Steve Jobs made a splash talking about iAds—both in terms of firing up advertisers and cheesing off competitors, such as AdMob. Now, Microsoft is reinforcing the hot button issue of mobile advertising with its announcement that Windows Phone 7 is an "Ad-Serving Machine.” What does that mean? According to Kostas Mallios, Microsoft’s general manager for Strategy and Business Development, it means that advertisers will have a direct channel for bringing their sponsored messages to uses in two new exciting ways. The first is an opt-in service called "Toast.” Toast allows a small ad box to slide down unobtrusively from the top of the screen to alert users of new offers. This functionality works even when the company’s program isn’t running, thanks to push notifications.

The second is the advent of live "tiles.” Tiles sit on the home screen and can be designated for a number of uses, one such, apparently, is advertising. Tiles can display sponsored messages that, when clicked, bring the user to the advertiser’s website.

The new mobile advertising solutions for Windows Phone 7, which is slated to hit shelves by the holiday season, differs from Apples iAds in that it integrates into the entire phone experience. iAds, on the other hand, is targeted more at apps, as it will appear alongside ad-supported games, applications and websites. Of course, there is the question of whether Windows Phone 7’s willingness to literally and figuratively "push” advertising messages into the user experience will be greeted tepidly, enthusiastically or vehemently. The birth of Internet advertising saw a sharp rise in pop-up ads and a subsequent drop off as users unanimously found them obnoxious and intrusive. Could Windows Phone 7’s push advertising service be the pop-up ad equivalent for mobile marketing?

Microsoft’s decision to allow users to opt-out of this service somewhat tips their hand, signaling that they are anticipating a certain amount of backlash. But that may be an overcompensation—if users simply opt out of this powerful advertising platform, the benefits will be mooted and advertisers will only serve audiences who too lazy or uninformed to disable them. This goes counter to perhaps the most lucrative of mobile marketing audiences—the tech savvy tweakers and fiddlers who are evangelical and influential in their endorsements (that is, when they actually like something).

At any rate, the battle for a balanced solution for high visibility and low intrusiveness in mobile marketing is on. It’s a tiny space to dominate—literally fitting in the palm of the hand—but its outcome will have massive repercussions for developers, cellular carriers, hardware makers, advertisers, publishers and anyone else who interfaces with mobile culture.