• by Mark Walsh  @markfwal, June 23, 2011

In the year since Google closed its $750 million acquisition of mobile ad network AdMob, Android has become the largest mobile operating system globally. Google disclosed that its mobile operations were generating more than $1 billion on an annualized basis. In April, AdMob hit 2.7 billion ad requests a day, more than tripling in the last year. The ad network itself spans 80,000 sites and apps, up from 50,000 in January.

Online Media Daily caught up with Jason Spero, director, mobile, Americas at Google, to discuss Google's mobile ad business, the integration with AdMob and remaining hurdles to expansion of mobile advertising. Spero, who oversees mobile display and search advertising for the Americas at Google, was previously vice president and general manager, North America at AdMob.

OMD: Google has made mobile optimization something of a cause. Do you see that as one of the main obstacles to mobile advertising growing faster?

Spero: Growth has been phenomenal, but there's sort of a broad readiness issue we're bumping into on different fronts. The big categories would be the advertiser landing pages, ad-serving and tracking as a second bucket, and managing fragmentation as a third. I'm amazed by how the industry has grown, but these are absolutely critical things for taking mobile to where everybody expects it to go.

We're not talking about spending a lot of money. This could be any retailer that just wants to be found in search, or any product. Basically, people are searching in every category in their mobile phone, and when they find particular things, they're looking for, they're engaging with it. Businesses -- whether that's the local movie theater or a massive national brand -- need to understand what customers want on their mobile phone, but many are not yet in position with a core asset.

OMD: How is Google trying to change that?

Spero: Making sure we have the right messages and creating the right benchmarking and trafficking tools. Google is frankly going house to house, talking to all of Google's advertisers, as well as doing marketing programs to educate people about the need for investing in mobile properties. This is the big issue facing our industry for the next year.

Of Google's top 1,000 customers, we found 79% were not mobile-ready -- did not have a mobile optimized Web site. That's four out of five, right? Google is going out and showing people what good sites look like, and what PC sites look like on mobile phones. [We're} helping them understand just how powerful it is when you build a simple, engaging property for the mobile phone.

OMD: How has AdMob been integrated into Google's ad infrastructure in the last year?

Spero: AdMob had a bunch of display assets and a bunch of targeting techniques, but now we've been integrating those with the Google platform. Google has a lot of investment in display if you talk about DoubleClick and all the integration with the core AdWords and AdSense systems. In the last nine months, we've been putting together the greatest hits of the Google display network and the AdMob product. We've been porting AdMob over to the Google stack.

Where we think we'll end up is in a place where a marketer gets a lot of the mobile-specific ad formats and targeting AdMob was known for -- all deeply integrated with Google, ad serving and analytics. Two or three weeks ago, we announced some new formats that weren't available previously -- new formats for tablets.

There's also a huge base of people out there who are already using DART for Publishers or DART for Advertisers, and we've announced some things about how DFP now integrates the AdMob format. Publishers that want to allow their sales teams to sell mobile formats can now leverage Google/AdMob formats for their own sales organizations.

OMD: How does Google handle mobile ad sales?

Spero: There's an Americas sales team that's verticalized to understand the needs of each customer base. The big Google sales org is now talking to customers about their needs around mobile search, mobile display and local. To the extent that customers want to have introductory conversations, that's a couple thousand people who are now trained and actively talking about mobile. If those customers want to go deep, about where things are going in mobile and how they take advantage of it ...we've got a team of mobile specialists.

OMD: How would you characterize where agencies are at in relation to mobile?

Spero: There are agencies that have some technological investment and those that don't. There is a mix of people trying to take the specialist approach, whether that's a closely held specialist team or an arms-length partner or another agency under the holding company. And then the other model is trying to mix the mobile expertise in with the account team.

The traditional, independent, built-for-mobile agency played an important part in the early years in mobile, and they're still there, and some of them are very strong. But the big agency holding companies' names have caught up very quickly. I've been impressed with the investment some of the agencies have made in their ability to build their own media mix models.

OMD: How has growth of Android impacted mobile advertising for Google?

Spero: Every time somebody turns in a low-level feature phone for a smartphone of any kind, their usage patterns go up dramatically. Loosely, they become more addressable by a marketing community. That is a trend not specific to Android or iOS or Windows Phone. People are getting more of these phones as the prices come down.

The role that Android has played in the market is to create a very viable second platform and, in a lot of cases, to provide a great first option for people who want to get a smartphone. That's very good for advertising.

As a media guy, I get to be agnostic. I serve lots of ads on Nokia devices and Windows phones, and on WebOS Palm Pre. For me, I want innovation. I want everybody who has a phone they bought more than a year ago to turn it in for one with a better processor. That means I can do a lot more with the media.