Basically the mobile devices (smartphones) are going to screw google just give it time. Screw them the way it has and is yahoo and Facebook.
All because on mobiles>>>
a— advertizing is lot less visible so less eye-catching
b- advertisers know this thus a google cannot charge (does not charge) as much for this advertising
c— even if you do click through on a mobile device there is far less chance of you scrutinizing and imbibing what you land on and advertisers know this
There are very attractive marketing opportunities presented by mobile devices but these are limited by a few current realities, the most prominent of them being the structure of many plans being limited as far as data.
In the absence of that limitation and assuming individuals with mobile devices were amenable (another hurdle that could be incented as a positive option), demographic and preference data unique to each individual combined with geographic location could be very lucrative for certain kinds of businesses.
You could literally pull in fairly well qualified sales prospects with a high likelihood of purchase via passing traffic with an offer that is appealing, timely and immediate (think coupon), or market to an obscure interest within a set geographic radius via a mobile blast.
I’m suspicious of Google and don’t particularly like them, but I wouldn’t count them out just yet. It’s just that they’re still stuck in the old static, traditional advertising mindset, counting eyeballs and clickthrough. A lot of fraud there and the medium is not optimal due to the size of the screen as you note.
They need to realize that they are direct marketers. An extremely appealing offer can be created in text alone, it’s been done for close to a century in print. I can assure you that they’ll go down if they fail to realize this. At least one of their primary competitors does.