Google Set for Richer Advertising on Smartphones

Latest Move Suggests High-End Phones Key for Mobile Ad Dollars

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SAN FRANCISCO ( -- Google's not only betting on display advertising as a big growth area in the PC space but also in the mobile space. And it knows when it comes to mobile ads, not all phones are created equal. That's why the search giant announced today it would help mobile publishers serve richer ads to high-end smartphone users.

While high-end smartphone users make up a small fraction of the cellphone-toting population, they tend to be more engaged, making them all the more valuable to advertisers.
While high-end smartphone users make up a small fraction of the cellphone-toting population, they tend to be more engaged, making them all the more valuable to advertisers.
The Mountain View, Calif-based company's latest mobile effort gives publishers a way to run bigger, more dynamic Google ads to users of smartphones equipped with HTML-capable browsers. Until now, mobile publishers ran basic text ads seen by all its site visitors, regardless of whether they browsed with conventional WAP phones or smartphones. Now, ads served to the iPhone, Palm Pre and Android-based phones can support images, more characters and other features that make them richer and more dynamic.

Google's foray into mobile has largely been defined by its investment in high-end smartphones, most notably its high-profile lead in the development of Android, which gives the company a seat at the table to ensure the mobile operating system powering smartphones can optimally support advertising. A few months ago, Google introduced new advertising units that can be embedded inside mobile apps, and last year it let advertisers show their desktop search ads on smartphones without the need for special mobile landing pages. (Mobile-specific landing pages often accommodate for the smaller screen size and reduced functionality of regular cellphones.)

"Google is seeing increasing search volumes from mobile, and smartphones in particular," said Greg Sterling, an independent search analyst. "It is trying to get ahead of the curve with these initiatives so when [mobile advertising] becomes mainstream, Google will be one of the major players, and display is a key growth area for Google."

The richer ads are also likely to outperform their text cousins. The company's announcement comes as Adobe Systems is readying a new version of a Flash player that will run on smartphones, except for the iPhone, that should pave the way for more interactive and multimedia mobile web content. The software's public beta test is expected occur between now and early 2010.

Yet by sheer numbers, smartphone users shouldn't be getting all this attention, because they're used by well below 20% of U.S. wireless subscribers. High-end smartphone users, by Google's definition, make up an even smaller fraction of the cellphone-toting population, as these include only the iPhone, Palm Pre and Android-based phones -- essentially those that can surf the web with HTML browsers.

Yet because features such as HTML-enabled browsers simulate desktop PCs, and other functions that deliver a great user experience, high-end smartphone users tend to be more engaged, making them all the more valuable to advertisers. A study by Rubicon Consulting earlier this year found that iPhone users were most interested in browsing the web, followed closely by using e-mail. Google's own research finds that people do 50 times more Google searches with these devices compared to older, conventional phones.

Moreover, smartphones are poised to become increasingly common: While the overall mobile handset market is expected to contract this year, demand for smartphones is expected to rise at least 10% in 2009 by some estimates.

Google wants to reach people on the web, regardless if it's access from the PC or the phone, and last week it announced a redesigned search experience that marries desktop and mobile. Users can type their points of interest from Google Maps on the PC, then bookmark, or "star," them. When they're on the go, they sign-in to Google from their phones, and when they hit the "local" tab, their starred places pop up. This makes looking up addresses and phone numbers easier and Google suggested this feature could be handy when planning road trips or vacations as users simply mark the places they're interested in on their PCs and call them up later on their phones.

Separately, Google has synced the desktop and mobile search histories of its users. By logging into their Google accounts, people can access their past searches, eliminating the need to type the entire search string.

"These are simple changes but they have the capacity to reinforce Google's usage," Mr. Sterling said. "I'm going to keep using this because it already has my history. It's convenient."

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