Amid predictions that ad-sponsored directory assistance through mobile phones will grow from 270 million calls in 2007 to 2.1 billion calls in 2012, the competition for mobile marketing and local search is quickly heating up.

There is Google and their 877-520-FIND, followed by 800-GOOG411. Then there is Microsoft, which acquired mobile directory service Tellme. As of late, even AT&T has joined the bandwagon. AT&T has leveraged its Yellow Pages via mobile services that mimic the blend of local business ads and listings in the traditional directory.

Despite the sudden surge of mobile devices and smart phones, “people still want the familiar Yellow Pages phone book that was in a drawer in their kitchen but now they want it in the handset in their pocket,” said David Huntley, AT&T SVP of Customer Information Services, in an Oct. 1 article carried by Adweek.

AT&T discovered that many consumers want user-friendly audio, graphic and text directory services to fit a variety of circumstances, like while they’re walking, shopping or stuck in traffic.

The most recent addition to AT&T’s lineup of local directory programs for mobile phones is the free, ad-supported 1-800 Yellow Pages Directory service. According Huntley, their research revealed that people will listen to short sponsorship ads if it means they’ll receive free information. They also noted that 411 directory service currently costs anywhere from 25 cents to $3.49 per call, depending on the carrier.

Essentially, the new service enables a mobile or landline caller to receive a listing and as an option an automatic connection to a specific local home or business, or to get a list of nearby merchants by category and location.

In exchange for the free information, the user must listen to a maximum of four ads that run 5-10 seconds each, beginning with a general sponsorship ad that comes on right after dialing; the other ads are heard after each interaction.

If a caller asks for pizza restaurants in a certain area, for example, she might hear up to three ads for nearby pizza joints; if she asks for a restaurant by name, she might hear an ad for that restaurant or for another nearby spot. The number of ads per call depends on how many advertisers in that specific category have signed up for the service, wrote Joan Voight of Adweek.

1-800 Yellow Pages was tested in California in July and introduced Sept. 10 in nine southern states: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. Plans call for it to be rolled out nationwide in 2008, sources said.

“Yellow pages companies such as AT&T are executing on a multi-channel ad business,” reported The Kelsey Group’s “Mobile Advertising Forecast. “Mobile represents a critical link in this multi-channel strategy where these companies will try to dominate ad share.”