Mobile Search Ad Growth Stokes Google-Microsoft Fires

Microsoft will employ a "flanking strategy" to try to capture a broad swath of the mobile search ad market.

The booming mobile search advertising will grow 112 percent within five years, making it imperative for market leader Google to take steps to defend itself against a search-hungry Microsoft, according to an analyst from The Kelsey Group.

The slowdown in traditional search engine growth is one of the reasons mobile search advertising sales will balloon from $33.2 million this year to $1.4 billion by 2012, said analyst Matt Booth.

Booth said slower growth in traditional top-line sales will force Google, Microsoft and Yahoo to attack the mobile ad market to protect their valuations.

Moreover, Googles ad overhang, in which the search giant has billed advertisers for ads even when there isnt enough traffic to clear them all, is between $1 billion and $2 billion, he said. Google is likely looking to the mobile space to clean its ad plate, with rumors of a Google phone swirling and the companys pledge to bid $4.6 billion on 700 MHz wireless spectrum.


Read more here about rumors of a Google phone.

"If Google had a ton more traffic through mobile [devices], could it deploy paid links. All of a sudden, it would have a readily monetize-able platform and it could clear out some of that ad overhang," Booth said.

Officials at Google, based in Mountain View, Calif., declined to comment, but the growth potential will put more pressure on Google to defend its turf from Microsoft and others looking to capture as much of this new Internet advertising frontier as possible.

Booth said Microsoft, of Redmond, Wash., will likely employ a "flanking strategy" using mobile to catch Google in the search market.

Likely moves include bundling assets from its purchase of VOIP (voice over Internet Protocol) provider Tellme Networks with MSN products and services, and deep partnerships with companies like AT&T and Verizon.


To read more about Microsoft bid to acquire Tellme Networks, click here.

Microsoft has also acquired ScreenTonic, which serves text and display ads to mobile phones and devices, and will likely make this a central piece of its platform.

Microsoft refused to detail its future moves, but spokesperson Whitney Burk told eWEEK, "We firmly believe that mobile advertising will be a strategic market opportunity in the coming months and years, and are therefore committed to furthering our investments in this space."

Burk added that through ScreenTonic, Microsoft is currently serving ads for more than 200 mobile advertisers and has sold more than 1.5 billion mobile ad impressions.

Should Microsoft attain massive mobile share, it could gradually push deeper into search, Booth said, noting that as Googles search share in Europe has grown, so has its mobile market share.

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