Say you are in a strange city and need a hotel for the night. You pull
out your phone, search for hotels on Google and see a nearby one listed
at the top of the rankings, with a little phone icon that says, "Call."
You tap it, reach the hotel and ask for a room.And just like that,
Google made money. That icon was a so-called click-to-call ad, and the
hotel paid Google for it when you called.
As more of us have
access to the Internet and apps through our cellphones and tablets,
advertisers are looking for new ways to reach us there.
Some
mobile ads remain just miniature versions of ads on Web sites, an echo
of the early days of the Internet, when advertisers essentially slapped
print ads online. But increasingly, advertisers are tailoring ads to
phones by taking advantage of elements like their ability to track
location, make a call, show maps with directions and add calendar
alerts.
The stakes are significant for an industry that is still
finding its way in the mobile world. Advertisers will spend a relatively
small amount of money on ads on phones and tablets this year $2.6
billion, according to eMarketer, less than 2 percent of the amount they
will spend over all. Yet that is more than triple what they spent in
2010.
"An ever-growing percentage of our ad buy is mobile because
that's where the consumer is," said Chris McCann, president of
1-800-Flowers.com, which has run mobile ads urging people to call or
walk into a nearby store. "It's the future for us."
Coming up with
ads that exploit the smaller mobile screen requires inventiveness from
many parties - advertisers; digital publishers like Google, Apple and
Facebook that sell ad space; and mobile ad networks like Millennial
Media.
"What we're trying to do is think about the on-the-go
user," said Jason Spero, leader of global mobile sales and strategy at
Google, which dominates advertising online and is far and away the
leader in mobile advertising. "What does that user want when she's
sitting in a cafe or walking down the street?"
A big challenge for
the tech companies is that advertisers pay less for mobile ads than for
those online, largely because consumers are less likely to make a
purchase on their phones. Though people click on mobile ads more than on
desktop ads, advertisers wonder whether that is because of what they
call the "fat finger effect" accidental clicks on tiny touch screens.
And
while users' actions can be tracked across Web sites online, it is hard
to know whether someone sees a cellphone ad for an offline business and
then walks in so it is difficult for advertisers to judge how
effectively they are spending their money.
As Google sells more
mobile ads, the average amount it earns from each ad has dived.
Facebook's value on Wall Street was halved on fears that it was not
making enough money on its mobile users. Apple's mobile ad network, iAd,
has been slow to gain traction.
Despite the problems, though,
there is evidence that mobile advertising is becoming a meaningful
business, and in some cases a bigger business than online advertising.
Facebook
executives said last week that in the third quarter, the company earned
$150 million from mobile ads, 14 percent of its total revenue. Pandora
reported that in the second quarter that ended in July 58 percent of its
revenue, or $59 million, came from mobile ads. Twitter executives have
said that on certain days, the social network earns a majority of its
daily revenue from mobile ads.
Mobile ad networks, which show ads
across mobile apps and Web sites, have created new and thriving
businesses. The biggest are Millennial Media, Google's AdMob and Apple's
iAd.
Google earns 56 percent of all mobile ad dollars and 96
percent of mobile search ad dollars, according to eMarketer. The company
said it is on track to earn $8 billion in the coming year from mobile
sales, which includes ads as well as apps, music and movies it sells in
its Google Play store. But the vast majority of that money comes from
ads, it said.
"Whoever does mobile best, they're going to be the
next Google, so people are asking, 'Is Google going to be the next
Google?' " said Chris Winfield, co-founder of BlueGlass Interactive, a
digital advertising agency. "It still is Google's to lose."
Google
and others have had success in taking advantage of the fact that mobile
phones know a lot more about people than desktop computers do - most
important, their location. And with a phone in hand, a customer is
probably more likely to be ready to buy something.
People
searching on a computer for jeans, for instance, most likely want to
research styles and colors, while people doing the same search on a
phone want the nearest place to buy a pair, said Mr. Spero at Google.
In
addition, Google has benefited from the fact that one main way people
use Google on phones is to search for nearby businesses, a prime source
of advertising. Thirty percent of restaurant searches and 25 percent of
movie searches are done on mobile devices, according to Google.
One
of Google's most successful mobile ad types is the click-to-call ad.
After running these ads, Starwood Hotels' mobile bookings grew 20
percent in a month.
Google also shows ads on the mobile version of
YouTube, including video ads like movie trailers before YouTube videos.
If someone watches the movie trailer, Google makes money.
The
company has also hinted that it could show ads through other services
like Google Now, which sends unprompted alerts to cellphones. It coaches
advertisers on how to do things like build mobile Web pages.
Larry
Page, Google's chief executive, told analysts this month that thinking
about mobile ads versus desktop ads is the wrong approach.
"We want a seamless experience that goes across mobile, desktop and TV, and that's what we're building," he said.
Pandora,
the Internet radio service, is second only to Google in mobile ad
revenue, according to eMarketer, which predicts it will bring in $229
million in mobile ad revenue this year from both audio and on-screen
ads.
An audio ad, for example, told Pandora listeners to tap the
screen for the location of the nearest Whole Foods and a sushi lunch
special. StubHub, the online ticket marketer, recently ran an ad on
Pandora's app. Those who clicked on it received reminders for coming
concerts to their cellphone calendars.
Gaining traction in mobile
advertising is particularly critical for Facebook; 60 percent of its
users log in on phones. But making the transition to the small screen
has been a challenge: most Facebook ads appeared on the right side of
the Web page, so there was nowhere to show them on a mobile device.
That
is one reason Facebook started running ads in the newsfeed, like
sponsored stories, which are notices that a friend likes a certain
brand. It is also starting a mobile ad network to show ads on other
cellphone apps, based on things Facebook knows about a user, such as
what they like and where they live.
Twitter has inserted ads
labeled "promoted" in its newsfeed from the beginning. On advertisers'
behalf, Twitter can show ads only to people using mobile devices, like
ads to download a mobile app.
Samsung showed an ad just to people
using its Galaxy Note device, directing them to search and download
Android apps for the phone.
Next, these companies must figure out
how to persuade advertisers to spend more than 2 percent of their
budgets on mobile devices.
"It's reminiscent of the Web in 1996,
'97," said Michael Moritz, an investor at Sequoia Capital who financed
companies like Google and LinkedIn. "People weren't interested in ads,
and prices were low. But advertisers don't have a choice. They've got to
go where audiences are."
© 2012, The New York Times News Service
After launching a slew of affordable tablets, Zync now seems to be gunning for the smartphone segment. The deal site 
Buddh International Circuit came to life, every year, the month of
October witnesses a slew of motorsport-related activity. This year has
been no different, and now Renault India has announced its arrival on
the Indian motorsport scene with the unveiling of its very own team for
the oncoming MRF Challenge season.
And that I’m afraid is all the good news we have from New Delhi, for
those of you looking forward to a season-end as exciting as the season
started. Alonso and Ferrari were half a second off-the-pace, the pace in
question being the Red Bulls RB8s of championship leader Sebastian
Vettel and Australian Mark Webber.