Using AdSense to cash in on the iPhone

It was only a matter of time, I suppose. Google, to no one’s real surprise, has tied its AdSense cash machine to the mobile applications market.

As downloadable applications proliferate for Apple’s iPhone and the Android platform, the web-behemoth is expanding its field-testing for the program and is playing with contextual ads for both platforms. According to Google, the ads can be targeted by “applications, locations, categories or keywords.”

Program developers can insert a snippet of code within their applications, allowing iPhone and Android powered handsets to display the ads. This effectively synchronizes the application with the Google ad network and opens up significant earning opportunities down the road.

One of the challenges associated with the approach is, as always, getting past the typical consumer “ad resistance”.

“What we are looking for… is to allow the user to look at the whole application as one and not say, ‘oh, that’s an ad, I’m not going to pay attention to it’,” says Harold Steinberg, director of business development for Urbanspoon (one of Google’s startup development partners in the venture).

So, it goes without saying that ads that are successfully integrated within the application stand a much better chance of being clicked by the consumer.

Surprisingly, the banner ad will likely be more heavily utilized, rather than the text ad AdSense is better known for. The traditional desktop-style web page rendition doesn’t convert well on the iPhone screen, making it difficult to expand and click on tiny text ads. Google says AdSense banner ads will all be “above the fold”.

While Google is keeping things small right now and only allowing a small number of highly qualified partners into the beta, it’s just getting started. As it opens up the program, allowing marketers to select mobile applications as part of their overall AdSense campaigns, bidding will increase significantly and ad rates will go up.

That’s important to note. Google’s ad programs can be very beneficial, but you should approach them with some caution too. It’s not hard to quickly burn through an advertising budget if you are either not sufficiently prepared or are unsure of your keyword choices, composition and landing page relevance.

The dangers are just as real for AdSense on the iPhone. While it may be tempting to jump into anything tied to the surge in mobile Internet, ads on apps are untested – and could be rejected by consumers. The cost of placing your ad on a platform will also be key.

Mobile application usage is expected to quadruple in five years. And the mobile advertising market is touted to grow to almost $5.7 billion within that same period of time. Google is preparing to capitalize on that growth – and with a little planning, you might be able to do so also.