Here’s How Google Relearned Advertising

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The difficulties faced by online businesses to find successful methods of mobile advertising is a well-known, often-repeated saga: the fat-fingered effect leads to accidental clicks, full-screen advertisements do not translate well to mobile devices, and advertisers have problems tracking the effectiveness of their advertisements.

Advertisers even pay less for mobile ads than for those online. The $2.6 billion advertisers are projected to spend on phone and tablet advertisements this year represents less than 2 percent of the amount spent on ads overall. Even though users click on more mobile ads than on desktop ads, it is a common industry belief that consumers are less likely to make purchases via mobile devices.

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However, companies must find a way to make mobile advertisements profitable because more and more consumers access the Internet and applications using mobile phones and tablet devices. Increasingly, advertisers are searching for new methods of effective mobile ads and as a result, developers have employed location tracking, click-to-call icons, calendar alerts, and directive maps to tailor ads to mobile devices.

MoneyGoogle (NASDAQ:GOOG), which already dominates advertising online, has become a leader in mobile advertising as well, earning 56 percent of all mobile ad dollars and 96 percent of mobile search ad dollars. The company has had particular success with its click-to-call icon. The icon appears next to individual results on its search engine and allows users to directly follow through on an ad. This means that Google can track the effectiveness of those advertisements.

“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, to the New York Times. “What does that user want when she’s sitting in a cafe or walking down the street?”

Google is not the only company to be profiting from mobile ads. Even though Facebook’s (NASDAQ:FB) stock lost half of its value because investors feared it could not make enough money on its mobile users, its third quarter earnings report revealed that the company earned $150 million from mobile ads, accounting for 14 percent of its total revenue. Pandora (NYSE:P) has had similar success, earning 58 percent of its second-quarter revenue from mobile ads.

In addition, mobile ad networks including Millennial Media (NYSE:MM), Google’s AdMob, and Apple’s (NASDAQ:AAPL) iAd, have grown into thriving businesses.

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