that the ads presented on the iPhone are simply more interesting and relevant than those displayed on other mobile devices? If we're talking about in-game and in-app ads only, that's entirely possible - especially if the ad is for another application! Or could it be that iPhone owners are, as mocoNews puts it, "a self-selected group that responds to marketing hype?" Yikes.

If we had to bet, we would imagine that it simply comes down to a numbers game. iPhone users use their phones more, see more ads, so therefore they will both recall and respond to more ads than anyone else.

Just looking at the smartphone market, Apple also continues to solidify its dominance. In America, the iPhone now accounts for 48% of all traffic to Admob's network, which is more than RIM (19%), Palm (9%), and Windows Mobile (15%) combined.

It's All About Usability

As we pointed out last month, Apple has created a user-experience that makes its users want to use the mobile web on its devices. It is probably safe to assume that most iPod touch users could easily have used their desktops or laptops to access the web instead, but for quickly looking up the news or reading email, the instant-on experience of a phone is often preferable over the more fully featured desktop experience.

For the much-sought-after and elusive 18-24 year old segment of the market, mobile advertising has promise. In fact, according to data from a BIGresearch study, it's twice as effective among younger consumers with 14.2% of 18 to 24 year-olds saying that mobile video influenced them and 15.9% saying text messaging did.

Those number also show that text messaging isn't the only way to reach consumers via their phone. Today's phones keep advancing and many of them have become more like a little computer in our pocket...or even a TV in our pocket. Because of this, marketers' now have the ability to tap into mobile TV services like Verizon's VCAST or Sprint TV, for example (Both are U.S. services).

Beyond The Small Screen

But mobile advertising doesn't exist in a vacuum. Verizon's strategy is to use mobile ads as part of the bigger picture - something they call their "three screen" approach. Since Verizon offers mobile data services, digital FIOS TV services, and high-speed internet, the mobile device "can be used to enhance or activate other types of media," says Stephanie Bauer, who leads mobile advertising at Verizon Wireless.

As for AT&T, Jordan Berman, executive director of media innovation for AT&T Mobility is looking at a strategy that includes "mobile display ads, a direct-response element such as a bar code or text shortcode, and some form of branded content or utility, whether an m-commerce site, coupon or a contest, to which consumers are driven."

Those mobile ads may help drive real-world sales, like Verizon's three-screened promotional effort, the Burger King "Whopper Freakout" campaign, created by Crispin Porter + Bogusky. Another company offering mobile ads is the mobile coupon service, Cellfire, who offers both downloadable apps and a mobile web site  for accessing deals from your mobile phone.

Effects on M-Commerce

However, mobile ads could also help the m-commerce trend, too. Earlier this month, we looked at some ways that m-commerce was taking off and discovered that nearly half (49%) of mobile data users said they expected to participate in mobile commerce in the future.

Despite the growth, it's still obvious that the perfect formula for marrying mobile ads and mobile shopping hasn't been perfected yet, as many marketers seem to still be experimenting with various methods and gauging their effectiveness.

Photo Credits: enV courtesy of nesster

According to Google, Teracent's offerings will help the company to improve display advertising on the Web. Since acquiring DoubleClick in 2007, Google has released a number of new features to improve its display ads. Earlier this month, Google also acquired mobile advertising company AdMob. Neither Google nor Teracent released any information about the financial details of the transaction, which is "subject to various closing conditions."

Teracent's most well-known competitor is probably Dapper, which also offers dynamic display ads based on factors like a company's inventory or a user's location.

While Google was on a buying spree in 2007, when the company acquired 16 companies, it only bought 2 companies in 2008. So far, Google has acquired 5 companies and products in 2009: reCaptcha, On2, Gizmo5, AdMob and Teracent.

Mobile social networks have a very desirable demographic for advertisers. Over 60% of the users at MocoSpace, for example, which is one of the largest mobile social networks, are between the ages of 18 and 34. And 25% of US citizens under the age of 25 rely solely on mobile phones as their main means of voice communication.

What's more, users of mobile phones are more likely to engage with advertising. UK ad-supported mobile service Blyk, for example, saw an amazing 29% average response rate on ad campaigns -- with one campaign -- for a book, no less -- receiving an incredible 67% response rate on the service. M:Metrics found in February that mobile users were more likely to respond to advertising than regular Internet users, and 27% more likely to say they are tempted to buy an advertised product then the average person.

Clearly, there is a huge opportunity for commerce on the mobile platform, and social networking on the mobile seems to be the best way to target consumers. In November of last year, we asked how many of you were using the mobile web. Not surprisingly, a majority of ReadWriteWeb readers were -- just over a third loading a mobile site daily. But surprisingly, 30% of you were not mobile web users. A lot can change in 6 months, though, so we'd like to ask again. And if you're looking for a mobile social network to try out, check out Corvida's recent look at four promising options.

What About Nokia, Palm, Motorola, and Rim?

While Nokia devices were responsible for just over 62% of all smartphone traffic worldwide, none of Nokia's smartphones ranked in the top 20 in the U.S. Palm's Centro, on the other hand, looks like a major boon for the company, as it is only trumped by the Blackberry Pearl when it comes to traffic volume.

Motorola, which does not have a single smartphone ranked in the top 20, still dominates the mobile traffic rankings with its RAZR V3. which was responsible for 3.7% of all mobile Internet use worldwide in August. The iPhone was the 17th most used phone on the mobile web and generated 1% of all worldwide traffic, up from 0.6% in July.

The iPhone is clearly growing quickly in the U.S. and now that Apple seems to have gotten its supply chain under control, chances are that it will continue on this track. However, it is also important to point out that, in the overall market, Apple is still only a small player. Most users, according to AdMob, are still accessing the mobile web on a RAZR.