Google says it's betting big on mobile

Google put on a webcast with analysts Monday to tout its grand plans for mobile.

Google Engineering Vice President Vic Gundotra predicted that the rates companies pay for search ads on mobile phones would overtake rates they pay on the desktop because of the growing popularity and adoption of so-called smart phones that deliver a better browsing experience and simpler data plans.

“Google has bet big on mobile,” Gundotra said. Google is not just making “mini versions” of desktop applications but is rethinking applications and delivering new ones, he said.

In recent years, Google has seen mobile advertising rates increase dramatically, Gundotra  said. The number of Google searches on mobile phones has increased fivefold in the last two years. He also noted that GPS and other features that broadcast a user’s whereabouts are helping Google create more relevant online ads.

The briefing came as Google awaits the outcome of a regulatory review of its proposed acquisition of mobile advertising firm AdMob. Google originally said it planned to buy the firm in November.

“We continue to be impressed with AdMob,” Gundotra said.

Making the leap from desktop to phone is crucial for the Internet giant, which dominates search advertising. The era of mobile advertising has arrived, Gundotra said.“The industry trends are blowing in Google’s favor,” he said.

CEO Eric Schmidt has already declared that Google is a "mobile first" company.

IDC analyst Karsten Weide estimates that, combined, Google and AdMob have 21% market share of mobile advertising. But he downplayed the significance of that lead.

“Google is the single most overestimated company in the industry,” Weide said. “So far it’s still a one-trick pony. Mobile is so new and so volatile. That does not mean that Google is going to be the ruler of the mobile universe.”

 -- Jessica Guynn

Photo: Google's Nexus One phone. Credit: Jeff Chiu / Associated Press