If there were any doubts about the growing potential of the smartphone ad market, Google would like to put them to rest. The search giant announced plans this week to start serving richer media ads to smartphones.

By focusing on more more real estate grabbing ads for HTML-enabled phones instead of creating mobiles ads that will be uniform across mobile platforms, Google is betting on the future of smartphones and trying to establish its dominance over the mobile ad market. For a company trying to make a play for the display ad market, this could help it along the way.

The search giant announced the launch of its new ad exchange in September, proving that it thinks display will have legs going forward. But while Google may have revolutionized search advertising, in the established field of display, growing its pie will be harder. Staking out some real estate in the fledgling mobile market makes a lot of sense.

And skipping past current cellphone standards will help with that. Publishers have traditionally needed to run basic text ads that could be sent to all mobile site visitors, no matter if they used conventional WAP phones or smartphones.

Now in addition to selling its Android smartphone, Google is pushing bigger and more developed mobile advertising.

A Google product manager explains the whole process in the video below:

Now, ads served to the iPhone, Palm Pre and
Android-based phones can support images, additional characters and other
features that are meant to interrupt the digital viewing process and create engagement.

Greg Sterling, an independent search analyst, tells AdAge :

“[Google] is trying to get
ahead of the curve with these initiatives so when [mobile advertising]
becomes mainstream, Google will be one of the major players, and
display is a key growth area for Google.”

Bypassing other mobile devices means the search giant sees smartphones as the lasting mobile platform. It’s not much of a leap to think that the portability and continually owering price of such devices will make them a stronger player down the line. But it’s interesting that Google is making its stake now, when smartphones only occupy 20% of the mobile market.

That said, Google’s research finds that people do 50 times more Google
searches with these devices compared to older conventional phones. And their growth is poised for an upswing. Cellphones have reached a saturation point in America. Most every household that’s going to have one does already. Subsequently the overall
mobile handset market is expected to contract this year. But demand for
smartphones is estimated by some to rise at least 10% in 2009.

And a Best Buy sponsored survey out this summer found that over 40% of all
cell phone owners in the U.S. who do not have a smart phone intend to
purchase one within the next year.

The main issue now is whether those users will like to see their smartphones invaded by the kinds of ads that they’ve already learned to avoid online.

Image: GoogleMobileBlog