There continue to be conflicting views as to whether iPhone developers actually make money from ads on the iPhone. One issue is that free app developers who advertise in games end up paying on a CPC basis, in which the click takes the visitor to the App Store. But often times the actual download doesn’t take place, so the developer is left paying for clicks that don’t produce conversions, says mobile game advertising network Greystripe. Now the network is changing its ad network economics around to help developers mitigate this issue.

Greystripe is offering a $0.99 per download program available today to guarantee iPhone application developers downloads of their free apps. Of course, this comes with a catch. Greystripe is offering download program to publishers who spend a minimum of $10,000 and is being offered on a limited basis to the first 200 developers who apply. The first 100 qualifying developers who email techcrunch@greystripe.com will gain instant access to the program.

Greystripe’s says that its rich media full-screen ads generate higher click through rates and are able to generate better revenue to its publishers. Based on this, the network thinks it can run a pay per download program that works for its publishers and advertisers. Greystripe also recently introduced a guaranteed CPC program. Although Greystripe claims its rates are higher, we’ve heard they are on par with AdMob’s rates.

It’s important to note that with Google’s acquisition of AdMob, other mobile ad networks may be left scrambling. Greystripe is not only aiming to make their network for attractive, but is also trying to provide an incentive for developers who are using other ad networks to switch over. Google has high hopes for AdMob and it should certainly continue to be the leader of the pack in the future. That being said, Greystripe has been able to raised several rounds of VC funding and even got a $2 million infusion from NBC. It should be interesting to see how the smaller ad networks like Greystripe, Videogg and others fare against Google-owned AdMob.

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When Google CEO Eric Schmidt mentioned a few weeks ago that the M&A spigot is now back on at the search giant, he wasn’t talking about a trickle. Today’s announced deal to by mobile ad startup AdMob for $750 million is Google’s largest acquisition since its $3.1 billion purchase of DoubleClick in March, 2008, and its third-largest ever after the $1.65 billion YouTube acquisition in 2006.

Why such a big bet? Because Google is gunning hard to dominate mobile Web advertising and AdMob has an early foothold in the display side. By focusing on the needs of mobile app developers, AdMob has “built what is approaching a $100 million business in three years,” says Jim Goetz, the partner at Sequoia Capital who sits on AdMob’s board, referring to the annualized revenue run-rate of the company. Since AdMob splits its revenues 60/40 with publishers, that implies AdMob is on course to see $40 million of that $100 million gross. The company is also cash-flow positive, with 140 employees.

But it is more the growth potential of mobile advertising from here on out which attracted Google. “The rise of open mobile is something on everybody’s mind. I think it is the next battlefield,” ” says Richard Wong of Accel Partners, which is the other big investor behind AdMob. (The deal, combined with today’s sale of Playfish to Electronic Arts, gave Accel a $1 billion day in exits). Google is pushing for broader adoption of open mobile phones with Android, and is seeing a big jump in mobile searches across all Web phones. Even though search is expected to make up the majority of mobile ad revenues, Google needs to compete in mobile display ads as well.

In fact, this deal is so important to Google that both Larry Page and Sergey Brin personally got involved to sweet talk AdMob founder Omar Hamoui, as you’d hope they would for such a large deal. “The personal entrepreneur-to-entrepreneur dynamic was critical,” says Goetz.

AdMob already shares a lot in common with the Google culture. It splits network ad revenues with developers in a model similar to AdSense, and it focuses on the needs of mobile app developers to help put money in their pockets. The rise of the iPhone, and now Android, is creating more mobile apps and more mobile Web browsing, which in turn is creating more mobile ad inventory for AdMob to fill. In September, AdMob served up 10.2 billion ad requests across 15,000 mobile Web sites and apps. About 28 percent of those were from iPhones and iPod Touches, with Android growing fast, making up another 7 percent. And if you look at only smartphones, Apple devices accounted for 48 percent of ad requests, with Android coming in second at 17 percent.

Now, just at the point that those mobile ads are taking off, Google is getting into the game. With AdMob, it is not buying gee-whiz technology or a popular consumer destination. It is very clearly buying a future source of revenues. And Google is in a unique position to accelerate AdMob’s revenue growth by plugging it into its existing AdWords and DoubleClick systems and exposing it to the hundreds of thousands of advertisers who already use Google and might like to add mobile display ads to their campaigns.

AdMob’s current revenue run rate of $100 million is impressive, but Google’s purchase price tells us it thinks the opportunity for mobile display ads is in the billions of dollars, at the very least.

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AdMob founder Omar Hamoui sent the following letter to customers:

Today we announced that AdMob has signed a definitive agreement to be acquired by Google for $750 million. We are extremely excited about this new partnership and what it means for our advertiser, developer and publisher partners.

AdMob’s people, products and tools will continue to work to deliver successful campaigns for you and to effectively monetize your mobile traffic – no interruptions. Our product and engineering teams will keep building great products for our customers. Our sales team will keep working with our thousands of advertisers to deliver successful campaigns. Our business development team will keep working to maximize ad revenue for the more than 15,000 mobile Web sites and applications that make up AdMob’s publisher network.

After our deal closes, AdMob will work with Google to accelerate the pace of innovation in mobile and do an even better job for you. We believe this deal will benefit our advertisers, developers and publishers by:

*Increasing our investment in building innovative and engaging ad units across platforms and to further improve targeting and tracking.

*Building even more powerful relevance and optimization capabilities, and more powerful technology and tools to monetize mobile traffic.

*Increasing the effectiveness of display advertising on mobile devices by leveraging Google sales team, infrastructure and relationships.

*Improving the already high level of service and support we deliver to our advertisers, developers and publishers.

Google has written its own blog post announcing the deal, pointing out the dramatic increase they’ve seen in mobile search and app usage:

iPhone and Android users browse the Internet more often than anyone else [Morgan Stanley], contributing to Google’s 5x mobile search growth over the past two years
And a quarter of these same iPhone and Android users spend nearly 90 minutes per day using applications on their devices [AdMob]

Google has set up a website to explain the benefits of the AdMob acquisition, detailing the rapidly growing (and still very nascent) mobile advertising space. Google also created the graphic below to highlight the differences between its own mobile search ads, and the display ads AdMob shows in applications on the iPhone and other platforms.

This has been a big day for acquisitions. Earlier today we broke the story that Google is acquiring VoIP startup Gizmo5 for around $30 million in cash.

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WIth the rise of Web phones like the iPhone, Android, Blackberry, and Palm (Verizon’s CEO says that 40% of its new phone sales are such smartphones), mobile advertising promises to be a huge growth area. The Kelsey Group, a market research firm, projects that the mobile advertising market will balloon from $160 million in 2008 to $3.1 billion in 2013.

Of course, that is just an educated guess which will turn out wrong. But there is no doubt that mobile advertising will be much bigger in four years, perhaps even ten to 20 times bigger than it is today. Where will all of that mobile ad money go to? Here I think the Kelsey group is more on target. It projects that mobile search will go from 24 percent of the total mobile ad market last year to 73 percent of the much larger pie in 2013, according to a recent research note put out by Citi analyst Mark Mahaney, which is where I’m getting all of these numbers.

Display ads are projected to go from 13 percent of the total to 18 percent, while SMS ads will decline as a percentage from 63 percent to 9 percent (see charts). So once again it looks like search is going to be the big winner. No wonder Google is so focused on mobile search as one of its major sources of growth.

Think about it. Display ads take up precious real estate on your phone screen and tend to just get in the way and be an annoyance. That’s why most people don’t like them. But when you are doing a search on your phone, you are often looking for something nearby—a store, a restaurant, a dry cleaner. You are more open to ads, especially if they are relevant to your search.

Mobile search is particularly tuned for local search ads. Mahaney writes:

Given the nature of mobile devices, local queries on mobile should, over time, be greater than local queries on the desktop.

Indeed, the Kelsey Group predicts that local searches will rise from 28 percent of all mobile searches in 2008 to over 35 percent by 2013. And as a percentage of mobile search ad revenues, local search is already half. So that is a $1.27 billion market opportunity in four years just for local mobile search.

So who would you rather be: Google or some random mobile ad network shoving display ads into apps and mobile browsers?

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In the budding world of mobile advertising, whoever can control the app developers and gain access to the ad inventory on their apps will eventually win the game. Keep that in mind as you try to understand the very strange acquisition of AdWhirl by AdMob.

You see, AdMob is perhaps the largest independent mobile ad network and AdWhirl is a fast growing mobile ad exchange which allows mobile app developers to switch from AdMob to other competing mobile ad networks such as Quattro, VideoEgg, or Mobclix. Although it launched only last April, AdWhirl was quickly becoming the preferred advertising interface for many developers because they could still serve AdMob ads through it, but not be tied to AdMob if a better deal came along.

AdMob didn’t really like this so it threatened to stop supporting AdWhirl’s “mediation layer” and basically pull out of it altogether. That plan didn’t go over too well with the app developers AdMob needs to keep happy, so it quickly reversed itself and decided to delay its decision to withdraw from AdWhirl. Since it couldn’t take its toys and go home, it did the next best thing. It bought AdWhirl. Problem solved.

Except that now, who is going to trust AdMob to maintain AdWhirl as a neutral exchange rather than use it to funnel more of its own ads to developers? Or worse, to track all of the ad impression data of its competitors to improve its own ad products?

Our source who told us about the acquisition claims that AdWhirl has already been giving AdMob this data on the sly in the hopes that it would be acquired. He also claims that ” there is a lot of stuff under the covers to favor AdMob: in the code, in the data, and biased ad calls to AdMob.” The source, who thinks developers will get the short end of the stick in this deal, also seems to think that AdMob will eventually just shut AdWhirl down, blaming the other ad networks for a lack of cooperation or technical integration issues. We’ll see how that plays out.

But for now, AdWhirl still generates too many impressions for the other ad networks to simply abandon it. But that is exactly what they should do if they want to counter the combined power of Admob and AdWhirl. “I don’t understand how it remains unbiased or why other networks would want to be a part of that,” says Mobclix co-founder Sunil Verma, who has built a competing mobile ad exchange.

AdMob is trying to calm fears of bias by promising to open-source the underlying code which powers AdWhirl. But again, it is not so much the code, as how it is used that is the issue. “No matter what, AdMob will still have access to the data and it will become biased as to who gets the first ad call,” worries Mobclix’s other co-founder Krishna Subramanian. If other mobile ad networks and developers share those concerns, AdMob will have a bigger problem than it did with AdWhirl. It will lose the trust of the developers it needs to survive.

Update: AdMob CEO Omar Hamoui has given us the following response regarding the acquisition:

Our open source solution will be both for the client and the server. We anticipate there will be many independent servers run by developers, and possibly our competitors as well. Once we release the code into the community, we think it will be adopted widely.

Most developers use mediation layers for percentage based inventory allocation. This is not something that you can game or manipulate. The mediation component either fulfills the percentage allocation or not. We are committed to making this solution as open as it needs to be to make everybody comfortable. We also expect the market will hold us accountable to this course of action.

The AdWhirl team has visited our offices over the past several days as we have worked through this deal. However any claims that we have historically been sharing data with AdWhirl or manipulating how it works for our benefit is completely false.

Since the news broke we’ve been talking to developers and they agree that the key is an open and transparent solution. We expect to be held to that.

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We’ve heard from numerous sources that mobile ad network AdMob may be in the process of acquiring AdWhirl, the startup that lets iPhone developers tap into multiple ad networks. One source has even said that AdWhirl is already working out of AdMob’s offices, though we haven’t confirmed this. Update: this is confirmed

Asked on the phone whether AdWhirl has been acquired by AdMob, AdWhirl CEO Sam Yam responded, “How did you know that,” before clamming up with a “no comment.”

It’s an interesting partnership, and one that raises a few questions. AdWhirl allows developers to switch between different ad networks on the fly without having to submit a new application coded with another ad network to Apple. The service has support for five different ad networks, including AdMob, Quattro Wireless, Videoegg, Jumptap, Mobclix and Millenial Media. Mobclix has a competing iPhone exchange that AdMob is not a part of. But if AdMob and AdWhirl have a relationship, this might make the waters a bit murky for the other networks. It would be suspect to have an open platform that is owned by one of the ad networks.

The acquisition does come as a surprise, however. In June, AdMob announced its decision to cut off ad network aggregators like AdWhirl and Tapjoy, claiming it had been hearing of complaints of technical glitches related to ads served by such “ad net mediators.” The company later announced a delay in this decision in August.

UPDATE: AdMob acquired the assets of AdWhirl, according a press release issues this afternoon.

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Here are the takeaways from the July report, with some commentary of my own:

- App discovery is mostly done by perusing through the rankings on the App Store and Android Market >> not much of a surprise since it’s a centralized platform for something

- Over 90% of users who browse the application storefronts do so from their mobile devices rather than their computer >> makes sense, because that’s where they end up too, but the percentage is very high regardless

- Android and iPhone users download 9-10 new apps per month, while iPod touch users download 18 on average. Furthermore, 22% of iPod Touch owning survey respondents download more than 20 free apps a month >> I’d expect downloading behavior to be similar for both platforms, but I have no clue why iPod Touch users would be inclined to download double the amount of apps than mobile phone users. (update: commenters suggest the younger demographic of iPod Touch owners likely install more games, boosting the average)

- Over half of Android and iPhone users spend more than 30 minutes per day using apps

- 19% of Android users download at least 1 paid app per month, compared to 50% of iPhone users and 40% of iPod Touch users >> this is the key finding in the report, although it would also be helpful to correlate these statistics with app pricing and actual revenue

- Users who regularly purchase paid apps spend an average of $9 on about 5 paid apps per month

- Dividing the average amount paid per month by the average number of paid apps downloaded yields an average app purchase price of about $1.80 >> this seems rather high

If you’d extrapolate the findings on app spending, which is not without risk considering the relatively small number of users surveyed, and combine them with estimated numbers of users of the devices / platforms, you could conclude that the App Store paid market is currently nearly $200 million per month (or approximately $2.4 billion a year) in size compared to $5 million per month (or $60 million on a yearly basis) for the Android Market.

Both strike me as overstated, particularly the estimated paid market size for Apple’s App Store, so I’d wager we need a bit more deep-delving analysis before reaching such conclusions.

You can download the full report here (PDF).

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Out of 2,309 tracked applications (representing 15.1 million unique iPhone and iPod Touch users), no less than 54% are actively used by south of 1,000 persons. That’s a very long tail there, and not an economically interesting one at that. Only about 20% of the tracked apps have more than 10,000 active users, and only 5% (or 116 apps) boasts more than 100,000 active users. For the record, an active user is considered to be someone who used the app at least once in May.

Two caveats: the AdMob network evidently doesn’t cover all applications available for the platform in its entirety, and the large majority of those it tracks are free of charge. That means two things: there’s no indication that these findings can correctly be extrapolated to the entire iPhone app universe, and it’s likely the curve is less steep with paid applications (usually, you’d be more actively engaged with an app you paid for than a free app you downloaded just for testing).

The report also correctly points out the App Store ranking system feeds the success of top applications, particularly when they are featured on the Apple website in combination with getting rave reviews.

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Google is moving into the mobile ad market with AdSense for mobile apps. Over the past few months, Google has been testing both text and graphical ads with ten mobile app developers, including Shazam and Urbanspoon. Today it is opening the private beta to more developers who meet certain criteria.

These are contextual ads for iPhone and Android apps. They can be targeted by “applications, locations, categories, or keywords,” according to Google’s Mobile AdSense information page. To qualify for the public beta, the apps must be free and generate at least 100,000 pageviews per day. The program is only for iPhone or Android apps. Developers must be ready to go live with the ads in four weeks and participate for three months.

Developers with 100,000 pageviews a day is still a limited set of the top free apps, but Google is serious about competing in this market. Mobile ad startups such as AdMob and Greystripe are now officially in Google’s direct line of fire.

Google is keeping things small right now to test out different ways to target ads inside apps, but it can pull out the big guns any time it wants. It already has more advertisers than any startup ad network and thus has a clear advantage when it comes to filling up mobile ad inventory. Although it is separate now, when marketers can check mobile apps as part of their overall AdSense campaigns, there should be a lot more bidding for those mobile ad spots within iPhone and Android apps, and those mobile ad rates should go up as a consequence.

Mobile app developers are going to sign up whichever ad network can give them the highest CPMs, and will swap out the ones which can’t keep up. Already, we are seeing some jostling for position among the mobile ad network startups. AdMob just kicked out AdWhirl from showing ads within its platform. I wonder if AdMob will allow Mobile AdSense ads on its network.

Update: AdMob responds that it will work with any mobile app developer on a non-exclusive basis and that developers which have established a direct relationship with AdMob can work with competing ad networks.

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There have been questions as to whether iPhone developers can make significant revenue from ads on the iPhone, mainly because the supply of advertisers can’t keep up with the demand for iPhone apps. Others say that developers actually can make quite a bit from ads on free apps. Mobile game advertising network Greystripe is in that camp and it is launching a new CPM Protection Program designed to guarantee ad revenue to iPhone app developers.

Greystripe says that the various mobile ad networks, including competitor AdMob, are undercutting each others’ CPMs (cost per thousand impressions) when competing for advertising dollars, thus leaving iPhone app developers with lower CPMs overall. Greystripe’s CPM Protection Program offers to beat any other ad networks’ eCPM by at least 25% for 60 days.

Greystripe claims that their rates are higher because of their rich media ad formats that use a Flash ad format, giving advertisers more creative options when it comes to developing interactive ads. Another explanation for Greystripe’s higher CPMs is that they are trying to buy market share.

Greystripe’s eCPMs come in at around $1.50 to $2.00, which the company says is higher than the average CPM delivered by other networks. In a guest post written by an iPhone developer on TechCrunch, the developer reported CPMs of $0.23 with ads powered by AdMob. But this data is anecdotal and based on one developer’s circumstance. I find it hard to imagine that the CPM of $0.23 is an average for AdMob. We contacted AdMob to see what their average eCPMs are and they fall into a similar range as Greystripe’s: $1.00-2.00.

It’s clear that Greystripe is trying to provide an incentive for developers who are using other ad networks to switch over (the program requires that developers have used another ad network). But the issue with switching ad networks is that developers have to change the code of ads and then reapply in the App Store, which we all know can be a hassle. Also, while Greystripe promises to lock in ad rates for developers for 60 days, it’s unclear what happens following that time period to rates. Once the 60 days are up, eCPMs could fall dramatically.

It’s definitely interesting to see Greystripe’s approach to competing against mobile ad platforms like AdMob, Videoegg and others. Widely popular and well-funded AdMob is a formidable competitor in the space.

Photo credit/Flickr/WilliamHook

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Questioned on when he sees the IPO market open up again, Conway responds that he thinks we are at least one year away. He’s more bullish on the M&A market picking up again, expressing the hope that this is only six months away.

In the rest of the interview, Conway mostly talks up some of the 130 startups he’s invested in to date, although interestingly he reveals that he’s not on Facebook or Twitter because he doesn’t have the time for any of these services.

Since he’s an early-stage investor in both those companies, that would make Conway the anti-Peter Lynch.

He also claims two of his portfolio companies, Admob and Digg, could one day go public.
But that’s at least a year away.

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With more than 20,000 apps available for the iPhone, standing out from the crowd is becoming harder and harder for app developers. There are only so many slots in the the top apps lists in the iTunes Store. Discovering new apps is becoming a real problem. But what if apps started cross-promoting other apps, just like they do on Facebook?

AdMob, which claims to be the largest mobile ad network on the iPhone covering more than 1,000 apps, will be launching an iPhone App Exchange by the end of this month for any developer who is already part of its ad network. AdMob currently shows ads across 7.2 million iPhones. Developers will be able to volunteer a portion of the ad inventory on their apps to go towards promoting other apps. In return, their apps will be promoted on other apps in the network. Depending on whether monetization or distribution is more important to them, they will be able to adjust the settings on their AdMob account accordingly.

Since AdMob knows which other apps in the network have been downloaded by each individual, consumers will never be shown ads for apps they already own. AdMob also keeps track of usage after each download, and has come up with a measure it calls “instaliness”—which is a combination of conversions and usage. The installiness of an app will factor into how often it is shown across the iPhone App Exchange. “Your app will be shown less if your app is bad,” says CEO Omar Hamoui.

He hopes to use the iPhone App Exchange to cement AdMob’s position as a leading mobile ad network by offering not just a way to make advertising revenues, but also as a distribution platform in its own right. In the end, though, if the ads don’t pay, getting wider distribution won’t help.

On a side note, while the iPhone makes up 20 percent of AdMob’s ad impressions, it is not the only platform Hamoui is excited about. In February, the first full month after AdMob launched ads on Android, it processed 48 million ad requests. In comparison, the first full month after it launched ads on the iPhone last August, it saw 50 million ad requests.

A year from now, will iPhone apps be cross-promoting Android apps?

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Mobile game advertising network Greystripe secured $5.5 million in Series C funding led by Incubic Venture Capital, Steamboat Ventures and Monitor Ventures. The company previously received a total of $10.1 million in Series A and B funding, with the same investors participating. Greystripe develops “advergames,” mobile ads that have game-like characteristics designed to increase the chances of consumers clicking on them. Greystripe has delivered 180 million ad-supported game and app downloads to date.

Greystripe has capitalized on strong growth in its mobile content distribution and monetization business, particularly with the iPhone. Greystripe is now trying to integrate mobile-centric ad campaigns with industry-accepted online media buying software. This unified integration allows for ad agencies to easily add mobile ads with one click and also allows for Flash advertisementsto appear on the iPhone (a technology that Greystripe developed). Ads can be used for both online and mobile purposes.

Greystripe is trying to integrate mobile ad campaigns into online ad budgets. Greystripe says its recent mobile ad campaign with Unilever Axe (which came out of Axe’s online ad budget) saw a 15% brand lift. The company says that despite growth in the mobile ad market, many brands are still hesitant to reach out to mobile advertising. They hope that the integration of mobile and online advertising for both monetary purposes and in implementation will boost mobile ad sales.

Other mobile ad networks that have iPhone specific applications, like AdMob, have received a vote of confidence through VC funding recently. AdMob has seen similar success in iPhone mobile ads, with the company serving 250 million ads last year.

Here’s a screenshot of a Greystripe advertisement but you can find a sample here:

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Mobile game ad network Greystripe has hit 140 million ad-supported game downloads thanks to iPhone users. In the fourth quarter of 2008 alone, it supported 30 million downloads. All of these ad-supported and Greystripe says that over 50 percent of ad impressions are from iPhone games. The ads themselves have game-like characteristics designed to increase the chances of consumers clicking on them and playing with them, hence “advergames.”

Last summer, TechCrunch reported that Greystripe turned its attention to the iPhone, and is subsequently seeing an increase in downloads and ad impressions. In fact, Greystripe’s Top 10 Total Games (by ad impression) are all iPhone games. In December, the company created its own version of Adobe Flash for the iPhone, which Apple currently prohibits on the iPhone, that would allow advertisers to use rich media flash ads. The company is making the iPhone market a “priority for the foreseeable future,” finding that the device is a much more successful ad platform for gaming than Java devices.

Greystripe is not the first ad network to see potential in the iPhone-other mobile ad networks have followed suite. TechCrunch reported last November that ad network Videoegg extended its ads to the iPhone. Other iPhone ad networks include : AdMob, Medialets, and PinchMedia.

Some of Greystripes top games on the iPhone include 21 Pro, Blackjack, Cookie Bonus Solitaire, Origami Rose, and Powerboat Racing. None of these are top game apps in the iTunes Store, however.

Greystripe also distributes ad-supported free games and applications through its consumer site GameJump, as well as through the iPhone App Store in iTunes. The company inserts ads into more than 900 game titles from 100 publishers that can be downloaded onto mobile phones. Advertisers on Greystripe’s iPhone and Java games including New Line Cinema, Burger King, Jeep, Speedy Oil Change, Dunlop, Xbox, Leap Frog and Axe.

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The online advertising business is in for a rough patch, especially for display advertising. The signs are everywhere. Yahoo, the biggest publisher of display ads on the Web, reported a 2 percent decline in display ad revenues in the fourth quarter, and the New York Times is seeing even steeper declines.

There is just way too much advertising inventory out there, and Websites are actually trying to show less ads per page to reduce ad clutter and keep advertising rates from cratering. The chart above from comScore’s 2008 Digital Year in Review shows that the number of display ads served in the U.S. is actually slightly down from a year ago. Even so, comScore estimates that 4.5 trillion ads were served to U.S. consumers last year. That comes to 2,000 ads per month per person.

And how many of those ads even register? The more ads that get thrown at us, the more we learn to ignore them.

As a consequence of the declining display ad revenues and the over-saturation of ads, there is simply no need for the 300-plus ad networks out there. And what we are seeing now is the stronger ad networks are picking up funding to shore up their positions and the weaker ones are getting bought. Just last night, for instance, Glam Media bought AdaptiveAds. This morning SocialMedia raised $6 million rather than the initial $20 million it was looking for and mobile ad network AdMob raised $12.5 million.

AdMob described its funding round as a “series C extension” of the $15.7 million it raised from Sequoia just last October. CEO Omar Hamoui confirmed to me that today’s funding was at the same valuation as the last one. Any funding in this environment is an accomplishment, but it does support my shoring up thesis. And AdMob is 100% focused on ads that appear on mobile phones, especially the new crop of Web-capable devices. This is still a high-growth area (and is not represented in the chart above), but it makes you wonder if those mobile ad rates are also feeling the pressure. Update: They are.

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Each month, AdMob, a mobile advertising network, rounds up the data from over 6,000 mobile websites and applications, analyzes it all, and releases their findings in their Mobile Metrics Report. In the September report, AdMob determined that the iPhone had become the #4 handset worldwide by count of ads requested. In the October release, the iPhone has skyrocketed all the way to #1.

Note that these rankings are not directly representative of sales numbers; while AdMob’s ad network is wide enough that these numbers can provide an accurate picture of usage trends, they don’t necessarily prove that one handset is outselling another.

September vs October Worldwide handset rankings:

Within the Top 5, the only major change is the iPhones sudden surge. Below that however, notice the BlackBerry 8100s sudden disappearance from the list – it has shifted down to #11, sitting just below the BlackBerry 8300. Why might this be? Well, the 8100 is a good half year older than the 8300 – chances are, more 8100s are reaching retirement.

September vs October US handset rankings:

In September, we were a bit surprised to see the iPhone sitting all the way down at #7 in the US while it managed to snag the #4 spot worldwide. In October, the iPhone’s rank seems a bit more well aligned with it’s worldwide status, coming in at #2. iPhone requests have more than doubled, allowing it to knock the KRZR down a notch. The rest of the list moves in relation, though as with the worldwide rankings, we see the BlackBerry 8300 climb as the 8100 sinks.

One thing to note with all of these statistics, however, is that AdMob advertisements embedded into iPhone applications are counted alongside web site statistics. If these same advertisements are not embedded into applications on all of the other platforms, wouldn’t the numbers be skewed in favor of the iPhone? Even if they were given the same real estate across all platforms, third-party applications are a far more significant part of the iPhone than they are of the vast majority of devices; if you own an iPhone, chances are great that you’ve installed (and regularly use) a handful of applications. Can you really say the same about the KRZR, or the Kyocera K24? Wouldn’t this, too, skew things a bit? I’d be interested in seeing how the data changes when limited to any website accessible by smartphone.

Other interesting tid bits from the report:

• 29.5% of the traffic that AdMob saw in October came from a smartphone – 59% of that was from devices running Symbian, while 15% ran the iPhone OS
• 77.7% of devices AdMob saw in October supported Polyphonic ringtones, down from 79.5% in September
• As in September, the Danger Sidekick II is the only Sidekick device to break the Top 20, though it has slipped down from #15 to #16.
• 62.8% of iPhone requests were from the US.
• Most popular manufacturer by carrier: AT&T: Apple, MetroPCS: Motorola, Sprint: Samsung, T-Mobile: RIM, Verizon: LG

If you’ve got a couple hours to kill tearing through page upon page of statistics (now including stats for Latin America!), you can find the full report here.

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AdMob, a popular mobile advertising platform, has closed a 15.7 million Series C funding round led by Sequoia’s Growth Fund with participation from Accel Partners. The company says that it will use the money to help expand abroad in India, South Africa, and Europe.

The round is a strong vote of confidence from Sequoia, especially given the fact that the famous firm recently presented its portfolio company CEOs with a 56 Slide Presentation of Doom that forecast dire economic conditions in Silicon Valley for years to come.

AdMob has seen tremendous growth since its launch two years ago, and now bills itself as “the world’s largest mobile advertising marketplace”. Mobile advertising is clearly going to be a huge market in the next few years as highspeed smartphones become more common (you can see our story on the network’s integrations with the iPhone here). Phones with geo-location abilities are especially exciting, as they could conceivably allow advertisers to target potential patrons as they pass their stores or enter a nearby parking lot.

AdMob will be competing in this still-fledgling space with ad networks from the likes of Google, Nokia, and Yahoo, as well as a number of startups.

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On the iPhone, even the ads are cool. Mobile advertising network AdMob is launching a whole new set of customized ads for iPhone apps. As CEO Omar Hamoui explains in the video above, the ads are specifically designed for iPhone apps. Rather than the static text or image ads that make up most of its mobile ad inventory today, these take advantage of specific features of the iPhone.

For instance, an ad for a song can stream the audio or launch the page on iTunes where you can buy it. A movie ad can open up YouTube so you can watch the trailer. An ad for a retailer can find nearby stores on Google maps. Others call a number through the phone, or can take you to a specific Web page. And just like on Facebook,where many of the ads on apps are simply promotions for other apps, an ad for an iPhone app will launch the App Store. (See video below).

To get iPhone app developers to sign up for his new ads, Hamoui is giving away $1 million worth of advertising to the developers with the most compelling apps who apply here. Each developer who is selected will recieve $5,000 worth of free ads for their apps.

Admob already serves up 34 million mobile ads a month on the iPhone’s Safari browser. But that is a mere one percent of the total that AdMob serves across all phones. Hamoui, however, believes that the new type of ads he is launching today will quickly make up the majority of his inventory. Some of the advertisers he’s already lined up include Ford, Electronic Arts, Land Rover, Jaguar, “The Mummy,” Loopt, AccuWeather.com, and MovieTickets.com.

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With the 3G iPhone about to go on sale tomorrow, mobile ad startup AdMob is releasing some data on its iPhone ad network. Since it launched the network back in July, 2007, AdMob has served 249 million ads to people’s first-generation iPhones. Last month alone, it served 52 million ads worldwide and 34 million in the U.S. The monthly growth those numbers is up 32 percent and 26 percent, respectively.

To put this in perspective, though, AdMob serves 3.5 billion ads each month across all models. So iPhone ads in the U.S. represent only one percent of that total.

The question is whether that growth will continue, or whether AdMob’s phone-specific ads will be superceded by regular Web ads. After all, the iPhone has a fully functioning browser that shows the same ads you see on your desktop.

One question is whether it is a better advertising vehicle than other phones. Another is what form will those ads take. Do advertisers need to create special ads tuned for the iPhone? Or can they just buy regular Web ads and assume that people will see them in the iPhone’s fully-featured browser? Silicon Alley Insider raised this question earlier in the week, noting:

. . . an iPhone’s browser loads an ad the same way a computer does — not the same way a Motorola Razr does. So if the iPhone is just loading a normal Internet ad in a custom size, there’s no real need for a special mobile ad network.

In a comment on that post, AdMob CEO Omar Hamoui responds:

You essentially assume that simply because “regular” ads can be served, they will inherently be optimal. . . . The reality is that . . . ads designed for the web as viewed from a PC are not and will not be optimal.

Although the idea of a unified web where everything is exactly the same (including advertising) is intriguing, the reality is that all the recent advancements in digital advertising (search, behavioral, demographic, and psychographic targeting, etc…) have been about differentiation of audiences rather than amalgamation. In the context of advertising, there is significant value locked up in even subtle differences and we know from experience that the device you are browsing on is no subtle difference.

Whether regular ad networks can play that game remains to be seen. But AdMob already tunes its ads for the specific phone model that the ad is being sent to. The current set of iPhone ads, for example, take advantage of the iPhone’s large touch screen to draw those interested deeper into an ad. And they can also trigger some of the iPhone’s special features, such as launching a Google map. For instance, in the Jaguar ad below, the Google map shows nearby Jaguar dealerships.

Similarly, ads that let you make a phone call for more information or to order the item being advertised are different than most banner ads (although some of those have click-to-call features too, it stands to reason that a click-to-call ad would work better on a phone). And in fact, the company claims that the response rates of these iPhone ads are better than other mobile ads.

With the 3G iPhone coming out with new features and a whole slew of apps, AdMob needs to keep up with the changes in the device. Advertisers will flock to wherever they can get the best response rates. The more that AdMob can tune its ads to the specific location and experience of the viewer, the better the response rates should be. I will ask Hamoui how he plans on doing this at the upcoming Mobile Web Wars Roundtable that I will be hosting.

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AdMob Mobile Analytics offers businesses a free solution to maximize commerce, advertising and content on the mobile Internet. AdMob Mobile Analytics helps mobile site owners understand their audience, optimize their content and improve usability. The suite allows users to track site performance metrics such as unique visitors, duration of visit, page performance, as well as user details including geography, operator and device specifics. This information helps mobile site owners tune their sites to the specific consumers visiting their mobile Web presence.

Notably, the service is ad provider agnostic: users can track campaigns by any provider as well as ad campaigns from AdMob.

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Google has added image (banner) ads to its mobile ad offering.

The Google Mobile team writes:

These look like standard image ads for desktop web pages but they are smaller to fit on mobile screens and they run on the mobile content network. Take a look at the mobile image ads example page to see samples….For advertisers, mobile image ads serve as a branding tool and have shown to have good clickthrough rates. Advertisers using mobile image ads will also benefit because we only show one image ad per mobile page. For publishers, mobile image ads provide added flexibility.

Banner sizes in actual size per the picture right.

The new offering from Google places the company up against Yahoo, AdMob and others in offering a full range of mobile advertising options.

There’s a market for this style of ad, but how big is the unknown question, particularly at a time where mobile phones are moving towards a full browser experience instead of a cut down version.

The other consideration: how many people click on ads on their phones? I straw polled a hand full of people when this question came up months back and I couldn’t find one person who could remember clicking on an advertising on their mobile phone…accept for the odd accidental tap. Would you?

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Since March 2007 the company’s monthly impressions have grown from 500 million ads per month to 2.5 billion advertisements per month today. AdMob’s 20 billionth ad impression was from financial services conglomerate HDFC. The ad was served in India at 1:56am GMT on Tuesday, March 25, while a visitor was browsing Cricinfo’s mobile web site on a Nokia N70.

We’ve covered AdMob a couple of times, but it’s a company doing some big numbers that we don’t hear that much about. Their client list is first rate: companies currently using AdMob include Porsche, Ford, Toyota, Adidas, CoverGirl, Herbal Essence, EA Sims, Terminix, TruGreen and Let’s Talk. Where it gets better (and why this is a company just waiting to be bought out) is two key clients: Google and Yahoo. The web’s two leading companies are using AdMob to advertise their services on mobile phones.

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AdAge has some details on the campaign here, but I obtained some raw figures from AdMob. Of those users who clicked on the Land Rover advertisement, 23% responded to at least one call-to-action on the landing page. 88% of those users watched the video, 9% entered their zip code to find a nearby Land Rover dealership and 3% used the click-2-call action, all of who were highly qualified leads. Of the 3% who clicked to call through the advertisement, 50% of the calls lasted more than 30 seconds and 20% of the calls lasted for more than a minute. Sales figures from the campaign were not available, but consider that the campaign was only 400,000 impressions; if LandRover had managed to sell one or two cars it would make the campaign more than effective.

The results would seem to indicate that the iPhone has become a more effective means of targeted mobile advertising campaigns than regular phones; the integration with Google Maps and the display of video provides a richer experience for both the viewer, and for the company seeking to expose their product.

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AdMob has enabled optimized mobile ads for Facebook Mobile, which developers can use to monetize their mobile applications. Developers can start showing ads and earning money immediately.

AdMob for Facebook Mobile is said to be the first monetization solution for Facebook Mobile developers. AdMob is now serving 1.5 billion ads a month, up from the 1 billion they were serving when we first wrote about them in August.

AdMob Investors include Sequoia and Accel Partners and management includes staff previously with eBay, YouTube and Google.

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Scott was Senior Engineering Manager for Google, where he led Google’s advertising quality engineering efforts focused on improving the relevance of ads to users and increasing ROI for advertisers. Scott’s time at Google also included M&A work for two successful acquisitions, establishment of the annual Google Faculty summit, and creation of a number of leadership development and engineering education programs.

Omar Hamoui, Founder and CEO of AdMob told TechCrunch that they are thrilled to have someone with Scott’s experience join their startup. “Kevin brings unparalleled experience building ad servers that maximize targeting and quality. Adding Kevin validates and empowers AdMob’s approach and leadership on the challenges of targeting and optimization for the mobile environment.”

AdMob is currently in the process of introducing new mobile advertising capabilities around mobile-specific targeting and relevance. We first wrote about AdMob in August where we noted that AdMob had seemingly slipped under the radar in terms of attention whilst competitors have been acquired. Admob currently serves over 1 billion mobile ads a month.

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