AOL's Mobile Ambitions

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Perhaps the biggest sign that AOL is serious about wireless is a slew of new and revamped mobile applications. The company recently relaunched the portal that users can visit via mobile Web browsers, changing it from a mostly text-based affair highlighting a few news stories to a richer site with a wider variety of content and ads. Likewise, the company has overhauled its mobile search application to enable users to receive more targeted results, a feature already offered by Google and Yahoo. With this enhanced mobile search engine, a user can enter a zip code and the word "sushi" on a phone to receive the address of the nearest sushi restaurant.

Starting in October, AOL plans to aggressively promote the mobile applications on its Web sites and introduce new features rivals don't have. All pages on the desktop version of AOL.com will start featuring "send to cell" buttons. When users press them, they'll be prompted to enter their mobile-phone numbers, triggering text messages to those handsets with links to AOL services.

Ad Explosion

By yearend, AOL plans to launch a mobile version of WinAmp Remote, a content-sharing application that will enable a cell phone to play songs and videos stored on a friend's computer. A mobile version of AOL's just-announced BlueString, a video- and content-sharing site, is in the works as well. Also on tap for the coming months is the launch of AOL My Mobile, which will enable users to replicate their desktop AOL preferences on a cell phone. And for those who'd prefer to stick with single-purpose applications, AOL is working to create mobile widgets with companies including uLocate, which has developed similar software for Sprint Nextel (S).

Despite all the initiatives, AOL is hardly a newcomer to mobile. The company launched its wireless efforts in 2000 and has since accumulated a rich portfolio of applications and struck a wide range of distribution deals with major wireless carriers including AT&T (T), Verizon Wireless, and Vodafone (VOD).

The newly intensified focus is no doubt spurred by an expected explosion in mobile advertising. In the U.S. alone, revenue from mobile search ads is projected to mushroom, from $33.2 million in 2007 to $1.4 billion in 2012, according to consultancy the Kelsey Group.

Crowded Field

Such projections are hard to ignore for a company that needs to augment dwindling revenue from Internet access subscriptions with an increased focus on ads. To that end, in May, AOL acquired mobile advertising network Third Screen Media. And on Sept. 17, Time Warner launched AOL's Platform A, an ad network allowing marketers to reach AOL users both online and on mobile phones. "We are finding that half of our big accounts are at least asking what they can do on mobile phones," says Falconer.

Some of AOL's key rivals may actually prove instrumental in the outcome of this mobile gambit. Google, which acquired a 5% stake in AOL for $1 billion in 2005, and MSN may both seek to distribute their ads on all of AOL's mobile sites, suggests Matthew Booth, an analyst with the Kelsey Group. Both "will be writing huge checks to get that deal done [soon]," he says.

But to ensure it remains relevant as a mobile ad purveyor, AOL will need to convince loyal e-mail and IM users that its wireless offerings are sleeker and easier to use than the robust offerings coming down the pike from powerful rivals. "AOL is not the first company that would leap to people's minds in thinking of mobile efforts," says Fred Boxa, a principal with IBB Consulting. "But they are trying to change that."

Kharif is a reporter for BusinessWeek.com in Portland, Ore.