eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
News Analysis: While Microsoft, Yahoo and AOL have all purchased mobile ad specialists in the last two years, the remaining players have been waiting for something, anything to galvanize their tender green field and open the door for more partnerships with Internet giants.
Google may have granted their wish by agreeing to buy mobile ad technology provider AdMob for $750 million in stock.
AdMob is a leading exchange for mobile display ads and ads served within applications for platforms such as the leading Apple iPhone smartphone, Google’s Android, Palm, RIM and Nokia. Google already pairs text ads with its search engine on mobile phones, similar to the way it does on desktops, but it has yet to crack the mobile display ad or in-app ad nuts.
Many industry watchers characterize AdMob as a mobile Web version of DoubleClick, which Google acquired for $3.1 billion to strengthen its display ads for the desktop.
When you consider that Google’s mission is to duplicate the success of its desktop Web advertising mission on mobile devices such as smartphones, the AdMob looks like a no-brainer. In the 24 hours following the announcement, reception to Google’s offer has been largely positive from both financial analysts and AdMob rivals.
BroadPoint AmTech analyst Ben Schachter said the deal should help not only to provide more relationships with mobile ad publishers and buyers, but also give Google a solid platform for monetization of mobile inventory and the delivery, tracking, and reporting of mobile ad campaigns.
However, he expressed surprise that Google opted to buy, rather than build mobile display ad and in-app ad technology. Google launched AdSense for Mobile earlier this year to fill this need.
When asked why Google opted to buy AdMob, a Google spokesperson said that while it had its own technology, “the more we looked at what the engineers at AdMob had built and their deep knowledge of the mobile ad world the more it became clear to us that bringing on board would allow us to accelerate our efforts.”
The spokesperson said it will continue to build its mobile ad technology with the help of AdMob’s engineering team.
Kelsey Group analyst Michael Boland said AdMob is one of the handful of mobile advertisers, including Millenial Media, Jumptap and smaller startups, where the majority of mobile online ads are being spent. Since forming in 2006, the startup has been a one-stop shop for Land Rover, Ford, and Volkswagen to strike ad deals with publishers.
How AdMob Helps Google and Mobile Ad Players
AdMob serves ads on some 15,000 mobile Web sites and applications for iPhone and Android. But AdMob’s claim to fame, Boland told eWEEK, is that it has the most amount of advertising placed within iPhone applications. Ideally, the AdMob team would take AdSense for Mobile and make it the dominant platform for not just iPhone, but all smartphones based on Android.
Still, all the vendors are vying for mobile ad pie that while currently modest, is rapidly growing. While desktop advertising has had a full decade to grow, mobile advertising didn’t really get any legs until months after the iPhone arrived in 2007.
As of June 2009, Nielsen said there were 55 million active mobile Web users in the U.S. The top five mobile ad networks in the U.S. in terms of potential monthly reach are Millennial Media, with 45.6 million monthly unique visitors, AOL’s Third Screen Media with 28.6 million, AdMob with 25.7 million, Microsoft’s MSN Ad Network with 25.4 million and Jumptap with 23.4 million.
Bernstein Research analyst Jeffrey Lindsay modestly projected the mobile ad market to hit $2 billion by 2013 in the U.S. However, he said Google will get a significant benefit from its likely large share of this $2 billion opportunity in the U.S. Armed with AdMob, Google will seek to build out its mobile Web ad arsenal.
So, are the other mobile ad network players indignant or scared? Essentially, no.
The general belief is that the mobile Web ad space is a green field, and that Google’s purchase of AdMob will pave the way for Internet companies to strike deals with others in the mobile ad network long tail.
Millennial Media President and CEO Paul Palmieri said in a statement:
““Today Google validated what many companies to include Millennial have thought for years – that mobile is a different market with a huge potential for advertising; possibly a bigger opportunity than online media. As the clear leader in mobile brand advertising, we are happy to see a player like Google bring economies of scale to the performance advertising space in mobile.”“
Greystripe CEO Michael Chang was similarly excited by Google’s play, noting that it opens the door for Internet companies to strike more deals, or even acquisitions, with mobile ad networks. Greystripe’s specialty is offering full-sceen Flash and video ads.
Chang said that while Google and AdMob are strong in the cost-per-click, small banner ads, Greystripe sells brand and rich media ads on a CPM basis. That’s where Chang sees the mobile ad market going in the future.
Regardless, BroadPoint’s Schacter noted that with Android, applications such as its Google Maps Navigation GPS, and now AdMob, Google clearly wants to become a leader in mobile computing.
This will be crucial as Google seeks to fend off Yahoo, which bought Actionality last year, and Microsoft, which nabbed ScreenTonic in 2007.