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Article from NYTimes.

Google’s venture capital arm is investing in a start-up founded by Apple alumni that is seeking to make mobile users a little less anonymous to advertisers.

Adelphic Mobile, based in Boston, has raised $10 million from Google Ventures and Matrix Partners, a firm that invested in the company during an earlier fund-raising round. The company has raised $12 million to date.

Adelphic was founded in 2010 by Changfeng Wang and Jennifer Lum, both of whom used to work for Quattro Wireless, a mobile advertising start-up that was acquired by Apple and became the foundation for iAd, Apple’s mobile advertising network.

Mobile advertising has been a disappointment to many people in the technology industry. The explosion of mobile devices initially prompted exhilaration among marketers about the potential for peppering people with ads on the cellphones that are always at hand. Google and Apple both bought start-ups to help bolster their mobile advertising efforts.

But many companies, including Facebook, have found it more difficult to make money from mobile advertising than through traditional Web sites. That is in part because of the limited screen real estate people have on their smartphones and their wariness about having it filled up with advertising.

“It’s not growing nearly at the rate it should have been given mobile media consumption rates,” said Ms. Lum, the president of Adelphic.

Adelphic is focused on another problem with mobile advertising: the relative poverty of data that advertisers have about the mobile users they are trying to reach. Through Web browsers on computers, it is easier to deliver targeted ads to users by keeping data on their browsing habits employing tools like browser cookies, the small identification files advertising networks place on computers.

Mobile advertisers do not know as much about users because mobile browsers and apps are not as commonly configured to allow the kinds of identification techniques that work on computers. As a result, advertisers do not know much more about the audiences they are trying to reach other than the type of cellphone they have and the wireless network they are on, Ms. Lum said.

Adelphic seeks to paint a more detailed picture of mobile Web users by using complex software to analyze dozens of “signals” about mobile users’ online activities, though Adelphic is not willing to go into too much detail about how the process works (it says it respects the privacy policies of the publishers that show its advertising).

Through its data mining, the company says it can identify the likely age of mobile users, as well as their gender and general location. In turn, the company tells advertisers it can deliver ads to the specific audiences they are after.

Rich Miner, general partner at Google Ventures, said in an interview that mobile advertising would become more effective over time and that Adelphic’s service was helping to push the market forward.

“With the growth of mobile, we’re still very early and, just like in traditional online ads, there’s still a tremendous amount of innovation and value to be created,” said Mr. Miner, who also co-founded Android. Google acquired that company and used its technology as the basis for its Android mobile operating system.

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Here is an article from SF Gate.

“Google Inc. executive Mike Steib is courting customers such as Progressive Corp. and touting tools that let marketers create the snazzy, interactive ads that rival Apple Inc. has been using to snatch mobile-ad business.

“We have a significant investment in mobile, and competition is going to push us to be really, really good,” Steib said in an interview the day Google closed its $750 million acquisition of AdMob, which places ads on mobile programs and Web pages.

As Google’s head of mobile advertising, Steib leads the effort to build his company’s next $1 billion business from sales of ads on wireless devices – and lessen its dependence on Web-search ads. With a team based in a former cookie factory in Manhattan’s Chelsea neighborhood, Steib is striving to persuade advertisers they will win over more consumers by working with Mountain View-based Google than with Apple.

“It’s safe to say Google will respond to iAd and respond very strongly,” said Michael Collins, chief executive officer at Joule, a mobile-ad agency that’s part of WPP Plc. “They have too many assets to pull from, too many arrows in their quiver.”

Staying ahead may not be easy, now that Apple is luring advertisers to iAd, a service that places ads inside applications that run on its iPhones and other mobile devices. Apple has sold more than $60 million in advertising on iAd since it was announced in April, CEO Steve Jobs said at a conference Monday. That represents about half of the mobile display-ad market for 2010, according to JPMorgan Chase & Co.

Tension between the companies escalated Wednesday when AdMob accused Apple of barring developers from using Google ad services to create ads for the iPhone – a move that may threaten AdMob’s ability to get revenue from the device.

This year, AdMob and Google together may generate more than $100 million in U.S. mobile-ad sales, according to IDC in Framingham, Mass.

Apple won business as Google awaited a green light from the Federal Trade Commission for its $750 million AdMob acquisition, announced in November, Joule’s Collins said.

Introducing iAd “gave Apple the opportunity to suck all the oxygen out of the room,” he said. “Apple is on a tear these days with the iPhone, iAd, the iPad.”

As sales of smart phones rise, more users are viewing ads on handheld devices in addition to – and sometimes instead of – computers or televisions. Spending on mobile ads in the United States is expected to reach almost $500 million this year, from $220 million in 2009, according to IDC.

In the next three years, as much as one-third of global digital ad spending will be devoted to mobile, according to Alexandre Mars, who oversees mobile ads for Publicis Groupe SA.

“You’re seeing advertisers who see mobile marketing as a significant business driver,” said Steib, who joined Google in 2007 from NBC Universal. “This is a big part of the conversation.”

Google’s strategy includes creating tools that help developers embed videos and make ads more interactive, similar to what Apple’s iAd can do. Google also wants to sell more ads tied to a user’s location and deliver coupons for nearby deals, said Steib, Google’s director of emerging platforms.

The company is keen to make money from delivering coupons for nearby businesses and selling ads alongside a tool that lets customers take photos of an item and search for it on the Web, said Steib.

That way, a bistro could offer free appetizers to a nearby customer who’s searching for a place to eat, and the user could later see where to buy a bottle of the wine paired with dinner. The restaurant and wine seller would pay Google for the ads.

Google and AdMob together had 21 percent of the U.S. mobile ad market in 2009, said IDC analyst Karsten Weide. Quattro Wireless, which Apple acquired in January after losing out on AdMob to Google, had 7 percent.

‘Short-term disruption’

Steib says iAd may create “short-term disruption.” Still, Google can contain the fallout in part because it has experience letting customers manage campaigns on multiple Web sites and it can change ads on the fly based on performance, said Steib, who himself is an avid user of Apple products. He owns about a dozen iPods, iPhones and the new iPad.

Bank of America Corp. went from buying an occasional mobile campaign to paying Phonevalley, the agency run by Publicis’ Mars, a $1 million annual retainer. Google’s AdMob is among the ad-placement companies used by the financial institution, the largest U.S. bank by assets.

“We did take a hard look at iAd and we passed on it,” said Kathryn Condon, a vice president of digital marketing at Bank of America. She said she’s not convinced it will provide more value than AdMob and the other companies the bank uses.”

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