Medio Pitches On-Deck Mobile Search and Ads

Speaking at a Web 2.0 conference in San Francisco last month, Google CEO Eric Schmidt summed up his vision of his company’s future in a pithy three-word mantra: “Mobile, mobile, mobile.”

Google, Yahoo! and Microsoft have all attracted a lot of attention in the last few months with their efforts to expand their search business into the mobile world. It makes sense: Cell phones outnumber PCs by eight to one in this country, and according to M:Metrics, more than 12.5 million U.S. users conducted a Web search from their handsets in February.

Mobile search represents a big potential market hanging out there ripening, and the major search players want to be ready with a big peach basket when it drops. No one knows for certain when that will be, but the impending arrival of the iPhone this June could supply one market driver.

But among the many factors that make search on a phone different from doing so on a desktop, one in particular may complicate life for the Big Three engines: the interposition of the wireless carriers as gatekeepers of mobile services. Most phones are designed to work with a specific carrier’s network, and they come with a set of “on-deck” services, the options users see when they turn those phone browsers on. These usually include the basic content, shopping and directory services, and they’re arranged in a one-click format that users can access quickly—without having to type in a URL to get to a Web page.

And when it comes to search, carriers have been wary about handing their customers off to the big brand names. They’d rather herd those users into a walled garden of the content and services they’ve selected, downloading ring tones, games and wallpapers that will help bring incremental revenue to their bottom lines.

As a result, several companies have found success offering white-label mobile search services that let the wireless carriers get around the desktop search superpowers.

Seattle-based Medio Systems is one of these white-label search providers, with contracts to supply search services to Verizon Wireless, T-Mobile, Amp’d Mobile and Canadian provider Telus mobility.

“The carriers saw what happened in the online world, where they became ‘dumb pipes’,” says Omar Tawakol, Medio’s chief advertising officer. “They built the mobile Internet; they have experience with 411, so they know a variant of mobile search. And they want to work with a white-label provider rather than hand off search to a media provider, which could lead you to think of your phone as a Google phone rather than a Verizon or AT&T phone.”

Last month Medio announced the launch of a mobile ad network that will deliver pay-per-click text ads both to on-deck search results pages for some of its carrier partners and to a Medio network of off-deck mobile Web pages. The ads will be targeted using past search behavior, click-through history, user demographics and geography to provide a higher degree of relevance to the mobile user. To accomplish this, Medio will use the RelevanceServer contextual ad technology it picked up with its purchase of WebRelevance last year.

It won’t be a pure form of behavioral targeting, Tawakol points out, because different carriers handle browser cookies in different ways, for example in terms of tracking behavior across sessions. In addition, there are both regulatory restrictions on the use of customer data from mobile phones and cultural barriers put up by the carriers themselves, who don’t want to scare off users and set themselves up for even higher churn rates than they already face.

“[Carriers] see their data as power, and they want to be careful how they share it,” says Tawakol, a former senior vice president with behavioral targeting network Revenue Science.

The ads will be sold at auction through a self-service platform that will take in all the carriers and Web sites participating in the Medio MobileNow ad network. (So far, Amp’d is the only carrier client to sign on for the ads, but Tawakol expects that other carriers will also enlist in the next few months.) The centralization will make it easier for advertisers to reach prospects across disparate wireless networks efficiently.

And Tawakol believes the resulting mobile search ads will have particular appeal—and the greatest initial take-up—with direct-response advertisers.

“A lot of discussion about mobile phone ads has centered on SMS marketing, banners and video,” he says. “Those are all ‘push’ media: An advertiser has a message, and he wants to get it to as many people as he can.” But search marketing is a “pull” medium that delivers ads that help answer a question asked by the searcher.

“We’re focusing on direct-response advertisers who are offering paid links that provide answers to searchers’ questions,” says Tawakol.

And those searchers are more than likely close to a transaction, since no one who’s not a masochist uses mobile search to research cars or other high-consideration purchases. Mobile searchers are highly qualified and looking to spend money soon, either online to buy a mobile game or ringtone, or on services available in their current location.

To that end, Medio has also announced that it will work with provider Ingenio to develop a pay-per-call option that will be attractive to local businesses looking to get found through Medio’s search ads.