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.

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”.

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!

Yahoo! has now started serving ads from the Yahoo! Search Marketing system on mobile phones. These ads are served on all smart phones including iPhones and Android mobile handsets.

Ads on Yahoo! Mobile Search

The best part about this new feature for marketers and advertisers is that unlike Google AdWords, the Yahoo! Search Marketing system will not require the usual process of creating new campaigns, mining keywords and writing new ads.

Standard sponsored search ads are displayed automatically on mobile search results pages. The ads are just 2 lines long, consisting of the ad title and the display URL.

One ad is displayed at the top of the search results page and two more ads are displayed at the bottom of the page.

All advertisers will be able to reach an ever increasing audience of mobile Internet users with the introduction of this new feature.

Marketers who wish to specifically target mobile search users will also be able to continue using the Yahoo! Mobile Sponsored Search service at:

Yahoo! Mobile Sponsored Search

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.

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.

Business Week reports that Motorola has invested $50 million in their Android Social Phone project, which will be managed by Motorola-owned mobile email company, Good Technology.
Motorola will require at least 6 months before they are ready to launch their new phone. They have not even announced a name for it as yet.

The phone is expected to have a touch screen like the iPhone, and a slide out QWERTY key board like the HTC T-Mobile G1. The look, though, is expected to be on the lines of the Motorola Krave, and it is likely to be cheaper than the G1 phone, at around $150.

The G1 phone is already capable of transferring contacts from ones Gmail account into the phone. It is likely that Motorola’s Android phone may take this one step further by tieing up with Facebook and or MySpace, to enable transferring contacts from these social networks into the phone’s address book. This would also enable users to check status updates and activity streams on the phone itself. Facebook has a similar facility with the iPhone, but they require a separate app for this, which may not be necessary on Motorola’s Android.

Whether people will be really keen on getting Facebook or MySpace on their phones or not will decide the future of the Android Social phone and indirectly that of Motorola too.

Though Motorola is the third largest mobile phone manufacturer in the world, their mobile phone division has made losses to the tune of $1.9 million in the last year and is desperately in need of another success story like the RAZR. They hope the Android phone might be just the thing they need.

According to comScore, 20.8 million users in the U.S. and 4.5 million users in Europe used mobile search in the month of June 2008. This means that there has been a 68% and 38% growth of mobile search over the last year in the two regions respectively, which is phenomenal.

Google has stated in the past that they believe that mobile search would soon generate the highest advertising revenue, and they have moved accordingly to lure mobile phone users.

Presently, Google is already the default search provider for handsets by Sprint in the USA, T-Mobile in Europe and NTT DoCoMo in Japan and also for the iPhone. Their own mobile device, the Android phone, will further boost Google’s market share and revenue generation.

Yahoo! is next in popularity for mobile search and advertising services and holds about 35% of the market share in the U.S. They are the default search engine on AT&T handsets, except for the iPhone and are planning to provide some new services by the end of the year.

9.5% of mobile users in the UK use mobile search services and 9.2% of cell phone users in the U.S. do the same, and these numbers are expected to go up.

Among the main reasons for the recent growth of mobile search would be the easy availability of smartphones, better 3G penetration and the introduction of flat rate data plans.

It is reported that along with the number of users, the frequency of mobile search has also increased. comScore analyst Alistair Hill says “The number of people accessing mobile search at least once a week grew 50% in Europe, with France and Spain leading at 69 and 63 percent respectively.”

With the competition among mobile service providers increasing, Verizon is certainly in need of a good search partner, and has been talking to other providers, including Microsoft.

Google, on the other hand, is equally keen to tie up with a carrier like Verizon, as the mobile search market is expected to grow by leaps and bounds in the near future. Such a deal could help Google improve the relevance of their ads by making them more location specific.

Shares of both Venison and Google went up after the Wall Street Journal reported that the two companies were close to a deal.

Yahoo! already has a similar deal with AT&T.

How long such deals would be beneficial, remains to be seen, as, once the markets open up, it will be possible for users to use the search engine of their choice irrespective of the make and model of their handset.

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.

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.

Henceforth, mobile display ads will be shown to all Windows Live for mobile users across the U.S. U.K. France and Spain on both Windows Live Hotmail and Windows Live Messenger. The ads will have to follow guidelines set by the Mobile Marketing Association.

According to Chris Ward, Commercial Director of Microsoft Digital Advertising Solutions, the launch of Display Advertising on Windows Live Mobile is an important milestone for their business and demonstrates the progress they have made in the field.

Brian Arbogast, Corporate Vice President of Mobile Services at Microsoft says, “In today’s connected world, the mobile device is emerging as a prime opportunity for advertisers to reach their audience.” Since Europe is estimated to have over 220.5 million mobile users, mobile advertising has become a fast growing field and advertising on Windows Live Mobile platforms will help advertisers to reach target audiences at all times and places.

Paramount Motion Pictures will be among the first in the U.K. to advertise through this means. Mobile advertising on Windows Live is expected to also be available in Germany, Italy and Netherlands shortly.

Microsoft also plans to include Live Search in the mobile advertising mix, but at present, the mobile search advertising facility will be confined to the U.S. on a ‘by-invitation-only’ basis. Microsoft plans to expand the mobile search advertising service later this year.

Google’s mobile search advertising service has been live for more than a year now, giving them sufficient time to establish a solid presence in the mobile search market and gather enough data to provide a far more intelligent service than Microsoft will be able to.

The delays in incorporating technology from ScreenTonic into the Microsoft Advertising service and launching a good mobile ad product are Microsoft’s fault alone, and they are likely to pay a heavy price for it, just as they are in the Internet search market at present.

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