Google Buys AdMob for $750 Million to Boost Android

By Clint Boulton  |  Posted 2009-11-09

Google moved to fill a hole in its advertising arsenal Nov. 9 when it purchased mobile display advertising power AdMob for $750 million in stock.

AdMob's technology platform helps customize digital display advertisements to small screens on smartphones, whose full Internet browsers make them a rich, new playground for mobile ads.

The company soared to success running mobile ads for Ford and Coca-Cola on Apple's iPhone, but branched out to support smartphones running RIM, Nokia, Palm and Google's own Android operating system.  

To date, content publishers, advertisers and technology providers have had a hard time putting ads in front of the millions of mobile phone users. Google has made some headway in providing mobile search ads to the so-called third screen, but it has been lagging in providing mobile display ads, or in-application ads.

AdMob fills those needs, ideally helping Google reach advertisers trying to engage smartphone users, and helping content publishers and mobile application developers get a cut of the money collected from ads paired with their content.

This is key to Google's mobile Web strategy, the foundation of which is Android. Google wants to see Android find purchase on as many smartphones and mobile gadgets as possible, and for users to use Google applications powered by Android.

Google aims to pair its Web services with its search, mobile and in-app ads. This would allow the company to expand its paid search empire from the desktop Web to the mobile Web at a time when Internet rivals Yahoo and Microsoft are struggling to do the same.     

"Mobile advertising has enormous potential as a marketing medium and while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time," said Susan Wojcicki, vice president of product management at Google, in a statement.

A big buy like this by Google is sure to attract the attention of federal regulators, privacy pundits and other experts who feel Google is getting too big for its britches. On a special Web site clearly designed to temper concerns about what this buy will mean for the competition, Google said:

"Mobile advertising is a rapidly growing and competitive space, and Google and AdMob are currently specializing in different areas. Though Google offers many forms of mobile advertising, its focus to date has been on mobile search ads, while AdMob's focus has been mobile display ads and in-application ad."

Google further claimed the deal will bring new innovation and competition to mobile advertising, leading to more effective tools for creating, serving and analyzing mobile ads formats. This will in turn serve well the developers, publishers, and advertisers trying to make money from the mobile Web.

Google also noted that its bid for AdMob is akin to mobile ad buys AOL, Microsoft and Yahoo have made in the past two years. AOL acquired Third Screen Media, Microsoft bought ScreenTonic and Yahoo purchased Actionality.

Still, Google is the overwhelming search market leader and for that distinction it undergoes intense scrutiny for any acquisition these days, particularly in the wake of acquiring display ad giant DoubleClick for $3.1 billion and video-sharing power YouTube for $1.65 billion.

Regulators will likely look hard at Google's latest acquisition, which is expected to close in the next few months. Google CEO Eric Schmidt a few weeks ago said the company could buy a company per month in search, mobile ads and other areas.

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