• by Laurie Sullivan , Staff Writer @lauriesullivan, April 4, 2011

Advertisers need to take the small mobile screen into consideration when planning paid search campaigns, as formats continue to evolve and technology improves to display and track ads. Expect technology to evolve this year to track purchase behavior, as well as link activity on mobile devices to in-store purchases.

Macquarie Capital analysts Ben Schachter and Tom White hosted a call for investors in March based on research with Efficient Frontier, the message being to update advertising industry executives on mobile search tactics and trends. Efficient Frontier's ceo David Karnstedt and business analytics director Sid Shah detailed the findings.

Karnstedt said more than 200 million mobile users on Facebook and other social media sites such as Twitter fuel the trend toward mobile consumption, as they are twice as active on mobile devices compared with desktop or laptop machines. Mobile device members are twice as active as those on the desktop. More than half of active Twitter users tweet from a mobile device. That trend will only increase with the rise in adoption of Android, iPhone and tablet devices.  

Efficient Frontier clients now contribute about 5.4 percent of all based search ad on mobile devices, up between nine and 12 times compared to a year ago. Many sites estimate that between 10 percent and 15 percent of all search traffic comes from mobile devices. About 97 percent of mobile budgets go to Google because the majority of mobile searches are done on the search engine.

Engines need to work on features on the mobile platform. If they can improve impressions, advertisers will begin spending more of their budgets on mobile. Today, the cost per click (CPC) on mobile ads trends higher, compared with traditional search campaigns, and the ROI lower - in fact, about 10 percent in mobile campaigns, compared to traditional desktop.

Shah attributes the imbalance to ROI inadequately capturing behaviors based on consumer purchase intent. Knowing this, advertisers will pay more and get less as the medium matures and grows. He says it should result in new metrics and technologies this year as advertisers double the amount spent on mobile campaigns this year. He expects CPCs to remain high as the industry attempts to determine attribution, intent behavior and new metrics.

Advertisers at retail and travel have been among the first to transfer offline media budgets into mobile to experiment in branding campaigns. Automotive and entertainment continue to experiment as well. Early estimates suggest advertisers will spend between 12 percent and 15 percent more this quarter.

Google owns 97 percent of the mobile search market and gains $50 million for each 1 percent share shift for mobile search in the U.S., according to Ben Schachter.

As for searches on Apple-related products, Schachter points to data in a recent report published by Macquarie Capital that shows while Google dominates search on the iPhone - 95 percent - about 50 percent of iPhone Google searches come from the toolbar, 42 percent from Google's home page, and less than 10 percent from Google's applications. He calls this "absolutely critical," because it shows Apple has significant influence over Google's mobile search share. Google also dominates display-ad serving on mobile devices. AdMob will run on AdX to support Google's mobile efforts for display within the next quarter, according to Karnstedt. Today, Bing and Yahoo do not have an answer to the auction-based approach for serving up ads on mobile, which gives Google a significant competitive advantage.