Yahoo to do mobile graphical ads

Internet giant Yahoo will announce a test Tuesday, using graphical adverts created specifically for mobile devices. The company is hoping the shift to mobile advertising will increase its reach in what is considered a potentially lucrative market.

A month ago Yahoo employed some of the technology behind its internet search engine to begin sending text messages to mobiles in another separate test. The graphical element is an extension of Yahoo’s push to bring more compelling advertising to mobile devices.

Both Yahoo and its bigger rival Google are trying to extend their reach on both search and advertising on ever-more sophisticated mobile devices with enhanced displays. Yahoo has trailed Google in terms of revenue resulting in a 30 per cent drop in Yahoo’s stock price this year. Google meanwhile has increased its market value by around 15 per cent.

Observers have warned that Yahoo may not receive a warm welcome in the mobile space because of the guarded relationship operators have with their customers. Eli Mahal, VP of marketing at mobile data optimisation firm FlashNetworks says operators “have no intention of becoming mobile ISPs in the mobile domain” and the giant’s success will rely on the relationships it has nurtured in mobile.

Kaj Hagros, VP of marketing and operations at messaging company First Hop, says predictions about the arrival of global brands on the mobile are at last being realised but he expects far less resistance from mobile operators than is widely anticipated, at least after a settling-in period. “Initially media brands will try to use operators as dumb pipes and they will also try to avoid local contracts.”

First Hop carried out some internal research internally this summer on how operators and media companies would work with one another in the first phase of mobile advertising. “The conclusion was,” says Hagros, “that mobile operators are expecting the global brands like Google and Yahoo to bypass them wherever possible… but the consensus was that their arrival was a positive thing and that new opportunities would emerge from their presence. We thought there would be more of a conflict than we discovered.”

Yahoo did not return calls.