As mobile adoption continues to soar, brands and agencies are increasingly looking to reach mobile users with marketing messages. Likewise, publishers experiencing rising mobile page views are now facing pressure to monetize this growing user base.

For both advertisers and publishers, mobile display advertising is an emerging industry that has a critical role in the development of the mobile web. But while the value of mobile display is obvious in concept, in practice, the industry as a whole faces some serious challenges.

A key concern is fragmentation. Kunur Patel of AdAge described the issue last year - “Marketers report that device fragmentation and lack of standardized metrics and ad formats are among mobile advertising’s biggest challenges.”

The Mobile Display Landscape

The chart above, courtesy of Supply Side Platform AdMeld, shows the complex state of mobile display. But while the landscape is certainly cluttered, from an advertiser perspective, three key ad networks are emerging as dominant players.

• Google. Google bought AdMob, a mobile ad network, in late 2009 for a whopping $750 million. Just recently, AdMob was finally integrated within AdWords, allowing all AdWords advertisers to buy inventory from more than 300,000 mobile apps. All told, Google is estimated to lead the mobile display advertising market, with 24% total share.

• Apple. Apple’s premium mobile display network launched to great excitement, as many expected it would jumpstart the mobile display industry. But iAd’s market share has fallen lately – from 19% to 15%. This dip has prompted Apple to lower their pricing several times – advertisers now only need to commit $100,000 to get started with iAd, down from $1,000,000 on launch.

• Millennial Media. Millennial Media is the largest independent mobile display network. MM just recently went public, with a market cap that actually exceeds the overall value of the mobile ad market. Obviously, Millennial’s investors are betting big on the future of mobile display.

Mobile Display Creative

Ad creative is another challenge for mobile advertisers. The huge range of devices, operating systems, browsers, and platforms requires a serious creative investment for brands looking to reach a wide audience.

The image above (provided by app development company Animoca) demonstrates the problem – there’s just such a broad range of mobile devices and capabilities, that developing mobile display campaigns requires an exhausting amount of creative.

While desktop display relies heavily a few key sizes such as the rectangle, leaderboard, and skyscraper, there are over 60 commonly used mobile ad sizes. Clearly the industry needs some standardization – which is what organizations like the mobile marketing association are trying to do, by establishing consistent best practices for mobile display creative.

There’s also the issue of mobile-specific requirements. For example, while Flash is a mainstay of desktop display, it’s obviously out of the question on mobile devices. Similarly, while Rich Media is core to many online branding campaigns, it’s tougher to execute smoothly on a mobile devices. (Although companies like Vdopia and Celtra have developed some pretty impressive mobile rich media capabilities.)

Search and Social

It’s worth pointing out that while mobile display has issues with fragmentation and overall maturity, mobile paid search is a much simpler industry. Google basically owns the entire mobile search space, and advertisers have no problems buying mobile clicks from AdWords.

Mobile search also has a very clear value proposition: mobile searchers are closer to making a purchase, and it’s easy to deliver a relevant and timely message to these action-oriented consumers.

Finally, Facebook has a key stake in the state of mobile display. One common pre-IPO critique of Facebook was that, while Facebook has a massive mobile audience, there’s currently no way to monetize these mobile users.

Just recently, that’s changed. On June 5th, Facebook announced their first mobile-only ad product. This new system allows marketers to buy sponsored stories specifically for mobile devices. This format is still young and untested, and its success will of course depend on how brands perceive the effectiveness, but nevertheless it represents the first big step forward for mobile-social display.