Google, Inc. (NASDAQ: GOOG) has finally started trying to monetize its YouTube service through video ads, and now the world's largest internet search service is toying with advertising at its mobile video website as well. So far, Google is only testing display advertising (small banners) on its mobile website and only on select pages for U.S. and Japanese visitors.

For now, this is only a "test" for YouTube. Google's Christine Tsai indicated that there are "millions of people who visit YouTube every day" on their phones. Google CEO Eric Schmidt has repeatedly said that Google's mobile presence is the key to the future, since there are a disproportionately larger number of internet-capable cellphones in use globally than PCs.

Schmidt has even called finding the right advertising model on YouTube the "holy grail." He's right -- but the only problem is that Google still has not found a mass advertising model for YouTube (mobile or not) that works when deployed property-wide. While Google continues to seek other revenue sources outside text advertising -- currently its only real cash cow -- YouTube probably presents the next best revenue source for the online search leader. That is, if it can make the YouTube ad model as unobtrusive as the search advertising model.

Google (NASDAQ: GOOG) CEO Eric Schmidt often says that the mobile frontier is the next biggest opportunity for Google. In terms of the math, he's correct: there are many more cellphones in use worldwide than PCs -- all it takes is to get customers accessing the web on their phones. So far, success has been mixed, however, Apple (NASDAQ: AAPL)'s iPhone is changing the game. iPhone users are going on the web constantly.

The web search giant has just taken a large leap in that direction, now that it has announced YouTube Mobile availability on millions of existing cellphones. The more customers that buy advanced, 3G-capable wireless phones, the more potential customers Google will have accessing YouTube content and even uploading videos directly from their handsets.

YouTube mobile product manager Dwipal Desia indicated, "It's basically the full YouTube experience you can get on the desktop -- on the phone." With YouTube easily the world's most popular online video property, can Google transfer this to the mobile arena in the next year or two? Getting customers to use YouTube Mobile is the largest barrier -- because once you've used it, it's hard to resist (from my experience, anyway).

Although Google referenced the iPhone and phones from service provider Helio, the company did say that the full YouTube video experience was not available on handsets from the second-largest wireless carrier, Verizon Wireless. The next step, of course, will be for Google to find out how it can monetize YouTube Mobile.

Google Inc. (NASDAQ: GOOG)'s addition of GrandCentral (an awesome service!) last week kept the batting average of the internet search company at a steady 1.00. Google keeps on making acquisitions that add to its already-impressive arsenal of products and services that, for now, overshadows just about every other internet brand. Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) have made some large-scale buys too in recent months (Right Media for Yahoo!, aQuantive for Microsoft), but Google keeps stealing the thunder.

But going back almost a year now, Google's acquisition of online video company YouTube still gets a lot of attention due to the way the website is stealing eyeballs from traditional media like network and cable television (and movies), among other venues. YouTube's video quality and medium (computer monitor viewing) is hugely subpar when compared to a standard home television experience, but that does not seem to matter; instead, it's the content that matters. Viewers may be getting increasingly fed up with the hi-def broadcasts of boring, staid shows and prefer the grainy reality of 'television' made by the public. Why? It's real.

YouTube's greatest potential, though, is not even on the computer screen -- it's on the cellphone screen. Visit mobile.youtube.com on your cellphone's web browser and you can get a taste of what may be coming. Not all YouTube content is available yet, but with these videos being converted on the fly to the format most modern cellphones can play, is YouTube's vast video library about to be opened to over a billion cellphones worldwide? With YouTube being bundled by Apple on the new iPhone and with a partnership with Korean cellphone giant LG on tap, Google's plans for YouTube may expand way beyond the computer screen. There are about four times as many cellphones in use in the world as PCs -- and we can all do the math, right?