This assumption has been confirmed by studies in the USA that show that in January 2011 mobile devices accounted for only 5.3% of all clicks on Google. In contrast, just 12 months later in December 2011 mobile devices accounted for 12% of all clicks on Google. This increase of 132% is substantial to say the least.

Comparing the share of clicks on device by region. Source: Marin Software

The good news is that ad spend on mobiles has kept pace with this increase and has gone up from 3.4% to 8.7% during the same period. This is an increase of 156%.

It is being predicted that mobile devices will account for 25% of all paid-search clicks on Google by December 2012, and at the same time ad spend on mobiles will account for 23% of Google’s paid-search spend.

Comparing the share of ad spend on device by region. Source: Marin Software

This sudden rise in mobile paid search as well as mobile ad-spend can be attributed to the unprecedented increase in adoption of smartphones and other devices such as tablets.

It is being estimated based on current figures that the number of smartphones in use globally will touch 1 billion between December 2012 and June 2013.

When increasing the ad-spend on mobile devices, advertisers will have to keep in mind the fact that while the cost per click on mobile devices and on tablet devices is less than on desktop computers, the conversion rates are considerably lower on mobiles than on desktops and tablets.

Though tablets are not yet as common as desktops and Internet-connected mobile devices they are growing in popularity and are providing the best overall return on ad spend. Advertisers should keep this fact in mind while planning their ad budgets in future.

Facebook Premium

Experts had predicted this would happen when Facebook kick-started the process of filing their IPO. Mobile was identified as a point of risk and this new service is a step towards mitigating that risk and  generating as much revenue as possible.

The new service is called Premium.

Premium ads will be seen in the news feed of a user if for instance, a friend has ‘Liked’ the ad. In other words, only social ads in the form of sponsored stories will initially be placed in the main news feed.

Facebook Premium illustration. Image courtesy of Facebook.

Advertisers will be able to start using Premium in April. The announcement was made during a marketing conference held in the auditorium of Manhattan’s American Museum of Natural History on Wednesday.

This is the first time that the mobile version of Facebook and its apps will be used as a source for revenue generation. However, Facebook will have to be careful with the way in which they offer this service as they will have to safeguard the user’s privacy while at the same time allowing advertisers to reach their target audience.

Reach Generator

Until now, marketers were allowed to use Facebook Pages as a free marketing tool. Premium ads will only appear in the news feed and the Facebook algorithm will determine whether or not an ad will appear in a particular user’s news feed.

Reach Generator takes news feed ads a step further. The service allows advertisers to pay Facebook on an ongoing basis, as opposed to a CPC or CPM basis, to sponsor one page post every day, and guarantees a 75% reach of the page’s fanbase over a month-long period.

The service is always on and advertisers don’t need to do anything other than generate interesting content once a day within less than 90 characters for their fans. Facebook guarantees that brands will reach a large percentage of their audience and estimates that the volume of engagement with the brand will double.

Unlike Premium Facebook advertising, the Reach Generator service will only be available to a limited group of qualifying advertisers. At present, qualification requirements have not been released, but are likely to consider advertiser budget and fan volumes.

Pages with Timeline

All Facebook Pages will be moved to the Timeline format, just like personal profiles, by 30 March 2012. The new format will allow pages to show richer content, create a history for the brand and engage directly with Fans via Likes, comments, shares and now even via direct messages.

One of the biggest criticisms of the timeline format for brand pages, however, is that it eliminates custom landing pages for brands, which were a very commonly used tool by most marketers. From April, users will always be taken to the main Facebook Page Wall and page  owners will not have the option to redirect users to any other tab.

Moreover, the cover image on the new profiles is not allowed to call out user actions such as Liking the page nor include any sales or contact information.

AccuraCast’s Facebook Page updated to timeline format

Level Playing Field?

In some ways, the new changes level the playing field for all advertisers and page owners. Brands will no longer be able to create doorway pages pushing users to Like the page. However, brands with deeper pockets will be able to pay their way for higher engagement.

Sponsored stories and social ads have shown better results on Facebook since they were launched. Now, these ads will become the norm, making the user experience better. However, ads will now show up in the main news feed, which is Facebook’s prime property. This alone is very likely to cause a severe backlash as users will most definitely protest the invasion of their personal feed by ads. Here too, brands with more resources will be able to post a lot more to the news feed and those who relied on the free promotion of news feed stories are likely to be quickly left out.

About half of the 850 million users of Facebook access the network through their mobile phones.

This has naturally made them want to start monetising this medium – by introducing Facebook Mobile ads. It is believed that they may introduce this feature next month itself, so that it would be functional before they go public, which is expected to happen in May.

It is actually quite surprising that Facebook has not already started to monetise mobile. It is very likely that future investors would question the reasoning behind this failure to make use of the opportunity to monetise what is one of the most popular apps.

Advertiser Challenges

Generating good mobile ads is a rather tricky task, compared to advertising on desktop computers, as the screen space available is much less. Also, users are likely to be interested only in relevant ads when they are on the go. Ads would need to be short and catchy. The use of graphics would also be tricky as image sizes are likely to be smaller in mobile ads.

Business Benefits

Businesses are likely to jump at the opportunity to grow their mobile user base and make use of sponsored stories to get more brand recognition and potential business via trusted referrals. Similarly, localised ads on mobile could see tremendous uptake by local businesses such as restaurants, hotels and stores.

The Biggest Risk – Users

The biggest challenge for Facebook, though, will be to lure more users to their mobile site and apps via better location features and to keep these users happy without getting them upset about too much advertising in such an intimate medium – especially in the wake of the IPO announcement that has made so many acutely aware of Facebook’s billions.

Marketing professionals and retailers are now putting a lot more effort into their mobile marketing campaigns. This is obviously because they have realised that mobile marketing is starting to pay rich dividends.

Analysts at Juniper have found that the latest techniques and tools available for mobile marketing are cost effective and at the same time they influence the shopper very positively. The availability of Near Field Communication technique for marketing and other tools such as mobile coupons have also improved the scope of mobile marketing to a large extent.

Mobile retail marketing comprises largely of mobile coupons, which dominate the market with over 50% share and are likely to grow to 75% of the total market by 2012, mobile smart posters, which currently account for less than 1% of the total market and mobile advertising, which will account for the rest.

Due to these and other developments, the mobile retail sector is set to grow up to $15 billion worldwide by 2012. This is an increase of 50% over and above the figures for 2011. The easy availability of gadgets such as smartphones and tablets will greatly contributed to this growth. An earlier report had predicted that revenue from the mobile NFC market would reach $50 billion by 2014.

Technological developments have proven to be good for both the retailer as well as the shopper. While retailers now have more ways of reaching their target audience, the shopper is also equipped with more access to information about the products available as well as the pricing, allowing them to take the right decision when purchasing a product.

Growth of mobile retail spend is faster in North America and Western Europe than in the Far East and China. The mobile retail opportunity, split among the 8 key regions globally in 2012 is as follows:

According to him, marketing in a place like Asia is very different from marketing in the U.S. While the U.S. market is reasonably homogenous, there are a lot of differences across the Asian market.

Hence advertising in the U.S. is relatively easy, as the culture and values of the people there are similar.

On the other hand, the culture varies widely in the Asian region. Over 2,000 languages are spoken in this part of the world, and hence one has to keep all these factors in mind while preparing an ad campaign for this region.

He further explains that the arrival of mobile technology has brought about a common thread across these different cultures. Hence it is essential to make optimum use of this technology while marketing any product or service, as it can truly connect the consumers across different regions and cultures.

He says, “Start with consumers, start with categories, I see a lot of great work where people just don’t have the opportunity to use a kind of “vanilla” view and so they get into category-specific details, sharing some great use of creativity out there.”

If marketers keep these tips in mind, they are sure to be able to improve their campaign performance and will reap rich benefits in due course.

Findings from the study shed some interesting light on consumer mobile usage. For instance, a third of the total time spent by users on their mobile is at home. Also, content consumption patterns on the mobile Web are starting to mirror that of the PC. Connecting, searching and entertaining dominated mobile web usage

It was found that users spend about 38% of their mobile time to communicate and about half of that time for entertainment or search purposes. In contrast, only 7% of the mobile time is spent on shopping.

This 7% of mobile time that is spent on shopping is most important for advertisers, as it has been found that users are most likely to engage with ads on their mobile phone while they are in the process of shopping.

This finding seems logical, as it can be easily understood that ads might be perceived as a distraction when one is using the phone to communicate with others or even while conducting searches or using the phone for entertainment.

In contrast, when users shopping, they would naturally be interested in seeing what products or services are on offer, before finalising a deal. It was found that users are most likely to recall an ad they have seen while they were shopping. While about two-thirds of users had seen an ad while shopping more than half of them had clicked on the ad.

It has also been found that most users prefer to shop through a mobile browser rather than through an app. In contrast, connecting and communicating is most frequently done outside a browser.

For advertisers, this indicates a need to target messaging appropriately, according to the usage mode.

How to optimise mobile advertising by mode. Image courtesy of Yahoo!

The report indicates that total U.S. mobile ad spending is set to grow from the level of $790 million in 2010 to $4 billion by 2015. In addition the report also predicts that the mobile local ad spend will go up from $404 million in 2010 to $2.8 billion in 2015.

In effect this means that while local ad spend currently accounts for about 51% of the revenue, it is set to go up to about 70% by 2015.

Mobile local advertising is defined as that which targets users in specific locations or contains location-specific calls to action.

While mobile ad spend is likely to go up mainly due to the easier availability of smartphones and increased web usage, local ad spend is set to grow due to increased ability of mobile phones to be aware of location of the user.

This increased capability of mobiles, will not only lead to increased advertising by big brands but will also encourage the small and medium businesses to advertise on mobile, through display, search and SMS formats.

Local Advertising can be further divided into National-local and Local-local advertising.

National-local advertising is done by big brands and agencies, which target the local population of a given area.

On the other hand, local-local advertising is done by the small and medium sized businesses.

This local-local sector of the mobile advertising business is what is set to grow at a very fast pace thanks to the availability of facilities provided by features such as AdWords, Foursquare etc. This will eventually lead to the large growth of mobile ad spending.

A report from the banking firm Macquaire Group, using data from Efficient Frontier, has found that at present, mobile paid search spend accounts for 5% of paid search spend in the U.S.

It has also been estimated that this could further increase to 10% by the end of 2011. In actual terms, mobile paid spend could then be worth $1.1 billion.

Quite expectedly, it has been found that Google is the major stakeholder in this market with about 97% of the market share, while Yahoo! and Bing jointly hold about 3.2% of the market share.

95% of searches on the iPhone come through Google. Of these, 50% are from the tool bar, 42% from Google’s home page and less than 10% from Google Apps. On Android devices, the number of searches through Google is likely to be even closer to 100%.

If Bing manages to tie up with Apple to become their default search engine, a large share of the mobile search volume could automatically go to Bing. Or, iPhones could lose favour with some users for providing a poorer search experience.

CPC for mobile search is currently higher than that for PC searches in some markets, while click through rates for mobile search are lower than for PC searches.

A Growing Monopoly

Google CEO Eric Schmidt has said that mobile search is growing very fast. It now accounts for about 15% of search across all categories.

This underscores the importance of mobile search. The fact that Google’s starting off in this growing market with such a strong position can only mean one thing – its position will get stronger, at the expense of all competition, and as a result, CPC rates will go up.

Advertisers stand to lose in such a situation, as the lack of a viable alternative will leave businesses with no choice but to advertise on Google AdWords if they wish to build a mobile search presence.

Users too will suffer in the long run, as the lack of competition will stunt development in mobile search, as the incumbent, Google, will have little reason to continue to innovate in that space.

According to comScore’s report, 2010 US Digital Year in Review, new and highly advanced mobile handsets were introduced along with new mobile content options and applications. The use of smart phones and the 3G spectrum increased significantly and the use of browsers and applications through mobile handsets went up by 7.6 percentage points between December 2009 and 2010 as a result of this.

The availability of new data plans with 3G and 4G services have also furthered the growth of the mobile industry. 29% of mobile subscribers now have unlimited data plans compared to 21.7% last year. This, coupled with the introduction of handsets such as the iPhone 4, Windows Phone 7 and RIM Blackberry Torch has caused the usage of smart phones to reach an all-time high of 27% of all mobile handsets.

While RIM remains number 1 with a 31.6% share of the smartphone operating system market, Google’s Android OS has become the second largest, with 28.7% of the market largely due to large-scale adoption of Google Android powered devices.

Samsung was the most popular handset manufacturer last year in the U.S.A. accounting for 24.8% market share of devices sold. LG was second followed by Motorola, RIM and Apple.

Mobile devices continued to be used for a wide variety of activities in addition to making phone calls. Text messaging was the most popular activity, with 68% of American mobile subscribers texting in Decmber 2010.

While the dominance of SMS might seem old-fashioned, one must keep in mind that the mobile phone is a communications device first and foremost. Moreover, a number of new technologies saw increased adoption too. 39.5% of subscribers used their mobiles to get news and information, 36.4% used their mobile browsers, 34.4% used mobile apps and 21.4% accessed mobile search services.

Mobile advertising for finance companies has grown 802% year-on-year. The top 6 sectors that have shown substantial growth in mobile advertising are:

1. Finance (802%)
2. Retail and restaurants (745%)
3. Telecommunications (719%)
4. Travel (411%)
5. Armed forces (372%)
6. Entertainment (315%)

One of the major factors for this growth in mobile advertising spend by the financial services industry could be because consumers who wish to manage their money more closely during the recession are increasingly making use of their mobiles to keep track of their banking, credit and investments at all times.

Within the financial services sector, the leading sub-sectors, in terms of mobile advertising spend on Millenial’s network were as follows:

1. Banking (38% of Finance sector’s spend)
2. Car insurance (20%)
3. Life insurance (15%)
4. Home loans (12%)

Some may be surprised by the presence of the U.S. armed forces on the list. However, if one considers the facts that teenagers are the most prolific users of mobile technology and that teenagers are also the prime demographic targeted by the armed forces for recruitment, the numbers are not that surprising.

An important factor driving the growth of mobile advertising as a whole is the fact that it allows advertiser the flexibility to choose between various types of customer contact options, including ring backs, form submission, coupon downloads and store locators.

Users thus get a wider choice, and are therefore more likely to respond to the ads  at their convenience without feeling imposed upon. The net result being that advertisers often receive a better response and conversion rate.

Mobile engagement methods used by finance services providers

Reports from Enders Analysis, a mobile and media research company, show that 2011 is expected to be the year when mobile advertising would come into its own. In fact, since the price of mobile ads is even lower than that of online ads, in most categories, the growth of mobile ads may adversely affect the online advertising industry. Enders predicts that by 2015, mobile advertising will account for 9.5% of all online advertising.

In 2009, the total revenue generated by mobile games was $6 billion, and by 2015 this figure is expected to cross $11 billion.

Of late, it has become the norm to offer games for free initially, in order to gain popularity and to get users hooked onto it. Later, additional extra gaming levels and game-play items are made available for purchase.

The report forecasts that the number of users downloading games through off-store and in-store means will rise significantly, thus adding to the total revenue through the pay-per-download and in-game purchase services. Mobile advertising spend is also set to increase substantially.

One of the main challenges that developers face today is that of discoverability. In other words, the game should be able to catch the attention of the user, given that there are thousands of apps and games now available on the iPhone and Android mobile app market places, all of which compete with each other.

This is a vicious cycle, in which a game that is downloaded frequently becomes prominent, but in order to be downloaded frequently, the game has to be prominent in the first place. Since only a few games are able to do this, most of the games usually remain obscure, and therefore clock very few downloads.

Another important feature guiding the growth of this market is the development of new handsets with modern technology that improves the mobile game experience.

Reports from Performics Inc. indicate that by the end of 2011, Mobile Google paid search will generate 16% of all Google paid search clicks. This figure was only about 3.5% in January 2010.

The surge in the growth of mobile paid search has already begun in the last few months of 2010. However, conversion rates from mobile search advertisements are lower than those from paid search on desktops.

James Beveridge, a senior analyst at Performics says, “Conversion rates are still lower for mobile search than desktop, suggesting that advertisers should focus on improving mobile site experience.”

Imran Khan of JP Morgan believes that monetising mobile search is the most important opportunity for Google this year. He finds that while mobile search queries have grown over 5 times in the last couple of years, and still continues to grow, only 3% of Google’s search advertising revenue comes from mobile and Google should now focus on strengthening this sector.

Robert Hamilton, Google’s own product manager for mobile search also says that mobile search usage has gone up by 130% in the third quarter of 2010 and the amount of search traffic on Android tripled during the first half of 2010. He also estimates that the number of mobile phones in use worldwide will reach 5 billion soon, and by 2014, there will be more mobile Internet users than wired Internet users.

Getting Mobile PPC Right

All facts point to the obvious conclusion – Google needs to concentrate on mobile PPC now. However, just like video, mobile has proved to be a difficult channel for Google to monetise.

Over the years Google has tested various mobile ad placements. Currently, ads are shown above and below the search results, depending on the nature of the query. Only time and extensive testing will tell what ad format and placement will work best for Google Mobile Search.

TrueView ads will allow viewers to not only choose whether or not they want to watch an ad, but also when they want to watch it.

The best part of this format, for advertisers is that they will be charged only when the viewer chooses to actually see the ad, and not when the ad impression is served. This cost-per-video-view ad model is good for advertisers as they will reach their target audience and only pay when their ad is watched.

Users will also benefit from the new format as it allows them to skip through ads that don’t interest them.

Just Like TV, But Better

Traditional television advertising works in the same way – users view ads before and during the content they’re interested in. However, unlike traditional TV ads, which must be endured by all viewers or can be walked (or channel surfed) away from,  TrueView ads will be skippable and will be priced per actual view only.

With the TrueView Video Ads – In Stream, which play as a pre roll or post roll ad along with a video, the viewer can select or skip a video ad after watching it for 5 seconds, and the advertiser is charged only if the ad has been watched fully or for 30 seconds whichever is shorter.

YouTube has already been experimenting with this ad format in their Promoted Videos advertising service too. They have found that users choose to see those ads that are relevant and interesting to them.

TrueView ad playing on YouTube

Advertisers will be able to collect data about the type of audience that shows interest in their ads. This will help them not only target future ad campaigns better, but also to align products to their target audience.

Google has also tested this system over a large audience and the results indicate a view-through rate between 20-70%. This means that between 20-70% of users have chosen to view the ad during the trial stages, which is an adequate response. This ad format was also tried during the recent U.S. mid term elections and the campaigns were fairly successful.

Hulu also offers viewers a similar choice – to watch or skip an ad. Hulu.com offers it in an InSlate format where users can watch one ad out of several or take a regular commercial break.

At present this ad format is available only in the U.S. and Canada and for limited testing in the U.K.

A similar service was made available by AdMob for the Apple iPhone platform almost a year ago.

Google’s mobile advertising blog explains that the addition of these rich media interstitial units to Android will be an exciting opportunity for mobile advertisers to reach a larger audience.

If this feature can just succeed in getting users to click on the ad more often, it could help in the development of more free apps. For instance, when the game Angry Birds was first introduced on the iPhone and iPad, it was a paid app. But later, when it was introduced on Android, it was free along with some ads, as its developers found that they could make more money through advertising rather than by just selling the game. Now, users get a free game that is paid for by ads.

Android video ad on Angry Birds game. Image courtesy of Google

So far, mobile ads have mostly been in the form of text and banners, which do not generate a lot of curiosity from users. However, the new interactive ads could be more interesting.

Google stated that 200,000 new Android connections are now activated on a daily basis, as compared to only 60,000 last February. The number of apps available has also doubled since last May and is now at 100,000.

It will now be possible for advertisers to reach users of the iPhone as well as Android devices through one single platform.

According to Borrell Associates, in the U.S. alone, the spend on advertising within mobile apps will be over $305 million this year and will more than double to an estimated $685 million in 2011.

Analysts at Borell predict that the figure will rise to over $8 billion by the year 2015, with local advertisers accounting for $1.2 billion of the total.

Since Apple opened their App store in 2008, about 5 million apps have been downloaded on mobiles. While the vast majority of these apps are for free, users have still ended up spending $1.5 billion on applications that are not free.

It is believed that only about one-fifth of the total number of computing devices in the U.S.A. can currently receive mobile ad messages, but by 2015 that figure should almost triple. This should encourage advertisers to pay more attention to mobile advertising.

Another interesting statistic revealed through research is the turnover rate of smartphone apps. Today, on average a single smart phone will have about 22 applications. However, it is estimated that within about 6 months time, only 5% of these apps will be retained. Since the turnover rate is very high, developers often do not even recover the amount invested in developing these apps.

Popular brands introduce new apps rapidly, but the offers they provide are not very attractive and hence their download rate tends to be very low.

Kip Cassino, Executive Vice President of Research at Borrell Associates says, “I think the app developers had better find out what is working for folks and what is most useful to people buying these apps. They need to concentrate their efforts and realise there is a bigger world out there than just Apple.”

These sentiments were expressed by Google’s Chief Financial Officer, Patrick Pichette recently, while replying to a question from a financial analyst during the company’s second quarter earnings call on the 16th of July.

He said, “Android] is not a huge resource investment, but it’s a formidable return in that what you have is the entire ecosystem exploding.”

While Apple is obviously minting money through the sale of iPhones (the new iPhone reportedly sold 3 million pieces in just three weeks) Google is doing so through the sale of mobile ads on the iPhone.

Other phone makers are also using the Android open source operating system to make new Android devices.

Search has reportedly grown by 300% in the first half of this year, according to Jonathan Rosenberg, Vice President of Product Management at Google. He says that the most popular app on the Android devices is a browser through which users search for products and ads thus helping Google to earn more money.

Apple is rumoured to be considering ending its partnership with Google and moving on to Bing instead. In fact, they have already included Bing as one of the search engine choices on Safari.

More worryingly for Google, the recently acquired mobile advertising network, AdMob, will reportedly be blocked by Apple. iPhone users constitute the largest market segment for AdMob.

In order to avoid regulatory problem, Apple is shutting out AdMob in a rather sly manner. The iPhone manufacturer has changed the developer agreement for the iPhone in such a manner that AdMob could be completely excluded from its services.

The new agreement states that ad networks will be allowed to share data only if the data “is provided to an independent advertising service provider.” In case there was any ambiguity, Apple goes on to clarify that “an advertising service provider owned by or affiliated with a developer or distributor of mobile devices, mobile operating systems or development environments other than Apple would not qualify as independent.”

Google develops mobile devices – Nexus One. Google has its own operating systems Chrome OS and Android for mobile. And Google is the driving force behind the Android development environment. Thus, the new agreement squarely shuts out Google-owned AdMob.

Apple has only recently announced the availability of iAds, its own ad-serving platform, and has already generated $60 million worth of commitments for mobile ads that will run in the second half of 2010. While the amount is almost negligible compared to the $23.7 billion that Google earns from advertising, the fact that it was done in just 8 weeks is definitely noteworthy. Also, these commitments have been made by well reputed brands such as Unilever, General Electric and Citigroup.

Colin Gillis, a financial analyst at BGC believes that mobile ads could generate 10% of Apple’s revenue by 2012.

While Google’s mobile operating system, Android, is doing quite well, it is still ranked fourth worldwide behind, Nokia’s Symbian, BlackBerry’s Research in Motion and Apple’s iPhone respectively.

AdMob founder and CEO, Omar Hamoui, says, “We are extremely pleased with today’s decision from the Federal Trade Commission to clear Google’s acquisition of AdMob”

The FTC had to seriously consider the impact of this deal on competition. The search leader’s biggest potential competitor, Apple, unwittingly helped Google by announcing plans to start their own mobile ad network.

Google advertising already includes industry-leading platforms including DoubleClick, AdWords, AdSense and Analytics. AdMob adds to Google’s product offering and will solidify their position in the mobile industry, irrespective of Apple’s attempts to break into the mobile ad industry.

Wasting no time over the question of whether or not the deal would be approved, Google has already been developing a number of new mobile ad formats, which were announced during I/O.

One of the new formats will be expandable ads for mobiles. Google will also enable click-to-call ads for mobile content and apps in the next few weeks. Click-to-call ads will work for ads on the mobile content network and on mobile apps. Advertisers can enable them by enabling phone extensions in an AdWords campaign that targets mobile handsets with full Internet browsers. The ads will appear as animated banner text ads with a call button. Advertisers can enable the click-to-call service by first ensure that their campaign is set to show on “All Available Sites”, setting up phone extensions, providing the business phone number and then choosing to show ads on “Mobile devices with full Internet browser”.

The company reported at the Mobile World Congress panel hosted by the Mobile Marketing Association that they earned $100 million through mobile advertising and mobile marketing. Their total revenue for the first nine months of 2009 was $4.27 billion.

Of the total revenues Turkcell earned over the year, about one-third the amount was generated through mobile advertising, while the rest was generated through mobile marketing.

What is even more impressive is the fact that the head of Turkcell’s mobile marketing and advertising division, Melis Tuerkman says that the company expects to increase this total by a further 60% this year through mobile advertising and marketing.

Tuerkman explains that the sector is growing very rapidly. In 2005, the total revenue from mobile marketing and advertising was a mere $1.5 million.

Turkcell has been an aggressive and successful proponent of mobile advertising. They lead the way in investigating new sources of revenue for mobile network operators.

Mobile search has grown 5-fold for Google in the past year. A slew of Android-based devices are hitting the market this year, and the Nexus One aims to be one of the best. Google’s mobile phone’s features include:

1. Nexus One phone hardware includes a 3.7-inch (diagonal) widescreen touchscreen interface with 800 x 480 pixel resolution, Wi-Fi, GSM EDGE, Bluetooth and a trackball
2. The phone will run on the Android 2.1 mobile platform
3. Basic features include a compass, gps, accelerometer, light sensor, proximity sensor
4. 2 microphones on the Nexus One allow noise cancellation
5. The phone is 11.5mm thin and weighs just 130 grams (with battery)
6. 5 megapixel cam + LED flash. 1-click upload to YouTube
7. 5 home screen panels to add more widgets
8. Live wallpapers – including animation – will sit behind widgets on the home screen
9. Live wallpapers are interactive and react to touch!
10. 3D framework introduced into the Android platform
11. Quick photo loading, 3D gallery and photo clustering
12. Google Earth for mobile due to be released soon
13. Voice activated searching and GPS-based search localisation
14. Voice enabled ALL text fields in the device, which means you can speak your emails, tweets, facebook updates

The Nexus One will be sold exclusively online via the Google website:

www.google.com/phone

Unlocked phones will be sold for $529. Alternatively, users can buy a subscription to T-Mobile and get the operator-subsidised phone available for $179.

Pricing of the Nexus One is disappointing, and this sentiment was reflected by some of the attendees at the press conference. Google CEO, Eric Schmidt, had in the past voiced hopes that we may one day see an ad-supported mobile phone. They seem now to be falling short of their own hopes.

Vodafone will be the first operator to sell the phone in the UK. Spring 2010 is the estimated time Google has given for the UK launch of their new mobile phone. Users on other networks can simply plug in the other netowrk operator’s  SIM card.

At the Q & A session following the press conference, Google mentioned that the core revenues and income they aim to gain from the mobile phone business is not meant to be from sales of the hardware but from the usage of their mobile search service and the ensuing mobile advertising.

A survey of 22,000 US consumers conducted by BIGresearch shows that consumers are increasingly expressing a negative attitude towards mobile marketing.

The percentage of people who are not in favour of mobile marketing has grown since June 2008.

67% of consumers surveyed said they dislike text ads, up from 64% in 2008. 60% dislike voicemail ads, also up from 57% in 2008. And 60% dislike video ads, up from 56% in 2008.

In fact, 52% of consumers surveyed actually felt that mobile marketing is an invasion of privacy. This number too is up from 2008.

The majority of users expressed the view that marketers should take prior permission before sending any such ads to consumers.

These findings are sure to give some sleepless nights to mobile marketers, who must now find a way to get their ads across to users without upsetting them, as that would defeat the whole purpose of advertising.

On a more general note, it was found that the mobile marketing audience consists of 58% males. The average age of these users is 39.2 years. These users also tend to access social networks in large numbers. 38% use Facebook, 23% use MySpace and 13% use Twitter on a regular basis.

AdMob is based in Silicon Valley and was founded by Omar Hamoui in 2006.

Google has agreed to pay $750 million for this acquisition which will help them to improve their mobile advertising technology. So far Google has been concentrating on Mobile search ads, while AdMob’s specialty is mobile display ads and in-application ads.

Besides helping improve Google’s technology, this deal is sure to bring cheer to publishers of mobile websites and applications as it will provide them with better tools for monetization, thus helping them to offer better services to their users.

It will also help advertisers to reach out to their audiences on the mobile web by providing them with more relevant ads through engaging formats.

Eventually these changes are good for the user, who will receive better mobile content, information and ads which will be useful to him for free or through low-cost mobile apps.

In other words this deal is a win-win situation for all concerned and will be good for the future of the mobile web which has already been gaining in importance in the recent past.

Go Mobile! provides tips to help marketers realise how best to reach their mobile clients. Google aims to make the site helpful to both new comers to the mobile marketing as well as to experienced marketers.

At present, the Go Mobile! site merely provide a one-page write-up with tips on mobile marketing, as follows:

Mobilise your website – if pages are specifically formatted for the mobile browsers, it becomes easier and faster for the user to see the highlights of the products or services being offered, thus saving the user’s time and improving the chances of making a sale.

Know your place – instead of asking the user for his location, make use of information from the mobile browser, or use Google Maps or other applications to know the customer’s location, thus impressing customers and providing more locally relevant information.

Offer ways to engage at any time – Since the mobile handset is always with the user, the marketer can engage them by providing a QR code or a phone number on a bus, for example, or by creating a downloadable mobile game to reinforce the brand.

Help customers spread the word – Encourage users to take part in events and ad campaigns etc. by sending MMS, IM, email etc to their friends.

Help them find you – make use of the ad products which Google offers to place relevant ads alongside the mobile search results when a customer is looking for something.

These basic steps are more common-sense than strategy, but could help marketers focus their mobile marketing initiatives more effectively.

Google Go Mobile!

Mobile search volumes have been a long-requested feature that Google representatives have been historically reluctant to share. Speculators always concluded that this was due to the low volume of mobile searches.

The new feature is not immediately obvious in the new keyword tool. Advertisers need to click the “Advanced Options” link and then check the “Show stats for: Mobile search” box.

The network statistics setting allows advertisers to change search volume data to show mobile device statistics only. This setting changes only search performance columns and does not affect traffic estimate columns.

Mobile website owners and mobile search marketing agencies will welcome this new feature as it finally gives them the ability to estimate PPC costs and traffic volumes they can expect from search.

A quick review of the mobile search volumes shows that even in popular mobile search categories such as local information and gaming, the volume of mobile searches is a mere fraction – as low as 0.3% – 0.6% of traditional Web searches for the same 1-word keyword queries.

AOL acquired Third Screen Media, a mobile advertising company, in 2007 for $80 million. According to sources in the know, the new CEO of AOL, Tim Armstrong, and the head of the advertising department Jeff Levick are planning to either shut down the mobile advertising network or just letting all their contracts lapse over a period of time.

It has been reported that AOL is not renewing the deals they have with their existing publishers for their mobile ad network. Instead, these publishers are quietly being allowed to go to AOL’s competitors. AOL has also not put out any new publisher proposals, which obviously means that they are losing a lot of clients, and surprisingly this does not seem to be bothering them, which again indicates an intention to discontinue the business.

A number of current employees of Third Screen Media are reportedly out in the field, hunting for new jobs.

It is believed that AOL will instead focus on developing mobile content and will also rebuild their mobile ad technology, which will then be able to service other AOL-owned properties.

This is certainly a good move at this stage, since AOL will be turning into a separate entity from Time Warner shortly. They will then have businesses like mobile web publishing, AOL Mail, MapQuest, AIM and iPhone apps, which they can monetise.

AOL could always rebuild their mobile advertising business again later with even better technology when the market turns and demand for mobile advertising really picks up.

The study, which was conducted in December 2008, delivered 900,000 audio ads to targeted mobile users. The aim was to measure the effects of the direct insertion of audio ads into the call stream of certain targeted customers.

Brand awareness as well as purchase intent was found to be greatly increased through this form of advertising.

Callers in the study were put on hold while calling a popular US toll-free movie ticket line. These callers heard various 10-second ads about redbox, a company that has fully automated kiosks to rent out newly released movies at $1 per night. The ads were meant to build awareness about redbox and to encourage users to use their kiosks. Those interested in finding out more about redbox had the option to engage further or to get an SMS coupon for the same.

A survey of these callers after the call found that the in-call ads increased aided brand awareness by over 9 percentage points on average.

Among those who rented DVDs frequently, the brand awareness increased 11.9%. Among occasional DVD renters, the likelihood of renting a DVD from a redbox kiosk went up by 10.7 percentage points.

A single exposure to this form of advertising increased brand awareness significantly. Regular online campaigns were estimated to require about 10 exposures to achieve the same level of awareness.

Mobile phone users worldwide have been growing by the minute, and that obviously means that the mobile ad business will continue to grow further.

According to estimates by eMarketer, the total number of mobile users by the end of this year should be 280.8 million and according to comScore, the number of smartphone users should touch 29 million by then.

AdMob has stated that the number of smartphone shipments worldwide is projected to grow by 13%.

eMarketer also estimates that the mobile ad spend in the U.S. alone will increase from $648 in 2008 to $760 in 2009.

One of the main reasons for this growth in mobile ads is the availability of better mobile websites, which have been optimized for use on mobile phones. Thus users find it easier and more interesting to access the net through their mobile phones.

AdMob which was founded in 2006 with just one employee, and has grown to 85 employees in January 2009, has done very well for itself, particularly in the last year due to these changes in the mobile internet experience. Since June 2008 their monthly ad requests has have grown to 8.3 billion.

According to the analytics firm Nielsen, AdMob is now the third largest mobile ad company in the U.S. after Millennial Media and Third Screen Media.

Their mobile ad revenue is expected to go up by 18.1% this year to $1.3 billion.

When these figures are compared to that of newspaper ad revenue which will be down by 18.7% to $35.5 billion, radio ads which will be down by 11.7% to $15.8 billion and TV ads down by 10.1% to $43 billion one can get a true estimate of how well mobile ads are doing.

The report says, “The emergence of devices such as the iPhone and HTC Dream (G1) that deliver truly compelling Internet experiences has generated discussion of which Web consumers will use on mobile – mobile Web sites or HTML sites.”

This question is what must have encouraged AdMob to undertake this survey. The survey was based on data collected from ad requests on their own vast network of about 7,000 mobile websites and 1,600 apps, and also from details provided by Gartner.

According to the findings of this report, smartphones have a smaller market share compared to other handsets, but they still account for almost 3 times the usage compared to the usage by other handsets.

Some of the findings of the survey are listed below.

While the iPhone OS holds only 8% of the market share, it is responsible for 43% of mobile web requests and 65% of HTML use.

The Android OS has even less than 1% of the smartphone market share but it generates 3% of the mobile web requests and 9% of HTML requests.

On the other hand the Symbian OS which holds a huge chunk of the smartphone market share – 52%, carries only 36% of requests for mobile web usage and a mere 7% of HTML usage.

The survey also found that 24% of requests made from the U.S. were made using a Wi-Fi network. The iPhone, iPod Touch, Sony PSP, HTC Dream (G1) and HTC Dash are the most popularly used Wi-Fi handsets.

The study concludes that overall, mobile Web sites are used far more on smartphones than HTML sites on those phones which operate on the RIM and Symbian operating systems.

In fact a few months ago Google’s CEO Eric Schmidt had even said that “mobile Search revenues will overtake those on the PC within a few years”.

Google hopes that PC and mobile searches will soon become identical, and to facilitate that they have already incorporated some new features into their search engine.

It is now possible for users to conduct searches on PC’s as well as on mobiles with improved search results, which are restricted to specific time periods such as month or year. The page summaries now available are also more detailed than they used to be and the introduction of the Wonder Wheel has further improved the result quality by providing related queries.

It is also possible to coordinate searches across various platforms like mobile phones, notebooks and set top boxes etc. with the availability of better developer tools and user interfaces.

According to a recent study carried out by Google and researchers at Stanford University, searches conducted on the latest smart phones are more akin to searches conducted on PC’s than to those on the older generation of mobile phones. The average length of a smart phone query is now nearly three words, while that on an ordinary phone is only 2.5 words.

According to Google different types of handsets require different search interfaces to operate, and that of the smart phones is now looking similar tot hat of the PC’s and users of smart phones would be able to avail of more personalized features for their search operations.

Reports from Forrester predict a high rate of growth for all the online sectors, but growth rates will be especially high for mobile advertising and social network advertising.

The overall growth for the online sector is expected to be a respectable 17% in the six year span from 2008 to 2014. However, the rate of growth for the mobile advertising industry is expected to be much higher, at about 27% per year, and for social network advertising, the growth is expected to be at an explosive rate of 34% per year compound annual growth rate (CAGR).

Actual figures are likely to go from the current $716 million to $3.1 billion during the six-year period ending in 2014. The overall interactive marketing spend in the U.S. is expected to just double, from $25.5 billion to $55 billion during the same period.

Forrester Research Vice President and Research Director, Christine Overby said, “Marketers don’t need to start revolutions in order to innovate, they need to solve problems”. She further says, “Social technologies allow for accessible innovation where the risks and costs are not as high, but the return is significant”.

tapMatch

Companies can now advertise their products on this service by bidding on keywords and categories. The ads will then be displayed on mobile web pages and above mobile search results.

Jumptap claim that the service uses technology to relay ads very selectively, so that advertisers do not waste their money.

The service allows advertisers to target ads to certain handset models such as the Blackberry and iPhone. Google AdWords mobile ads do not currently provide device targeting. Like Google, other targeting options such as location, mobile carrier and language are also be available on tapMatch.

In the past pay per click mobile ad services have not been able to target audiences too well, in spite of the personal nature of the medium. TapMatch will allow advertisers to select their target audience by building client profiles through various sources such as search queries, context and previous click-through history of the client. Accordingly only appropriate and relevant ads will be shown to the mobile user.

Additional levels of audience demographic targeting present in the ad delivery system are expected to produce high levels of user engagement, which should eventually translate to high a conversion rate for advertisers.

Signing up for tapMatch is easy. Advertisers who are used to Google AdWords will find the process of signing up and setting up campaigns to be remarkably similar.

Pricing of these ads will be auctioned just as it is for Google AdWords. Advertisers will be required to pay only if the user carries out one of the click actions the service offers, which include:

• Sending users to a website
• Displaying an SMS landing page that includes a title, 250 character description, an image and instruction to text something to a short number
• Capturing an email address via a landing page that includes a title, 250 character description, an image and a text box with a button to capture user email addresses
• Showing a phone number on a landing page with a title, 250 character description and an image – this would have worked better as a pay per call action
• Delivering a 250 character marketing message along with a title and image.

In theory, all these features seem very interesting. However, reality might show that tapMatch has a long way to go before it provides serious competition to the likes of Google, mainly due to the higher volume of mobile users that default to the search giant even for their mobile search needs.

Tag technology helps to convert physical media such as print ads, billboards and product packaging into direct communication links. Users can photograph the tag with a mobile phone camera and use Tag reader software, which is available for free from Microsoft (see link below), to instantly access the encoded information.

gettag.mobi

In order to create Microsoft Tags, businesses can log on to the site using a Microsoft, Hotmail or Live ID and then fill in a simple form providing a bit of detail about the information that needs to be encoded within the tag.

tag.microsoft.com

Microsoft Tags use a technology called High Capacity Color Barcodes (HCCBs). They have been evolved from QR Code technology, which has been widely used in Japan for years now.

QR, which stands for “Quick-Response” is made of 2D matrix codes by which information can be encoded and read by mobile phones with cameras. A standard QR code can record up to 7,000 numeric characters.

Because Tags use 4-colour barcodes, each individual square can record 8 bits instead of the 2 bits on QR Codes. As a result, Tags are just ¼ the size of QR Codes and yet store the same amount of information.

Tags can be used to show a message on the phone, dial a number, scan a vCard and save the details to the phone’s list of contacts, link to maps with driving directions and, of course, link to a website.

The technology will be available for now on Apple iPhone, Blackberry 81xx, 83xx and Bold, J2ME based handsets, Symbian S60 3^rd edition and Windows Mobile 5 and 6 handsets.

For mobile marketers, Microsoft Tags provide the added advantage of easy measurement of campaign success through a selection of six reports that allow tracking the number of scans over time and comparing success of various tags and category groups.

Sample report of Microsoft Tag scans per day

The new application, called ROK Promoter, will enable advertisers to not only create and transmit their ads directly to their customers, but will also let them monitor the effectiveness of their campaigns without requiring any outside help.

www.rokpromoter.com

Through the ROK Promoter, videos and images will automatically adjust themselves to fit the size of different mobile screens. It will also be able to handle several different Bluetooth transmitters in various locations and will provide statistics regarding the impact of various ad campaigns on the audience.

“Opt-in, one-to-one marketing, through mobile phones and, in particular, being able to reach customers at that crucial point where buying decisions are being made, is becoming ever-more important and valuable to advertisers, says Laurence Alexander, Group CEO of ROK, “so we set out to make the process of creating, delivering and monitoring such campaigns as easy as possible for advertisers.”

As the initial set up cost of proximity marketing via Bluetooth is relatively low, it has become quite an attractive proposition for advertisers. Licenses will be available to advertisers on a weekly, monthly and long term basis as per their requirements. Advertisers can interact with consumers on their mobile phone by setting up Bluetooth transmitters in locations where they believe they can catch their niche audiences.

Bluetooth marketing had taken a back seat in the past as it required specialised companies to provide services, but with the launch of ROK Promoter things could change quickly.

It is estimated that the Nokia Media Network reaches over 100 million customers worldwide, allowing their advertisers to promote products and services to their target audiences on the premium mobile Internet publisher pages, operator partner portals and Nokia services pages that are all part of the network.

Click through rates for ads on the network are touted to be about 10% which is considerably higher than the average click through rate in the industry.

Nokia already has Reuters and Cosmopolitan on-board and some of the new companies that will now be included in the Nokia Media Network are:

• Agence France-Presse, France
• RTL Mobile, Germany
• Cuatro, Spain
• Grupo Prisa – Publisher of El Pais, Spain
• Unidad Editorial _ Publisher of El Mundo, Spain
• CNET, U.K.
• Telegraph Media group, U.K.
• Trinity Mirror, U.K.
• International Herald Tribune, Pan-European

Business Development Manager, of Agence France-Presse, Otman Meriche says, “Agence France-Presse has joined the Nokia Media Network because Nokia has demonstrated leadership in building a global media advertising service. Our advertisers are looking for brand-safe, high performance media, and Nokia’s understanding of the mobile channel is unrivaled.”

The world’s largest handset maker is also pushing advertisements to publishers’ mobile websites by acting as an ad platform, known as Nokia Interactive Solutions. Their services the group provides include mobile banner ads, mobile coupons, mobile websites, location finders and click to call ads.

Nokia seems to be seriously going head-to-head up against Google in their quest to dominate the mobile advertising market. Like Microsoft, they own the lion’s share of the actual medium used to access the Internet. However, Nokia might have the advantage in mobile as there isn’t any established norm and users’ habits are just being formed, unlike on the desktop where users have become creatures of habit and Microsoft’s battle is much more to change user mindsets than to develop a superior product.

This news comes in spite of the fact that the total amount of money being spent on advertising across the various forms of media, such as print, television and radio is expected to go down.

Media communications company, Carat, has estimated that the budgets allocated to online advertising will go up, by 23.7% in this fiscal year, and 18.6% next year. In other words, the Internet will account for 8.6% of the total revenue allocated to advertising this year, and 9.8% next year.

An important cause for this could be the change in loyalty of consumers, from the older forms of media to Internet and mobile. However, it is more likely that the increased level of accountability offered by search marketing makes it more attractive than other media formats, especially during times of economic uncertainty.

Another report released by StrategyEye Digital Media also indicates that in spite of the general down-sizing in advertising, Internet and social media advertising will continue to remain strong.

StrategyEye surveyed over 200 decisionmakers in dominant companies across the digital media sector. The survey found that 60% and 56% of respondents are likely to invest more in social media and mobile respectively. 87% of those surveyed felt that online advertising gave better results than other form of advertising.

While almost 62% of advertisers using traditional media plan to cut down these budgets, 52% of advertisers using online plan to increase their budgets and only 13% of them will reduce online ad budgets.

Most advertisers are of the opinion that online advertising presents a great opportunity. Many companies plan to spend more on digital media at the expense of traditional media. Mobile advertising is doing very well presently, and is expected to continue doing so. Online TV is also believed to be a great opportunity in the future.

The most surprising result of the survey, though, was the general opinion that investing in social media is perceived to be a good move, in spite of the relative reluctance shown by most brands to invest in the space.

Having a well balanced mix of online advertising, mobile advertising, online TV and social media might be the most effective strategy for 2009.

Madhouse Inc. started a contextual ad service, towards the end of 2007. They have also started full screen interstitial mobile ad products and mobile video ad products this year, which are firsts for China, and have been very well received

Ad platforms in China allow mobile ads to be targeted to users depending on their location, mobile phone brand, model, and even retail price. The services can also optimise ad versions and frequency of ads shown, clicked or downloaded by each individual customer, similar to the way Google AdWords does.

China currently boasts over 500 million mobile phone subscribers, which represents a penetration rate of under 50 percent. Most Western European nations have penetration rates of over 100 percent.

If the Chinese population adopt mobile usage in a similar manner, the potential audience for mobile advertising in just that country will overshadow Europe or North America.

Google hopes to gain better insights into how users interact with mobile video advertising. Advertisers will be able to use this as a new medium to promote their brand and expand their audience to target the millions of users that access YouTube on their mobiles regularly.

This move will be beneficial for both content producers as well as users, since content producers will be able to use this facility as a means of generating revenue, which will in turn allow publishers to make more content available for free, thereby bringing down costs for users who wish to access videos on their mobiles.

Product Marketing Manager for YouTube, Christine Tsai, says, “This is our first step, in testing mobile advertising for YouTube – it will give you a new way to interact with content on the go, while allowing us to learn.”

Video ads on YouTube are currently available in two formats – InVideo ads and placement targeted ads. Additionally, advertisers can create branded channels on YouTube and promote videos via click-to-play ads. It is not clear at present which formats will be made available when the mobile video advertising service goes live for all YouTube advertisers.

At present they will have offices in London and Boston.

Vice President and Head of Mobile Advertising for Nokia, Mike Baker says, “We want to be a catalyst, in the mobile advertising ecosystem. It is seen as somewhat of a black art, practiced in a cottage-industry fashion.”

He further explains that with several mobile ad technologies now available, discussions about reach and measurement are no longer relevant, but rather it is creativity (or the lack of it) that is responsible for holding back the medium.

This move is expected to bring mobile advertising out of the shadows and into the main stream, and thus turn it into a full-fledged marketing medium.

This program will be aimed at integrating various mobile advertising formats, thus improving customer engagement. Through this programme advertisers will be able to plan and execute campaigns, with their target audience in mind, and they will also be able to measure their campaign’s effectiveness.

Several companies like Mobiqa, Mobile Acuity and uLocate have already signed up for this alliance. These companies are already providing facilities such as image recognition, digital coupons, mobile barcodes and location based targeting.

Through this program, it is hoped that advertisers will be able to optimise mobile advertising, as the mobile phone is a very versatile gadget and can influence customers in various ways through out the day, but at the same time it is not easy to run these campaigns due to the fragmentation in the industry.

Nokia’s efforts to streamline the industry and help advertisers reach their target audience have been appreciated by both advertisers and agencies.

Japan is of course the world’s most advanced country for mobile marketing, as about 80% of its 100 million mobile users, use mobile data services, and Japan accounts for 40% of the world’s mobile data revenue.

According to a report from Seed Planning, the market which was worth about 81 billion yen, last year, is expected to cross the 100 billion yen ($1 billion) mark, by the end of the year, i.e. a 22% growth in a span of just one year: and if this expansion continues in the same manner, it may even cross 250 billion yen by 2011.

This sudden growth spurt in the mobile advertising market, is inclusive of banner ads, affiliate advertising, paid search and mailing ads.

Affiliate advertising in particular, has crossed the 17.9 billion yen mark, which is a rise of 184% over the previous figures. This will be welcome news to the directory industry, which is of the opinion that affiliate advertising on mobiles is a good way to increase their mobile online business.

Though similar ads are available for desktops and mobiles, they may not be equally successful on both the versions. What works for one need not work for the other. For instance it has been shown that email ads have been more successful on mobiles than on PC’s.

Thus it is necessary for an advertiser to be very watchful, in order to decide which form of advertising will give him the best results on each platform.

This announcement will be good news for mobile publishers. It will eventually improve their income through automated access to various networks, thus helping to fill available inventory. The earlier practice often tied down publishers to a single network. Now they are in a position to choose whichever network offers them the best deal.

Ari Paparo, DoubleClick’s product manager says, “This integration is a great example of how DoubleClick is working with key industry players, to bring value to publishers by enhancing the liquidity of mobile display inventory. Publishers who have a tie up with DoubleClick Mobile will be able to sell mobile inventory indirectly through any of the above networks.

DoubleClick Mobile will provide details about what inventory has sold directly, what has been taken up by the ad networks and what is still available for sale. Publishers will have better income earning potential through direct and indirect sale of ads.

Paul Palmieri, President and CEO of Millenial Media, believes that the tie up with DoubleClick Mobile will allow publishers to accept ads from their own roster of leading advertisers without limiting their right to direct sales, thereby bringing more publishers into mobile advertising. Although DoubleClick is a part of Google, they have decided to remain neutral (for now) in order to benefit their publishers.

With the number of mobile Internet users increasing, publishers are naturally expected to try and use this opportunity to the best possible extent to maximise both direct and indirect sales.

A line of text with the word “[AD]” attached to the banner will identify it as an advertisement to users. Google is not the first ad platform, nor the first search provider to offer this format of advertising. Yahoo!, Microsoft’s Screen Tonic, AOL’s Third Screen Media and AdMob already provide mobile display ads.

AdWords, though, is the only integrated platform offering mobile display advertising alongside a host of other formats. Moreover, it is not too late for Google to enter this market, as mobile Internet usage is still not very widespread and advertisers are still testing the waters.

Mobile image ads on AdWords are currently only offered on a pay per click basis and not on the CPM basis where advertisers pay for ad impressions. Mobile text ads are also available on a pay per phonecall basis, but this option is not enabled for mobile display ads.

The mobile image ads are similar in principle to ads on the content network for PC users, but are smaller in size, in order to be accommodated on the mobile screen, and will run on mobile content network. The ads can be in JPEG, GIF or PNG format and will be in the following sizes:

• 305 x 64 Banner (3k max)
• 215 x 34 Banner (2k max)
• 192 x 53 Banner (2k max)
• 167 x 30 Banner (2k max)

Keywords will be used to contextually target the sites in the mobile content network. Google will only show one image ad per mobile page. Publishers will be allowed to maximise profitability by choosing between text ads, image ads or a combination of the two. Google will then automatically run the ad that is expected to best serve the user’s purpose.

Mobile image ads are currently functional in several countries including The U.K., U.S.A., Russia, Australia, France, India, Italy and Japan. The screenshot below shows how advertisers can use the new service.

Adding image ads to Google AdWords Mobile

According to latest reports from Forrester Research, the vast majority (83%) of marketers think that mobile advertising will grow several fold in about 3 years from now, and to be able to make the most of the boom when it occurs, advertisers should start preparing themselves from now.

One of the biggest obstacles advertisers will have to deal with is the lack of awareness among the masses about mobile ads. It is reported that only about 7% of users trust mobile ads.

Advertisers will need to start analysing data on how clients use their mobiles. Prior research and data from network operators indicates that 42% of users use their mobiles for SMS, 25% for picture messages, and just about 15% use it for email, apart from making and receiving phone calls.

33% of users have come across some form of marketing on their phones, and this figure is expected to increase with time. According to data collected by Forrester, only 1% of users said that they had clicked on a banner ad, while using their mobile phones, although new arrivals on the mobile market such as Blyk have made claims of very high click through rates.

Acceptable Advertising

Marketers can use the ‘send to a friend’ feature and referral incentives to improve the acceptability of mobile ads. They can also distribute branded logos and graphics that can be used as screen savers or wall paper by customers. Using ads containing keywords that are common in that region or local language would also be a smart move.

Sponsored links are prefered over ads that appear while the page is loading, as most users find the latter to be quite tiresome. Marketers can also put in pre-roll ads before mobile video clips and games, as this seems to be the most acceptable video ad format on mobile. Advertisers must remember that it is extremely important to keep their ads short and sweet – preferably under 15 seconds.

It is also necessary to consider that the size of the mobile screen is small in this case and users make use of the mobile to collect information while on the move. As of now, only 23% of mobile users feel that accessing the web through their mobiles is a pleasant experience. Advertisers should use fast-loading content and use only miniature versions of their regular sites on mobiles.

Ads run before and after videos on the service. While Sony BMG provides the music, Rhythm New Media is in charge of selling and serving the ads. The music video service was officially launched on the 31st of March. According to 3, the response to their free-to-access mobile video scheme has been excellent, with about 1 million users (25% of their clientele) signing up for the service by October 2007.

Signing up for free ad-funded music videos on 3 is quite simple. When a subscriber wants to start using this facility, he/she needs to simply visit the 3 music page, select the ‘opt-in’ option on the mobile screen, enter their age and gender.

Users can browse to select videos. A short pre-roll ad gets displayed before the video plays, followed by the music video the users selected and after that a post-roll ad gets played. In order to encourage customers to use this service without fear of exorbitant data charges being levied on them the word ‘FREE’ is prominently displayed next to each link.

Ads are shown to suit the demographic profile of the user according to the gender and age group they specified when opting into the service. Hence different users may see different ads before and after the same video. In order to check the efficacy of the system, a special link is provided on the main page for viewers who may be interested in participating in a survey that asks users of the service what brands they think they have recently seen being advertised on their mobile, what ads they have seen and the main message of an ad that they were shown.

Responses to the service have been very encouraging, with viewers viewing 3 videos per day on an average. 25% of them had spontaneous ad recall and 75% reported total message recall. 95% of users are happy with this service. Some top brands like Microsoft, Unilever Lynx, Nivea and Paramount pictures have already advertised through this format.

3 Official Press Release

At present, data charges from mobile search far exceed the income generated from advertising. However, this trend is changing rapidly as more and more operators offer flat rate tariffs and all you can eat data packages. As operators bring down their walled gardens, more content owners and developers will be able to take advantage of the market, eventually attracting more consumers.

Juniper Research‘s estimate of $4.8 billion by 2013 may seem very far off at present, given that last year global mobile search advertising brought in less than $100 million.

Google has, however, reported a 20% jump in mobile search usage in recent months, owing to the improved user experience offered by the search application on handsets and improved handset design, as well as flat-rate data tariffs.

40% of the money spent on mobile ads is expected to be earmarked for local search ads, according to the report from Juniper Research. This too seems unlikely at present, given the recent doubts cast over the actual popularity of mobile local search.

However, current trends could change if application developers and search providers create a more compelling proposition for consumers, who would then be more inclined to take advantage of the benefits of geo-specific services and advertising.

China and the Far East are expected to be the main revenue generating regions, followed by Western Europe and North America, in that order. Current trends in China, India and the Far East definitely point towards this prediction coming through. The world’s largest mobile operator is China Mobile, followed by Vodafone and then China Unicom. These volumes will naturally attract more advertiser dollars.

Google CEO Eric Schmidt has repeatedly spoken about their plans to expand the AdWords mobile advertising programme. Google has already forged partnerships with the leading manufacturers like Nokia and BlackBerry as well as the largest operators including China Mobile and Vodafone. Yahoo! has similar tie ups with T-Mobile and Hutchison’s 3.

At the end of the day, the success of the mobile search industry rests in the hands of the consumer. Consumers will decide whether they will adopt the mobile Internet at the rate analysts are predicting and whether they will react to mobile search advertising as receptively as they do on the wired Internet.

The findings are based on a study of over 22,000 mobile users, carried out in the last quarter of 2007. The results of the report indicate that:

• The number of consumers who remembered seeing mobile ads has increased 38% between the 2nd and 4th quarters of 2007.
• Teenagers are far more likely to recall mobile ads. Asians and African Americans are more likely to recall these ads.
• SMS text messaging is the most popular form of ad response, and was used by 26% of the users, while click-to-call was used by 9% of people.
• 32% of those studied sid they were willing to accept mobile advertising if it could lower their mobile bills, 13% would accept mobile advertising if it improved the media content available amd 14% were open to mobile advertising if it would be relevant to them.
• 23% of users expect that mobile advertising will increase in the near future.

While advertisers continue to look for ways to connect with users through their mobile devices, the quest for acceptable mobile advertising is not complete. Only 10% of the users surveyed found mobile advertising acceptable.

As of now there is no consistent yardstick to measure the performance of mobile ads and this leads to advertisers feeling as if they were fumbling in the dark. Google, Microsoft and Yahoo! have launched a number of services for mobile and programs to enable marketers to place ads on mobiles. This can only mean that the mobile ad market is set to take off in a very big way and a lot of money is at stake here.

Read the full press release from Nielsen

T-Mobile + Yahoo!

T-Mobile’s deal with Google to provide search to their customers was one of the first of its kind when they launched their Web ‘n’ Walk service. Today that partnership has been terminated in favour of a new deal forged with Yahoo! Beginning in March, T-Mobile customers in 11 European countries will see Yahoo!’s mobile oneSearch by default on their phones.

Official press release: Yahoo! and T-Mobile Partnership

“T-Mobile’s decision to work with Yahoo! is a clear demonstration of the strength of our industry-leading mobile search service and our ability to work with partners to give consumers the best possible mobile Internet experience,” says Marco Boerries, executive vice president, Connected Life, Yahoo! Inc.

Nokia + Google

Nokia Search, the new facility powered by Google will be launched on Nokia’s N96, N78, Navigator 6210 and classic 6220 models in a few select countries. Eventually Nokia plans to make this service available in over 100 countries and it will run in 42 different languages.

Official press release: Google and Nokia team up on search

The Google search box is already available on Nokia Internet Tablets and Nokia also supports Google’s YouTube videos on their N95 8GB model. This latest deal between the two companies will enable written and oral search services with document and photo sharing facility through audio and video applications. It will also provide Internet navigation and online music. In other words, it will allow users to browse around, access maps, messages etc. through just a click on their mobile phones.

Google VP Vic Gundotra says, “Google search combined with the high quality applications on Nokia devices (will) help make information available to Nokia device users wherever they are and provide an excellent overall experience.”

Digging Deeper

On the surface this might seem like everyday business… winning some clients, and losing some to the competition. However, considering what’s at stake here, the ramifications are much, much deeper.

T-Mobile, like most UK operators considers Google to be a serious threat to their future revenue streams. All operators want a large slice of the mobile advertising pie. Google has played hard ball, and severed a few relationships along the way. T-Mobile’s decision to drop Google and partner with Yahoo! has likely little to do with Yahoo!’s superior mobile search product offering and more to do with a strategic move to decrease Google’s dominance in mobile.

Nokia has been debating about its mobile search strategy for a while now. They have considered launching their own search facility within their phones, partnering with Google, or using a white label mobile search provider. This announcement most likely indicates that in spite of the fact that the two companies are rivals in many ways (Nokia’s S60 software competes with Google’s Android platform), the world’s largest handset manufacturer has accepted the fact that they could never develop as good a search service as Google, and if they tried to compete with Google’s brand recognition in search, they would most likely lose.

Forging a relationship with Google allows Nokia to tap into the mobile search market rather than ending up being completely excluded from it.

In return, Google could potentially gain direct access to 40% of worldwide mobile users and 50% of the Smartphone users via their handsets.

This means that even the T-Mobile customers who would have otherwise no longer seen Google search, might once again see it in the near future on their Nokia phone itself without even having to access the operator portal. Nokia and Google’s deal could thereby cut off operators like T-Mobile and competitors like Yahoo! completely. Few tears are likely being shed at Google for the loss of the T-Mobile contract, in the face of this potentially huge new opportunity.

The UK is an important advertising market, and most of the big mobile providers operate there. The initial testing of this project will therefore be carried out in the UK. The aim is to set up a television-style rating system for mobile ads. The working group will set out a range of metrics to decipher exactly who the mobile audience is and what their areas of interest are. The group will also collect and deliver information from the UK operators to analyze the feasibility of the measurement system.

Advertisers will benefit from this project as it will help in judging the effectiveness of mobile ads. So far the lack of availability of concrete data backing mobile advertising has been a major stumbling block, as advertisers obviously want to know whether or not their ads are reaching their target audience.

Providing good quality data has been difficult so far because mobile advertising is a relatively new field, and operators still do not know exactly what data is required by the channels and how the relevant data can be collected and disbursed while maintaining client confidentiality.

Information collected as a result of this initiative will have to be made available across different operators. The data may also need to be audited by a centralized body to ensure client privacy is not breached. The GSMA, which represents over 700 companies across 218 countries, is ideally placed to lead such a project and should be capable of uniting the normally rival organisations.

Rob Conway, CEO of GSMA says, “The working group and the GSMA facilitate crucial engagement between mobile operators, advertisers and agencies, to help ensure that mobile advertising realizes its full potential for the benefit of all players in the ecosystem.”

While most see this as a positive step forward for the mobile telecoms industry, Julien Theys at Screen Digest thinks this is a “defensive strategy” by the telecom companies to one-up Google.

According to eMarketer the mobile advertising industry will rise from $i.5 billion in 2006 to $12 billion by 2011. Phil Chapman, director of marketing T-mobile UK, says “The power of the mobile as a marketing tool can only be realized if advertisers can clearly see and understand the benefits compared to traditional media.”

Read the official press release by the GSMA

The results of the “Wave 8″ market survey by Advertiser Perceptions bring a mixture of good and bad news for the mobile advertising industry. About 55 percent of marketers plan to increase their budgets on mobile spending in the next 6 months, indicating that there is a healthy level of enthusiasm in the market.

However, less than half the participants in the survey, consider ‘interactivity’, which is a strength of mobile advertising, to be an important criterion when deciding their budgets for advertising. On the other hand, these advertisers consider ‘reach’, which is a weak point of mobile advertising, to be the number one criteria.

Mobile Internet usage needs to increase and attain levels comparable to other forms of media before platforms and publishers can expect advertisers to invest substantial sums in this medium. Among other things, mobile companies will have to facilitate cross-operator inventory, and a consistent audience measurement system to lure advertisers.

Growth Predictions

Analysts and industry leaders seem unabashed about their enthusiasm for the future of mobile advertising. Sterling Market Intelligence forecast mobile advertising revenues will reach $5.08 billion in North America and Western Europe by 2012. Thomson Financial predict Google’s 2009 mobile ad revenue alone will reach $21.31 billion. Gartner predict that the worldwide mobile advertising market will grow from $895 million in 2007 to $14.6 billion in 2011, while the Kelsey Group forecast that the US mobile ad market will grow from $33.2 million to $1.4 billion in 2012. Forrester are the most conservative, predicting less than $1 billion in mobile ad revenue by 2012.

In brief the results of the Wave 8 report show

• 70% of mobile advertisers use text messaging
• 31% of advertisers use video ads
• 36% of mobile marketers use mobile search
• 45% say they intend to start mobile search in the next 6 months

Google’s Optimism

According to eMarketer there are 405 million mobile internet users and the figure is likely to double in just about 4 years. This huge potential market and its steady growth is what fuels Google’s continuing desire to rule the mobile ad space. They are obviously relying heavily on mobile to drive a chunk of their future growth. This would explain why Google CEO Eric Schmidt dismissed Forrester‘s conservative predictions for the mobile ad market and said “(The mobile Web) is the recreation of the Internet, it’s the recreation of the PC story and it is before us — and it is very likely it will happen in the next year.”

Blyk’s business plan is based on mobile display advertising. This ad supported system targets youngsters aged 16-24 in the UK. Subscribers of the Blyk network get free mobile call minutes and messaging in return for viewing six advertisements that they receive daily. The ads are highly targeted, based on selections made by the user at the time of subscription. Users of the Blyk network therefore only receive ads that they have opted-in for and are likely to be interested in.

This kind of advertising works because the users know what they are opting in for. Moreover, all the ads are sent according to individual preferences, which means the subscriber is more likely to be interested in finding out more about the products and services being advertised. The novelty factor and the fact that subscribers are compelled to view the ads in order to receive their free mobile minutes probably helps improve click through rates as well.

Do the privacy pundits approve?

The advertising system employed by Blyk should not ordinarily be perceived as obtrusive advertising because all the subscribers know what they are getting into. The choice is theirs, whether or not to opt in to use the operator, in the first place, and also to choose the products and services they would like to see ads about.

The future for ad-funded MVNOs

Early results seem to show that the concept of an ad-funded MVNO has is backed by a viable business plan. Advertisers will definitely be interested in purchasing ad inventory if these high click through rates can be sustained. The 16-24 mobile market is also notriously fickle, and an operator that can tie these subscribers down will definitely be able to attract top advertising budgets.

The next challenge lies in convincing not only youngsters to sign up but also professionals and middle-aged users who have higher spending power. If the service can be marketed well, then Blyk could could be a trendsetter and spell a bright future for ad-funded mobile networks as well as mobile advertising.

The new service is called Snap.Send.Get. As the name suggests, consumers can use their mobile handset to capture a photograph of a brand that interests them and send the picture to SnapTell via MMS. SnapTell use an image matching algorithm to compare the received picture with a set of brand images already stored in their database. On recognition of the image, SnapTell sends across image related content to the consumer. This information may be in the form of related WAP links, videos, games or ring tones.

Turning Every Mobile Camera into a Marketing Tool

Any mobile phone with a camera can be used with SnapTell, irrespective of the optical resolution. The subject of the photograph can range from logos, posters, billboards, magazine print ads, product packaging and even bottles and branded cans. Users don’t even need to install additional software. The Snap.Send.Get algorithm employs sophisticated text extraction technology to recognise text in the image and uses the extracted text to search for relevant information.

Gautam Bhargava, Co-founder and CEO of SnapTell believes that Snap.Send.Get will enable brands to reach out to consumers who are on the go. According to Gautam, “The Snap.Send.Get solution simply uses existing packaging or collateral materials to create a personalized marketing experience that is fun and easy-to-use for the consumer.”

SnapTell have also announced a partnership with mobile’s content distribution services/technology provider iLoop. iLoop will offer SnapTell’s mobile marketing service to clients using their mFinity platform.

Will It Really Work?

While the premise of the service sounds good, it faces two major obstacles:

1. It relies on consumers sending MMS messages, which is more expensive than SMS. The returned information would therefore need to be really special in order to justify the cost of sending an MMS message.
2. It is untested in the real world – if consumers actually start sending random product logos or poor quality photographs with multiple subjects and hope to get back information, there is a good chance that the service will not work quite as well, leading to consumers getting frustrated with the brand.

If, on the other hand, the product does improve on the drawbacks of its predecessor, Qode, Snap.Send.Get could create an effective new means for brands to interact with consumers at various stages of the buying cycle.