The idea came to light when Google CEO Eric Schmidt was interviewed after a presentation on business innovation at Stanford University's Graduate School of Business. While he acknowledged that Google had no such plans nor did he foresee any of the major manufacturers or operators adopting such a scheme over the short term, the amount of time that consumers spend using their mobile devices made them increasingly attractive advertising venues – venues that could be subsidized via that advertising.
Of course, an easy analogy could be drawn between this model and the pre-cable, free television market: while the broadcasts were paid for by advertisers, neither the advertisers nor the manufacturers gave the television sets away. Such will likely be the case with mobile devices; but with some phones already being given away to consumers willing to sign long-term contracts, the idea of tacking on an "accepted advertising" provision to either lower the term of the contract or increase the quality of the free phone could gain traction.
Google is currently evaluating the direct-to-mobile advertising model in the Japanese market which offers a superior infrastructure and more widespread usage of mobile devices and forward-thinking marketers would do well to study the search giant's approach to this growing opportunity.
While Google anticipates that nearly all of its $10 billion revenue this year will come from web-based text ads, it has previously stated that it believes mobile-based advertising will eventually account for an equally large portion of its revenues.
For those that doubt the viability of mobile media, this should be a wake-up call.
