We have been wondering when we would see Google ads on Mobile and also wondering about how it might work.
Abstract

A method and system for presenting promotional content to a user of a communication device involves receiving information from a communication device, where the information relates to the communication device, and identifying a result relating to the information that is capable of being presented in a plurality of formats on the communication device, and dynamically selecting a format for the result from among the plurality of formats, and presenting the result in the selected format for display by the communication device.

The general trust of the claim (so it seems to me) is that the ads are context specific..ie if you search for something on your mobile..you will be shown an ad that is relevent to your search and your location for example.

Further it is claimed that you will be able to click the and fire of an SMS automatically. This SMS could entitle you to a coupon. Anthor type of ad may bring you to the advertisers mobile web site. Another could simply open an SMS compose window where you can write a message to the advertiser. A further claim referres to plurality of formats which I think is about formating the advert page to suit the phone model.
Read all about it on the US patent office site

My comment? Maybe I am missing something but this sort of thing is routinley done in the Adult content mobile phone industry, I cant understand how a patent could hold, but then I am not Google.