Yahoo! steps up attack on mobile advertising - and beyond

Eden Zoller, Principal Analyst

Google's moves in the mobile market tend to grab the headlines, particularly with the intense speculation around a rumoured Google phone. All this noise makes it hard to hear Yahoo!, which means its role and progress in the mobile market are often underestimated. This is a mistake. In the last few months alone Yahoo! has made a string of important announcements relating to mobile search and other services in the mobile market.

Yahoo! expands its mobile ads inventory

On 27 March 2007 the company announced Yahoo! Mobile Publisher Services, a set of services designed to enable publishers to increase the discovery, distribution and monetisation of their content on mobile phones. The new services that publishers will have access to are the Yahoo! Mobile Ad Network, Mobile Content Engine, Mobile Media Directory and Mobile Site Submit.

Yahoo! Mobile Publisher Services is the latest in a string of initiatives around mobile advertising that show how seriously Yahoo! takes this market and underscore the fact that it aims to be the premier player in this space. This is no mean feat - the mobile advertising market may be immature but it is becoming very competitive with a raft of companies jockeying for position. This includes online rivals like Google and MSN but also a large number of respected mobile specialists, many of them mobile search specialists such as Modeo and Jumptap.

But it's not the only one

Yahoo! is not first off the block with a mobile advertising network. AdMob and Third Screen Media already offer services of this kind, and in early March Nokia announced intentions to enter the field. Yahoo! has launched its publisher network with only three partners, which is very modest and does not provide a large collective inventory. But the partners themselves are a good start. They comprise MobiTV, which provides a mobile TV platform to several US operators including Verizon and Sprint plus Orange in the UK; Opera, one of the leading providers of web browsers for mobile devices; and go2, a location-enabled mobile content network in the US. The first advertisements will go live in the second quarter of 2007. Yahoo! plans to expand the number of partners in the coming months.

Yahoo! is being very ambitious and will face strong competition in the mobile advertising market, which is still very much up for grabs. Google tends to be viewed as the lead contender in terms of online brands moving into mobile advertising, mainly because of the huge clout carried by its brand among both consumers and the advertising community. However, we think it unwise to underestimate Yahoo! The mobile publisher advertising network should be viewed alongside Yahoo!'s other activities in this space, which are ramping up quickly.

Yahoo! pushes properties through devices

Yahoo! recently announced a version of Yahoo! Go for Mobile 2.0 available for Windows Mobile based devices, and, more significantly, it announced oneSearch. This search feature was originally part of the Yahoo! Go interface but is now being made available to a huge range of devices, around 85% of mobile phones in the US according to Yahoo! oneSearch will launch first in this market, followed by Europe and elsewhere in the second half of 2007. The initial response to oneSearch from industry insiders suggests it is good, although we have not tested it ourselves. It links strongly to location and is designed to be very easy to use. It also has a 'dare to compare' feature that challenges users to compare oneSearch results against those from Google Mobile Search. You can't get more explicit than that.

Yahoo!'s focus on devices raises questions over its direction in terms of partnerships with mobile operators. Yahoo! does have relationships with operators, but not many, and the latest with Vodafone seems short and light. It is focused on display but only has an exclusivity run of six months. The current focus on pushing out properties at the device level plays to a scenario where operators will be marginalised. They will of course benefit from the traffic generated by people using Yahoo! search and accessing Yahoo! content, but they could see their own premium content bypassed and will certainly not benefit from advertising revenues. Of course, one way to avoid this would be for operators to become part of the Yahoo! mobile adverting publisher network, where Yahoo! calls the shots.

Eden is a Principal Analyst with Ovum's consumer group practice. A key focus is strategic analysis of the wireless market, with particular expertise in enhanced content and messaging services, mobile marketing and next-generation device/platforms.