Google said this week they are expanding their AdWords service, offering businesses the chance to place ads next to cell phone search results.

They are also rolling out a new Adsense for Mobile service, where contextual ads will appear on web sites specifically optimized for viewing on cell phones. Mobile users clicking on ads are sent to the mobile-version of an advertiser’s webpage or offered the option of connecting to a business phone.

According to a Monday press release, “AdSense for Mobile is intended for AdSense partners who have created websites specifically for mobile browsers, and who want to monetize their mobile content via contextual advertising. Like Google's other AdSense products, mobile text ads run on an auction model. The system automatically reviews the content of publishers’ mobile websites and delivers text ads that are relevant to the websites’ audience and content.”

Google will use auctions to set prices and advertisers will pay when a user clicks, just like the online version. Google says conversion tracking is available for their mobile offerings.

AdSense for Mobile will cover at least 12 countries besides the U.S., including England, France, Italy, Germany, Spain, Ireland, the Netherlands, Russia, Australia, India, China and Japan.

Google joins Yahoo, AOL and Microsoft in jockeying for the best position in the emerging mobile search marketplace. All four have recently snapped up intellectual talent and treasure. AOL bought Third Screen Media and Microsoft sucked up Frances’ ScreenTonic just three months ago. On Monday Nokia said it would buy Boston’s Enpocket.

As of this week, Sprint customers can take advantage of both MS mobile and LoMo search technology. Sprint’s Mobile Shopper allows users to search and compare prices on 7 million products from online stores like eBags, Bluefly, and Shoes.com with in-store prices. The tool is from a Boulder, Co. company called mShopper. Sprint also offers GPShopper’s “Slifter Mobile” local mobile search tool for finding an item a user wants as close to the user as possible.

According to Strategy Analytics, $14.4 billion will be spent on mobile advertising by 2011, an estimated one-fifth of all Internet ads.

Savvy businesses will optimize mobile versions of their Web sites, if they haven’t done so already.

This is a big question with serious implications for online retailers in the months before the holiday buying season.
A recent article at Clickz throws some light on this topic.

Here is an excerpt:

The [WebSideStory ]study looks at traffic and conversion data from 20 business-to-consumer e-commerce sites during the first eight months of 2006. Paid search had a median order conversion rate of 3.4 percent, while organic search results produced a conversion rate of 3.13 percent. The data set included more than 57 million search engine visits.

There are arguments to support both sides, Rand Schulman, WebSideStory's CMO, told ClickZ.

"On the one hand, because you control the message of paid search, you'd expect higher conversions. On the other side, because people value the 'editorial integrity' of organic, you'd expect higher conversions," he said. "Ultimately you need to do both. I think the eye-opener here is that neither side has a significant edge."

It would have been interesting to get some more details on the variables within the study.

For instance, were they comparing organic vs. paid, regardless of the position of either link on the page? In other words, did they compare an organic listing in position two with a paid listing also in position two? Or was the comparison between the two listings, on the same page, but regardless of position?

And did they compare paid and organic links which pointed to the exact same page? Paid links almost always point to an optimized offer page. But that often isn’t the case with organic links.

And were those 20 companies in the study of similar sizes? And did they represent a fair spread of industry categories?

However, putting aside those questions, and assuming the basic validity of the test, there is a big lesson to be learned here.

Keep your PPC campaigns going...but also pay attention to your organic search positions.

Remember, organic search traffic costs you nothing per click. So if you get the same conversion rate from organic listings, your net revenue could make a nice jump upwards. (Assuming you don’t spend an arm and a leg on search engine optimization.)