Mobile geo-targeted ad rates reaching new highs?

December 9, 2010, 7:19 PM UTC

Mobile ads are going to be a big business.

Yesterday, ooVoo CEO Philippe Schwartz came into the Fortune offices to demonstrate his company’s excellent new mobile video conferencing software (more on that next week) on Android and soon on iOS.

On the desktop, ooVoo has two revenue models.  One is a subscription service, mostly sold to businesses who want to do multiple-window video conferencing without advertising.  On the consumer side, they run Google (GOOG) Adsense ads on their video conferencing application.  In the long run, they plan to make enough from advertising to give the application away for free.

What is startling, however, is that they are seeing much higher ad rates on their new mobile phone application.  Schwartz said he sees cost per click rates that are three times higher than what they are for desktop ads.  He uses Google’s Admob and the mobile ads are geo-targeted to the general region (down to miles, not feet).

He said he would have been happy with rates that were on par with desktop rates and is obviously elated with the results they are getting.

I should caution, however, that his estimates are based on information coming from just one testing group that has test centers in robust real estate markets like Manhattan and Atlanta.  Clearly, more data is needed.

That also brings up another interesting issue.  Advertising to people in high-cost urban centers may bring higher mobile click rates than advertising to general, rural or depressed geographical areas.  Following that, web publishers will likely try to attract “high cost” eyes by tailoring their content to those people rather than the population at large.  It will be interesting to see if this phenomenon changes the media landscape.