AT&T Subsidiary Creates AdMob Competitor That Is Local

A subsidiary of AT&T, which is known best for its yellow-pages products, is launching a mobile ad network that will target consumers based on their location.

The network will compete with Apple’s iAd and Google’s AdMob networks, and is available to iPhone and Android developers and publishers looking to monetize their games or applications through advertising.

It could be particularly powerful because it taps into AT&T’s thousands of local salespeople, who work directly with local pizza places, dry cleaners, movie theaters and restaurants across the country.

The mobile ad network joins AT&T Interactive’s existing properties, including search on the Web or mobile at YP.com. A separate subsidiary prints the yellow directory that is delivered to your doorstep. The company’s interactive revenues have an annual run rate of $1 billion.

As an example of how big this business is getting, last year Google disclosed that mobile ad sales were now at a $1 billion annualized run rate. Google’s business is international and consists of both search and in-app mobile advertising.

While AT&T would still have a lot of catching up to do, David Krantz, AT&T Interactive’s president and CEO, said in an interview that he’s hoping its ads result in higher click-through rates because they can target a person’s location with more relevant ads.

Based on a three-month trial, Krantz said prices and fill rates were falling somewhere in between Apple’s iAd at the high end and Google’s AdMob or Millennial Media at the lower end. In the trial, which included 750 million impressions, costs per click ranged between 25 and 30 cents.

“We have really high fill rates because of our coverage, and we are able to provide CPMs in between [Apple and Google], so we’ve had a lot of interest in the pilot … We are finding a ton of demand for what we do,” he said.

Most of the major ad networks also try to serve more relevant ads based on location, but oftentimes it is difficult if they don’t have the sales force. Greystripe was focused on regional advertising before it was purchased by ValueClick, and Where had also latched on to the idea, before it was acquired by eBay’s PayPal.

AT&T’s ads will appear in any application as long as a person has opted to share their location. If a consumer clicks on a banner, it will direct them to a landing page from inside that application that will include click-to-call information, directions, reviews and coupons.  (Note: AT&T Mobility customers will not be treated any differently from subscribers on other wireless networks.)

AT&T is also launching a daily deals service sometime soon, but it is not part of the launch at this time.

Advertisers who are already part of the YP local ad network will not pay more to participate. AT&T pays the publisher on a pay-per-click basis.

Two of the applications that participated in the beta were Pinger and Skout. In a release, Pinger said it achieved CPMs three times higher than with other ad networks serving ads that were not local.

Krantz said AT&T’s ad network was built in-house with the help of Plusmo, which it acquired in September 2009.