According to the to Interactive Advertising Bureau, total online ad revenue reached $9.26 billion in the third quarter of 2012, which is up six percent from the previous quarter and 18 percent from Q3 figure of $7.8 billion a year ago.

The CEO of IAB, Randall Rothenberg, said the growth is due to marketers recognizing digital media’s capacity for engagement and interaction. He cited social media and mobile on-the-go marketing as examples.

Here’s the IAB’s chart of online ad growth in recent years:

The upshot for publishers is that, while the mobile monetization riddle has not been solved, the growing amount of dollars flowing into the digital space is likely to produce solutions soon.

IAB compiles the numbers based on a revenue survey of web sites, commercial online services, free email providers and all other companies selling online advertising.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Takeaways from connected consumer’s second quarter
• Facebook’s IPO filing: ideas and implications
• NewNet Q4: Platform mania and social commerce shakeout

On the surface, PaeDae’s withPrizes tool competes first with Kiip (see disclosure below), allowing brands to hit game users with real world rewards at key milestone moments when they’re feeling good. But PaeDae is a white label tool, so the rewards look like they’re made possible by the developer.

Santa Monica, Calif.-based PaeDae also tries to give out fewer rewards and really make its mark by offering brands effective targeting so their rewards go to the right people. PaeDae CEO and co-founder Rob Emrich told me the company uses an array of online, offline and location data to help target the right users without using cookies or UDIDs. He said advertisers only pay for performance, not impressions.

So far in early results, PaeDae has been able increase time played in apps by 90 percent and give developers eCPMs of more than $20, much higher than typical eCPMs. PaeDae said for most casual games, it can boost average revenue per user by more than 100 percent. And advertisers are seeing click-through rates of more than 9 percent and redemption rates for prizes of up to 28 percent with some brands.

PaeDae CEO and co-founder Rob Emrich

PaeDae also works as a way to distribute apps with its withUsers tool. Developers who install the PaeDae SDK can turn around and take some of the money they make and use it to promote their apps. So a user in another game can get an invitation to download an app from a PaeDae developer for free. PaeDae will still apply its targeting technology to go after the right users.

PaeDae is working with about 20 developers right now including Kronos Games and Doppelgames and has hundreds in the pipeline. It’s also working with more than 20 brands including P&G, Omaha Steaks and online fashion retailer Beachmint.com.

With monetization lagging usage on mobile apps, developers can use all the tools they can get, if they can really deliver. If PaeDae’s results hold up over time, it might be another viable way for developers to make some real money and also drive more usage of their apps. The company, which launched in August 2011, has raised an undisclosed amount of funding from angels.

Disclosure: True Ventures is an investor in Kiip and the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics
• The 2013 task management tools market

Wadworth, who is currently a Tapjoy board member, will take over a company that has become a reliable tool for app developers to monetize their apps. The company provides tools that allow developers to make money by getting app users to complete certain tasks, like watching a video, signing up for a subscription or downloading another app. It also launched its own direct-to-consumer portal where users can find and download games.

Tapjoy ran afoul of Apple last year for its incentivized app downloads because it was apparently manipulating the App Store rankings. Tapjoy backed off but has resumed the practice using HTML5 windows that don’t get reviewed by Apple.

Previously, the company, known as Offerpal, was criticized in 2009 for the way it offered virtual currency in Facebook games for signing up for a service, sometimes subscribing an unaware user to paid services. The situation came to be known as Scamville.

It’s unclear what prompted the change at the top for Tapjoy. Shah assumed the CEO position in 2010 after the company changed its name to Tapjoy following the Facebook Scamville episode. He helped the company focus on mobile monetization, which has become a huge opportunity thanks to the booming app market.

Wadsworth worked at Disney for 17 years building up the company’s digital media and technology business. He spent 11 years of those years as Disney’s chief Internet and digital media executive before retiring in 2010.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• NewNet Winners and Losers of 2009
• Virtual Worlds: Trends and Opportunities
• GigaOM Research highs and lows from CES 2013

Now the company is hoping that’s a recipe for serious revenue as it turns on its first location-based advertising platform called Waze Ads. Retailers and brands can pay to insert themselves into Waze’s maps and search results when their locations are on the route of Waze users. So when a Waze user launches the app to navigate to work, home or some other location, they will be able to see ads and discounts from a gas station, restaurant, coffee shop or store pop up on their navigation map. Waze will not show more than three ads on a map at any given time.

Waze said what makes this different from other location-based ads is that it can understand where people are headed because they set their destination, not just where they are at the moment. That allows it to show ads that are relevant to users and only appear along the route towards a destination.

Waze could track where individuals have visited in the past and target ads based on that, but it wants to be careful about that. So it’s using more general group data to serve up what people might want. For example, it might know that a person visits Starbucks every day, but it doesn’t want to serve that person with only coffee ads because it could be creepy knowing that Waze is tracking your every move. But in the future, Waze is looking at how it can layer in more data from users, including Facebook likes and other user behavior.

The company said 20 percent of users already search and navigate to restaurants while in the app, and 15 percent search for fast-food establishments and 10 percent for coffee shops. Waze surveys have also found that more than half of the service’s users routinely make pit stops along their routes, with 30 percent doing so to shop.

Waze Ads is launching in the U.S. with advertisers such as Dunkin Donuts, Circle K MACS, Kum & Go, Wyndham Hotels, Jamba Juice and Procter & Gamble. Some will offer discounts to users, while others can just advertise their location or ask for users to download an app. Waze is looking at employing payment tools to help confirm when a user spends money as a result of seeing an ad impression. It recently integrated with CardSpring to sync offers to debit and credit cards and will look at rolling that out in the future.

The launch of the mobile ad platform follows a test of ads for gas stations in June.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Shopping Matters When it Comes to Location-Based Apps
• The Enormous Promise of Location
• GigaOM Research highs and lows from CES 2013

FixYa CEO Yaniv Bensadon told me during a recent phone conversation that it was much easier to explain many device defects visually. That’s why he came up with the idea to leverage mobile phone cameras. “Show me what your problem is and I will show you the solution,” Bensadon said, adding that this will also help to grow FixYa’s video inventory beyond the iPhone app. “As soon as a question is posted, it’s gonna appear on the site,” he explained.

But the real goal of the new iPhone app and its video capturing capabilities is to grow FixYa’s mobile usage. The service currently attracts about 30 million users a month, 20 percent of which come from mobile. Bensadon is especially enthusiastic about the prospects of monetizing mobile users.

FixYa’s plan to make money with mobile comes down to one key issue: Even with videos, users won’t always be able to fix their appliances themselves. That’s why the app is going to give them recommendations for local retailers and service providers, complete with a click-to-call option. FixYa is piloting this option in California, where it started to build a local sales team, and it is looking to expand click-to-call to other regions early next year. “We see it as a huge opportunity,” Bensadon told me.

FixYa was founded in 2005 in Israel, and relocated its main office to the Bay Area in 2007. The company received a total of $8 million in funding from Mayfield Fund and Pitango Venture Capital.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What Amazon’s new Kindle line means for Apple, Netflix and online media
• How consumer media will change in 2013
• Podcast: Mobile winners and losers in 2012 and what to expect in 2013

According to TechCrunch, Facebook will work with several mobile ad exchanges to serve the ads. When a Facebook user visits an app or website that is connected to a partner ad exchange and uses Facebook for authentication, Facebook will help target an ad if the user fits an existing bid. The ads could promote a website or prompt someone to download an app. Facebook recently started offering developers the ability to pay to promote their apps in the Facebook newsfeed.

While Facebook has a huge audience to advertise to, it has an even bigger opportunity to build an offsite ad network. The social network has already started experimenting with placing Facebook ads and sponsored stories on Zynga.com. If it can harness all of its user data, it could be a tool for advertisers to better reach consumers on the web and mobile devices. Of course, Facebook still gets knocked for its ad targeting on its own site, so it’s not clear how big the demand will be. Facebook isn’t saying which ad exchanges or publishers its working with. But it’s one more way for Facebook to drive revenues, something it definitely needs in mobile.

Mark Zuckerberg has said he wants to make Facebook a “mobile first” company and he sees reasons to believe that the company can make a lot more money on mobile use of Facebook than the desktop. With so many apps now connected to the social network, Zuckerberg doesn’t have to rely on just ads on Facebook to drive revenue.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Facebook’s IPO filing: ideas and implications
• NewNet Q4: Platform mania and social commerce shakeout
• NewNet Q4: Platform mania and social commerce shakeout

In the past, it hasn’t made much of a difference in how advertisers interested in your mobile behavior used that information to target ads at you.  But George Bell, CEO of mobile ad network Jumptap believes advertisers need to be smarter about separating so-called “impulse” behavior from “intent” behavior, and said his company has a new way to help them do it.

By partnering with thousands of publishers, third-party data providers like Datalogix and Acxiom, as well as data companies that focus on vertical-specific offline data (such as Polk for automotive data), Bell said the company is linking consumer behavior on mobile and the web with offline data to give advertisers a more global picture of their activity.

Distinguishing impulse from intent behavior

“Because of the nature of the device –- it’s always on and always on your person –- people use [mobile devices] to express impulse… people tend to fantasy shop,” he said, adding that other impulse actions include clicking on ads or content by mistake or out of curiosity. “If you don’t have a way to see consumer behavior across screens you’re not going to get a full enough picture of the consumer’s intent.”

From its publisher partners, he said, Jumptap is given hashed (or anonymized) profile information about mobile users–including email addresses–which is then forwarded to the third-party data providers. Those companies query their databases to match mobile information about users to information they might have about their online or offline behavior. The vertically-focused data companies supply additional information to further flesh out consumer profiles.

That’s a lot of consumer data to piece together, especially for privacy-minded smartphone and Web users who may not want their personal information shared with outside companies. But Jumptap said it doesn’t handle user information until it’s anonymized and that it gives mobile consumers tools to learn about the process and opt out.  Last month, the company announced that it has partnered with Evidon, the ad tech firm powering the AdChoices icons that lead to privacy notifications, to bring those icons to mobile web and app ads.

Tracking consumers across multiple devices

Historically, mobile ad targeting has used indicators related to the devices themselves (including the device type, usage, data plan and zip code) and consumer interaction with content and advertising on the device.  Bell said Jumptap’s new “consumer-level” approach to targeting gives advertisers the ability to distinguish between a consumer searching for a Rolex who is actually a luxury shopper and a consumer who is really a student with little income, who happens to be in an affluent zip code, clicking on ads (maybe even by mistake) for high-end goods.

But the company isn’t the only one coming up with ways of tracking and targeting consumers across multiple devices to get more complete pictures of their behavior.  Through device recognition (or “device fingerprinting”), which involves the collection of potentially hundreds of data points flowing off of a mobile or desktop device to identify it, advertisers could start to link behavior across iPhones, tablets and laptops.

As my colleague Ryan Kim has reported, a team of ex-AdMob and Google scientists launched Drawbridge to target advertising across platforms using consumer behavior data from online and mobile ad requests.

Jumptap said it doesn’t yet have data showing the effectiveness of its approach but said a handful of advertising clients are currently using it in beta. As the company looks ahead to an IPO within a year, the ability to target mobile consumers with more granularity will help keep it competitive in an increasingly active marketplace.

For more on mobile monetization, check out GigaOM’s upcoming Moblize conference in San Francisco.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• NewNet Q4: Platform mania and social commerce shakeout
• NewNet Q4: Platform mania and social commerce shakeout
• How tomorrow’s mobile-centric data centers will look

The forecast, if accurate, suggests that while downloads are exploding — 45.6 billion expected this year and 309.6 billion predicted by 2016 — people will buy fewer and fewer apps. And the amount paying customers will spend is also expected to go down. Gartner said that paid apps priced $2.99 or less are expected to represent 87.5 percent of all paid download this year and will account for 96 percent of all paid downloads by 2016.

This might sound depressing for some developers but the upside is that in-app purchasing is growing as a key monetization tool. Gartner found that apps with in-app purchase in which users can buy extra items, levels or services inside the app is expected to soar in the coming years. Apps that feature this approach are expected to increase from 5 percent of all apps worldwide in 2011 to 30 percent of all apps in 2016. And the revenue in-app purchase provides will grow from 10 percent to 41 percent over the same period.

This move to in-app purchase isn’t new if you’ve been following along.  In a mobile games report it released in January, Juniper Research said worldwide revenues from mobile in-game purchases totaled $2.1 billion in 2011 and were expected to grow to $4.8 billion by 2016. We’ll be talking about app monetization strategy at GigaOM’s Mobilize conference Sept. 20-21. 

Many developers are finding it’s easier to attract users with a free price tag and then monetize a portion of their audience through upgrades and additional purchases. There will still be a room for paid downloads and the revenues that model provides will still be substantial. That’s good news for developers who put out a quality product but may not drive enough download numbers to make in-app purchase work well or don’t have an app that easily lends itself to in-app purchases.

But the forecast suggests that the freemium trend is only going to continue and if app developers aren’t already considering it, they should look at how their app might adapt to this new reality.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Bluetooth to Feel Blue as Personal Area Network Battles Loom
• How to Ride the Freemium App Wave to Success
• Podcast: Mobile winners and losers in 2012 and what to expect in 2013

Activision is the first publisher to make use of the new in-app purchase option, which will be available in the game Skylanders Cloud Patrol. Users will be able to buy a physical toy for 99 cents using Amazon’s 1-click transaction system and have it shipped to their address. They will also be able to get a digital copy of their character that will be playable in the game.

As we’ve noted, mobile advertising is still waiting take off and in many cases it works better for apps that have a lot of usage. But now, developers who have some physical items to sell can enjoy the simple check-out process that makes Amazon purchases so easy and addictive. That could help attract more developers to support Amazon’s Appstore for Android.

Many developers are already seeing a better return on their investment in Amazon than in Google Play, even though Amazon’s mobile efforts are built atop Android. Flurry reported in March that among top apps that appear on the Apple App Store, Google Play and Amazon Appstore for Android, Amazon apps make 89 percent of the revenue per active user of the same iOS app while Google Play lags behind with 23 percent of the revenue per user. That was before Amazon officially turned on in-app purchase for its appstore apps. Now, Amazon will have another selling point for developers who are serious about monetizing their apps.

I’m not sure if this will be used primarily for toys sold in video games. That in itself is smart because there’s a lot of opportunities to get players, especially kids, to buy their favorite characters. But this could be huge if it’s used by bigger mobile commerce players. Most people use their phones to research rather than buy products because it’s not always simple to check-out on a phone. But if Amazon can make buying physical stuff in apps super easy, that could be a boon for a lot of sellers. And it could show that mobile has a lot of opportunity as a revenue generator for developers and publishers, despite some early signs that it’s still lagging.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Tablets wars: Apple is from Venus, Amazon is from Mars
• What Amazon’s new Kindle line means for Apple, Netflix and online media
• A look back at mobile in the third quarter

The company, which is in the midst of opening offices in San Francisco and New York, shared some new research with GigaOM, finding that 40 percent of clicks are essentially worthless, creating a conversion rate to install an app from an app store of less than 0.1 percent. Trademob found that 22 percent of clicks are accidental, while 18 percent are fraudulent. That could be one thing holding back mobile advertising as some advertisers question how effective their spend is on mobile.

Trademob — which aggregates more than 100 mobile ad networks and offers post-download conversion tracking to measure advertising efficiency — studied 6 million clicks around the world over six weeks earlier this summer. Click fraud appears to be a growing issue, repeating some of the problems that online advertisers had to deal with, Alexander Franke, COO of Trademob told me in an phone interview. He said mobile click fraud, which represented about 10 percent of clicks at the start of the year, falls into two main categories: server side and botnets/client side.

Franke said 8 percent of clicks are created by an app publisher who uses a server to register false clicks. A more sophisticated problem is when someone deploys botnets on a number of hijacked devices to manipulate mobile click data. And in some cases, fraudsters hide one banner ad behind another getting credit for both clicks. These two methods account for 10 percent of useless clicks, said Franke.

Trademob uses its tracking software to analyze the header data and IP addresses from clicks to identify suspicious clusters of activity. That can identify server-side fraud when the clicks come from the same IP addresses. For more sophisticated fraud, Trademob can identify when fraudsters generate clicks that don’t match the original campaign targeting settings. For example, Trademob will notice when a mobile ad campaign targeting iPhone users in western Europe, suddenly sees a lot of clicks from hijacked Android phones in India. Trademob puts these publishers on a blacklist and won’t advertise on them.

Accidental clicks are actually a bigger problem than fraud, but the rate of accidental clicks appears to be falling. Pontiflex ran its own survey with Harris Interactive last year and found that 47 percent of app users said they were more apt to click a mobile ad by mistake than on purpose. It’s not a straight comparison but Franke believes that accidental clicks are going down, in part due to larger screen devices which lower the potential for mis-navigation.

But it’s not just fat fingers. Many shady publishers intentionally place big banner ads next to small buttons to induce accidental clicks, said Franke. Using its tracking technology, Trademob is able to identify the persistant bad publishers who yield extremely low conversions after the click and add them to its blacklist.

These numbers are all generated by Trademob, who stands to gain by the awareness of useless mobile clicks. The company, which was founded in 2010 with funding from German VCs Tengelmann Ventures and High Tech Gründerfonds, has made its tracking tools one of its major selling points to customers. But Franke said Trademob has the best data around mobile clicks because of its sophisticated post-click analytics.

The figures, if true, help explain some of the lingering challenges for advertising. With mobile usage exploding, there’s a growing opportunity for ethically questionable people to recreate click fraud methods on mobile, where defensive measures are less mature. This may add to the concerns of advertisers, who are still figuring out how much they want to spend on mobile. That can ultimately hurt legitimate mobile publishers and developers who are leaning on ad support to pay the bills.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The future of mobile: a segment analysis by GigaOM Pro
• How tomorrow’s mobile-centric data centers will look
• Podcast: Mobile winners and losers in 2012 and what to expect in 2013