Mobile Advertising is set to Grow 45% in 2010 to $3.8B. That explains why Google and Apple are diving head first into mobile advertising and marketing, with Google's AdMob $750M acquisition and the recent announcement that Apple will likely acquire Quattro Wireless for $250M. (It looks like Microsoft / Yahoo might want to scoop up Millennial Media or another mobile ad firm to compete.) The advertising industry as a whole may take a while to recover, but one of the largest growth areas is in mobile.

They say "the proof is in the pudding" so lets' look at some recent results; A recent campaign run by Shedd Aquarium found that SMS beat out Web in Direct-TV Spot. The SMS call to action generated 325% more entries than the Web based call-to-action, making up 52% of the total entries, though it ran in only 25% of the ads. And over at Pernod Ricard their Malibu branded mobile application that was created to support the launch of its new Malibu Island Melon flavor has seen over 2 million downloads (not just iPhone).

Delivering a nice and/or fantastic experience on the 4^th Screen (Mobile), is not the same as it is on the 3^rd Screen (Desktop), there are around 5,000 handset models, 8 different operating systems, scripting languages, various browsers, delivery platforms and then the carrier networks to negotiate. It is important to point out that Mobile is NOT another medium yet is designed to work across all media in one form or another. Now is the time to develop a Mobile strategy and start to implement it as your clients are about to ask you all about it.

Newspapers are searching for a way to monetize their digital content, Rupert Murdoch plans to charge for all his news websites by next summer, something that didn’t seem to work well for The Irish Times, who removed their “pay wall” in June 2008.

On-line advertising revenues just aren’t paying the bills, this Observer article covers an analysis suggesting that the average print newspaper reader is worth £155 a year (£90 from price, £65 from advertising), whilst the same on-line newspaper reader is worth just £5. So in simple terms you need 31 online readers in order to recoup 1 offline loss.

Is that in any way possible, should we all pack up and go home?

So how can newspapers make money from their digital assets? One answer may be through mobile applications, Apple’s recent decision to enable “in app purchases”, supplementary content purchased from within iPhone applications, has been adopted by the Spectator magazine, their application costs 0.79 cents and “expires” after a week, and thereafter you must pay 0.79 cent for the current weekly edition. It’s an old school model updated for today’s world. You can’t ignore the cost savings here and dare I say it the positive environmental impact of reading your spectator online.

This strategy could be a lucrative play for other news titles with large amounts of multimedia content. For example, the forthcoming Guardian iPhone app could easily incorporate in app purchasing for their highly successful audio podcasts covering the premiership.

Apple also recently decided to allow in app purchasing from within free applications, previously in app purchases were only available within paid apps.

In Ireland (where I am based) the new iPhone application released by the Irish Independent newspaper seems to be doing very well in the new world. The app launched recently, sells for €2.39 and is top of the paid application chart in Ireland, which means it has certainly paid for itself already, and will be making profit from here on. It is a relatively simple RSS feed style application which doesn’t use in app purchasing, it displays 4 categorises of news: National, Sport, Entertainment and Top Stories. Is it canabilising an existing audience? Hard to tell, but I doubt it as it’s a younger more tech savvy audience that have the iPhone here and its possibly increasing the audience. Regardless its one further revenue stream to stem the hemorrhage of revenue loss from traditional papers.

…especially if you’re in Germany.

German telecommunications provider Deutsche Telekom’s T-Mobile has not only blocked the VoIP connection that enables Skype for Apple iPhones, but has also threatened to cancel the contracts of any T-Mobile subscribers who attempt to install Skype on iPhones in Germany through workarounds.

Skype’s iPhone application, which lets users make cheap or free calls over their phone data plans, is a raging success. Barely a week after its release at the end of March, 2 million users had downloaded the application, representing almost 10 percent of iPhone users.

This has all kinds of ramifications for carriers, handset providers (currently only iPhone & Blackberry have Skype app) and particularly regulators.

For the carriers, who are worried about the service eating into already declining voice revenues, they’re turning to the regulators already and seem to have successfully given themselves a nice alternative.

For the user this creates a situation where there no longer exists free and unfettered use of data on their handset…that they’re already paying for. Additionally, they risk having their account cancelled (as with T-Mobile in Germany) if they usea work-around to access Skype.

Massive businesses such as Google & Yahoo completely rely on this “Net Neutrality” to access their base, via the ISPs, so they are clearly positioned in the opposition corner and are lobbying for unlimited access to the user through the carrier.

However, the EU has agreed on a bill that allows carriers to either cancel a subscribers account if they use a service such as Skype, or place it in a tiered package they costs more.

It seems the mobile internet is becoming victim of its own success. Mobile Internet is taking off . . . many people are excited about the new smartphones, the iPhone, Android phones and so forth. But carriers are concerned because that traffic comes without the adequate revenue.

It seems we're at that nexus in mobile development whereby data usage by consumers needs to fill the revenue hole created by products such as Skype, as this is really only the start of IP based mobile products.

The solution needs to balance these costs to find a business model that works.