After years of hype and hot air, advertising on mobile phones finally appears to be making some headway, boosted by the popularity of smartphones such as Apple's iPhone and the content found on them.

Executives gathered at the mobile industry's annual event in Barcelona, Mobile World Congress, said the biggest boost to advertising was the introduction of smartphones, led by the iPhone, which had made surfing the Web an everyday occurrence.

Apple is also responsible for the popularity of another growth driver, the AppStore, which lets iPhone users download thousands of small software programs to personalize the way they play games, listen to music or find directions.

Advertisers have been able to place ads within those programs, or widgets.

But any operators hoping for a boost should likely not hold their breath, as analysts and executives believe the majority of advertising dollars will go to the publishers such as Google who already dominate the Web.

While we all believe in mobile advertising, we have to recognize that it hasn't taken off as quickly as expected, said Vodafone's Vittorio Colao, chief executive of the world's largest mobile group by revenue.

The mobile industry has talked up advertising for many years, touting the personal and ubiquitous nature of the phone and its ability to offer ads based on location.

Anyone interested in a new car, for example, can in one step click through to ring the dealership.

Its supporters also point to the forecast that in a couple of years, mobile is expected to become the most common way to get onto the Internet, overtaking the computer.

But would-be promoters of mobile advertising have found that getting around the problem of cluttering up the phone's small screen with display ads has been harder than expected.

And, a lack of common standards across the industry in how operators, handset makers and advertising agencies approach the service, and the little research showing its effectiveness, mean the industry is still some way from taking off.

There is no real consensus yet on the value of global advertising spent on mobile although Mike Wehrs, head of the trade group Mobile Marketing Association, said he believed it was at the million range and not yet billions.

HYPER TARGETED

Serious interest, however, is growing fast.

Christian Louca, the UK country manager of mobile advertising agency YOC, told Reuters the mobile advertising industry had now moved beyond the trial phase and was starting to see dedicated budgets for mobile.

And AdMob, one of the largest advertising marketplaces which signs up advertisers and publishers, said it had seen 6.8 billion network requests in January alone, driven by publishers who want to make money while giving away content for nothing.

People are waking up to the mobile Internet and getting more used to good advertising, said Thomas Schulz, managing director of AdMob, which partners with more than 6,000 mobile websites, 700 applications and 60 brand advertisers.

By 2011 it is anticipated that more people will use or access the Internet on mobile devices than on the PC, that's on a global basis, and that's driven by emerging markets.

Social Network MySpace currently offers advertisers hyper-targeting where they put people anonymously into interest groups and Chief Executive Chris DeWolfe says they can now do this for mobile if consumers opt in.

A lot of our big brands are beginning to target cross-platform, he told Reuters in Barcelona.

But not everyone is convinced.

Ovum analyst Eden Zoller said mobile advertising had huge potential but that it was still very much in flux and there was little clarity around the business model.

There's still a lot of work to be done, she said.

(Reporting by Kate Holton; additional reporting by Georgina Prodhan; Editing by Hans Peters)

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