The 800-pound search engine gorilla is at it again, shaking things up in the virtual world. This time it's extending the reach of Adwords -its billion dollar contextual advertising system -to mobile devices.

Google's new Mobile Ads system delivers two short lines of text and a third line containing a destination URL (and an optional "call" link that dials the advertiser's business) to mobile phones and wireless PDAs. The text-based ad can be used to target mobile users in the United States, the United Kingdom, Japan, and Germany.

From an advertiser's perspective, Mobile Ads is used in conjunction with Adwords. So, when someone searches Google from a PC the advertiser's Adwords ad appears, but when searched on a mobile device the Mobile Ad appears. The advertiser should have a mobile-enabled website or landing page (written in XHTML, WML or CHTML), but theoretically Mobile Ads could be used simply to put a local business' phone number in front of mobile users.

Now hometown advertisers can use Mobile Ads to lure prospective consumers to make local and, most importantly, impulse purchases.

Imagine a shop that advertises a time-based neighborly discount of 50% to local mobile users, who in turn drop what they are doing and head to the advertiser's shop to make a purchase. Think of the possibilities for neighborhood businesses.

Google Ads is a giant step for location-based services.

Of course, it's not as good as an advanced location-based service that uses embedded chip technology to send subscribers targeted discounts based on proximity to a shop -but, it's nonetheless great that Mobile Ads can entice mobile users to pursue locality-based offers.

However, there are some general limitations.

First, even the most brilliant copyrighters/marketers would be hard-pressed to squeeze "motivation" into just two lines of text with 12 characters each. Second, mobile devices may not be conducive to the sort of on-the-spot analysis that most of us do when an offer interests us. We open another browser to search for alternatives, reviews, competitors, coupons, and other things to evaluate the offer -and even bookmark the advertiser's site for follow up evaluation. Third, e-commerce check-out systems may prevent or frustrate mobile purchases.

In addition, people seem to use mobile phone searches primarily for amusement and to alleviate boredom. So, they would be searching for things like celebrity information, jokes, horoscopes, games, sports, techie info, and ringtones. Indeed, at least one major study of mobile search behavior (by Google, Columbia University and Carnegie Mellon University) supports this theory, indicating that many mobile phone searches relate to adult, entertainment and tech info. While there is evidence that wireless PDA users do search frequently for "local services," I am not sure it's prudent to assume they are also making purchases or visiting local merchants as a result of a search.

So, where does that leave us overzealous web owners?

If you own a website that offers "sticky" mobile content you could consider selecting the Mobile Ad option the next time you run an Adwords campaign. If you don't offer mobile content, well, maybe you could use this as an opportunity to get a mobile-compliant website or landing page.

However, you might hold off on using Mobile Ads if you are looking to promote an ecommerce-based service -and especially a non-impulse service!

Of course, if you have an impulse or content offer I would start using Mobile Ads while the cost-per-click for various keywords is still low due to the newness of the program.

Finally, I should note that many wireless carriers have advanced location identification chips buried in their mobile handsets in order to meet the Federal Communications Commission's E-911 public safety requirements.

It will be very interesting to see if Google finds a way to use that technology to further expand its services to include targeted, location-based advertising.