Alltel's relationship with JumpTap is typical of many early operator/vendor partnerships. JumpTap provides many pieces of the mobile ad puzzle: a search engine; technical integration with devices; back-end software for analyzing search trends, purchase patterns and user behavior; and an ad network that delivers the actual mobile inventory.

Indeed, while many of the larger online ad players — such as Google, Yahoo! and Microsoft, in particular — talk about partnering with telcos, they also pose a rather formidable potential threat if they attempt to go after the mobile ad market themselves, completely side-stepping the mobile operator. One option is for such players to focus on the mobile Web browser — rather than the operator deck — as the vehicle for Web ads. But Web ad giants aren't limiting themselves to the mobile Web; Google's Android and Yahoo!'s mobile widget projects are among the paths Web players could take to route mobile advertising around the carrier deck.

By comparison, smaller mobile ad players appear much more willing and likely to align themselves and partner with carriers, seeing carrier-deck opportunities as their launch pad to the mass market that mobile advertising requires.

For example, vendor Digital Sidebar has developed a solution for delivering ads into the “white spaces” and “trigger points” on device screens — for instance, before or after sending a short message service message or upon ending a phone call. Those are areas where carriers — rather than device-makers or Web players — can stake a claim, making the vendor a natural carrier partner, said Stephanie Grossman, the company's CEO. “Our focus is on carriers,” she said. “Carriers need a system like ours, especially today with all the emerging competition, and for us a meaningful user base comes through carrier relationships.”

Grossman emphasized that for the most part, the two things that carriers own today are voice and data. “Everything else is — or will soon be — a free-for-all,” she said, including mobile advertising revenues. While the mobile Web may get dominated by Google, that still “requires the user to go to it,” she said. But by integrating ads into the device interface, “you're really placing them front and center and engaging the user every time they use the device.”

Better use of phone real estate is one next-generation path. Better ad targeting — via demographics or location information — is another. But today this still remains more promise than reality.

For instance, consider go2 Media, which provides mobile content and advertising solutions for a variety of mobile operators, including deck placements with AT&T, Metro PCS, Sprint, Verizon and others. Despite those existing relationships, Lee Hancock, founder of go2 Media, said locally targeted ads still have a long way to go. “The fundamental issue is the lack, in terms of both quality and quantity, of local information,” Hancock said. “There's still a lot of work to do there.”

The work, though, could yield big results. According to Hancock, the yellow-pages industry — currently the biggest local advertising provider — generates about $15 billion per year on about 16 billion directory searches, which amounts to about 92 cents per search. By comparison, mobile searches generate about 10 cents in ad revenue. “That's a tremendous disparity,” Hancock said, “and shows how the print industry is monetizing local ads versus online and mobile. The true value of mobile is probably somewhere in the middle of those two numbers.”

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