Omar Hamoui only started his company in 2006, but chances are his fledgling project has already served an ad to your mobile phone. The so-called “mobile Web,” which refers to people browsing the Web on their portable devices, has been growing exponentially in recent years, and so has Hamoui’s playfully named company, AdMob (the “mob” is short for “mobile”).

From a company with a staff of one that served up several million ads in its first few months, AdMob has become a 60-person powerhouse that serves almost 3 billion targeted ads a month to mobile devices worldwide. It is funded by $19 million in venture capital from, among others, Sequoia Capital, the Silicon Valley firm that’s backed companies like Google and Yahoo. In classic long-tail fashion, Hamoui has succeeded by signing up thousands of mobile websites as publishers and making it easy to serve up ads targeted by mobile device, user’s geographic location, and type of content an almost entirely automated process.

As Hamoui has gobbled up share in a market that could grow as big as $4 billion in the U.S. alone by 2011, the dominant sellers of online ads have largely been on the sidelines—until now.

Last September, Google rolled out a product for its current advertisers who want to place ads on portable devices called AdSense for Mobile. This extended Google’s search-results ads to the Web. AdSense for Mobile increases its service for publishers. According to Google, the number of Google searches being done on mobile devices is growing rapidly, and is likely to increase as the company develops mobile products for the iPhone and others.
    
Google’s not the only giant circling around AdMob’s market. AOL acquired one of AdMob’s strongest competitors, Third Screen Media, last year, while Microsoft, Yahoo, and Nokia have all also acquired smaller AdMob competitors in recent months. The advantage of some of these competitors, particularly Third Screen, is in their relationships with big-name publishers that have wider reach than the typical AdMob publisher.

It’s shaping up as a classic David versus Goliath battle, pitting the fresh-faced, serial entrepreneur Hamoui against some of the Silicon Valley establishment.

But the 31-year-old Hamoui, who dropped out of the Wharton School after his first year to run and grow AdMob, says he’s ready for the fight.
 
“They have lots of money and lots of people,” he says of Google. “But we can move fast and react to changes quicker than a large company can.”

That agility is one of the reasons Hamoui was able to establish AdMob so quickly in the first place. While other early mobile ad sellers were attempting to penetrate the expensive, entrenched mobile network run by the large cell-phone carriers, Hamoui went after the more accessible small mobile Web publishers who probably never thought they could make money selling ads, figuring if he could serve up targeted, trackable ads on lots and lots of them, he’d still be able to build a strong business. Hamoui also targeted mobile Web publishers in foreign countries where cell-phone surfing was more prevalent; today, almost 60 percent of the ads AdMob serves are outside the U.S., particularly in India, Britain , and South Africa.

Hamoui conceived the idea for AdMob out of his own frustrations as a publisher and advertiser. His previous startup was a photo-sharing site for cell-phone users. He found that to advertise to this group, he had to first buy Web ads to get people to visit his mobile site, and then only converted a small portion of those visitors to actual users. His cost per customer was an unsustainably high $30.  

At one point, he contacted a popular mobile site directly and offered to pay the company, which had never sold an ad before, one cent per click-through. With every 10th visitor actually signing up for his service, Hamoui instantly reduced his cost for acquiring each customer from $30 to just 10 cents.

“I realized that there were plenty of people like me who have cool mobile ideas but no place to advertise, and a lot of people who could charge for advertising but have a tough time finding customers,” says Hamoui.

Hamoui gradually shifted his efforts to developing this mobile ad network, and he soon had dozens of publishers signed up. The company also began to attract the attention of venture capitalists, who recognized the potential scalability of AdMob. Now the company finds itself in a “very enviable position,” says Julie Ask, a wireless analyst for JupiterResearch. “They are one of the leaders in global reach, and they have a lot of smart engineers that are continuing to innovate.” (AdMob currently has four Ph.D.’s on staff and recently hired executives away from both Yahoo and Facebook).

Now the company’s growing ad inventory has allowed it to attract large advertisers like Coca-Cola, Starbucks, Jaguar, and Ford, who are looking to spend big money on individual ad buys.

“If you were a Coca-Cola or Toyota, and you want to spend $50,000 on banners on cell phones, there aren’t that many companies that can handle that much inventory,” says Ask.
    
And the company now does have its share of larger mobile Web publishers such as CBS News, AccuWeather, SportsLine, and TV Guide—all of which could change to another mobile ad network at any time, leaving Hamoui in a potentially vulnerable position and a reminder that the battle is not yet won.

“We started with the little guy and we sort of grew our way up,” notes Hamoui. “Now the larger contracts that we’re going after are coming to us for two things—one is technology, two is reach.” According to Hamoui, AdMob now reaches one in every three mobile Web users every month. And the company also has performance data on the over 25 billion mobile ads it’s served since 2006 that it uses to advise its advertisers on maximizing their campaigns.

Hamoui’s going to need every last one of those advantages as he girds for battle with the likes of Google and Yahoo.