Comments for Google Looks to Dominate iPhone and Android Advertising With AdMob Acquisition

Google Looks to Dominate iPhone and Android Advertising With AdMob Acquisition

2009-11-09T19:04:50Z

Google announced this morning that it has acquired 3-year old mobile display ad serving platform AdMob for $750 million, half the price it paid for YouTube in 2006. Why did Google make this move? Two reasons stand out.

First, AdMob is a very strong company in a sector (mobile advertising) that everyone expects to become much more important in the future. Second, this is a chance to make a big move towards monetizing on Apple's iPhone platform while making sure that no one else does something similar to Android in the future.

]]> AdMob puts display ads on mobile web pages and inside mobile applications. On Google's page detailing the acquisition today the company used imagery to say that mobile search ads had been its primary focus to date, while AdMob's focus was outside search and inside apps and pages. Google has an ad program for mobile apps to, though, called AdSense for Mobile Apps. You've probably seen it if you use the Pandora iPhone app.

AdMob is Strong in an Early Market

Apparently Google's mobile apps ad platform hasn't been doing so well, at least not compared to AdMob. AdMob has been growing fast. VentureBeat's Matt Marshall did some back of the envelope math and estimated that the company was pulling in $40m+ in annual revenue 18 months ago, which was just 18 months after it launched.

That was in a radically different time for the mobile market. As our own Sarah Perez wrote two weeks ago in a post about AdMob's latest mobile metrics report:

Believe it or not, it was only a year ago that the Motorola RAZR scored as the number one phone here in the U.S. while the iPhone was the only touchscreen device to even make the list of top ten handsets. Only a year later, and so much has changed.

That was durring the RAZR era that AdMob was at a pace that Matt Marshall said "looks headed to IPO-type revenues within three years."

Newspaper guy turned real-time, mobile content delivery founder at NozzlMedia Steve Woodward puts it like this:

"Google now has a way to extend its advertising dominance into mobile, which is growing faster than any other medium. Together, they have the delivery system, the analytics and the know-how to capture not only high-end advertising but also the medium and smaller business advertisers that Google caters to. It will be interesting to see how online publishers react, since a Google-AdMob network could sell ads at lower CPMs than its competitors, driving down revenue for publishers."

Planting a Flag on the iPhone, Protecting the Android Inventory

Now the iPhone rules. AdMob's own numbers claimed that mobile traffic from the iPhone and iPod touch grew 19X over the last year. AdMob is making a strong play on the iPhone. TechCrunch reported this Spring that the company claims to be the biggest mobile app ad network on the iPhone and is working on a traffic exchange system for app promotion similar to what's been done on Facebook.

Now move those efforts over into the Google column and Google is making money off of the free apps on Apple's platform. That's probably not something Apple feels great about.

Meanwhile, Google's own Android mobile OS is no slouch, either. Admob reported this Fall that Android now accounts for the 2nd largest share of mobile web traffic (far) behind the iPhone, at 17% in the US, beating RIM and Windows Mobile.

Does Google want to see someone else leading the ad monetization on its own mobile OS just like it is now poised to do to Apple? No way. The answer? Buy AdMob.

It's a very smart move. Perhaps unsurprisingly, Google's share price rose this morning to its highest point in almost 18 months.

Comment from Tamara Gruber on 2009-11-10

2009-11-11T02:15:31Z

This is a combination of Google's performance ad market with AdMob's self-service mobile platform and extensive reach into iPhone apps, giving Google deep coverage of Android and iPhone. Other ad networks can still compete through engaging ad formats and the premium publisher marketplace is still untapped.

Comment from Samir on 2009-11-10

2009-11-10T23:04:30Z

i am sure microsoft must be worried now that droid and admob make a big buck for google

http://thetechnologycafe.com/google-dives-deeper-into-mobile-advertsing-aquires-admob/

Comment from camcorder taschen on 2009-11-09

2009-11-10T03:46:52Z

Symbian will still hang around for awhile and might recover, but Windows Mobile is practically dead meat. They might be able to pull out of it with v7, but I suspect it'll be too little, too late.

Note that these are only online figures, but online is where everyone's going.

Comment from zato on 2009-11-09

2009-11-09T23:42:09Z

"Now move those efforts over into the Google column and Google is making money off of the free apps on Apple's platform. That's probably not something Apple feels great about."

Really?

Comment from Alex Hawkinson on 2009-11-09

2009-11-09T20:49:24Z

This is no doubt going to improve the ability of businesses to buy mobile advertising from Google, but with the rise of social networking and social commerce, how much do traditional ads matter?

90% of consumers trust one another, but only 14% trust forms of traditional advertising. Just as they do in regular search (and obviated completely by social discovery), the majority of users will simply ignore ads. The ones that don't ignore them probably justify the acquisition for Google on their own, but it's an interesting dynamic.

A few more thoughts here http://bit.ly/3WEfdN - would love to hear what others think.

Comment from Marshall Kirkpatrick on 2009-11-09

2009-11-09T20:09:08Z

Dan, a look at AdMob'd investors shared with Google makes it seem all the more like that.

Comment from Dan C on 2009-11-09

2009-11-09T20:06:34Z

The Yankees of the tech world.

Comment from Lawrence @ CRB on 2009-11-09

2009-11-09T19:45:19Z

Google is unstoppable. What can't these guys buy?

Comment from Todd on 2009-11-09

2009-11-09T19:29:55Z

"...Meanwhile, Google's own Android mobile OS is no slouch, either. Admob reported this Fall that Android now accounts for the 2nd largest share of mobile web traffic (far) behind the iPhone, at 17% in the US, beating RIM and Windows Mobile."

*Extremely* satisfying to read that on the screen.

Also

"...Android now accounts for the 2nd largest share of mobile web traffic (far) behind the iPhone..."

Android OS is *not* just for mobile phones! Runs on TV set top boxes, net books, industrial machinery, automobiles, refrigerators ( RFID obsessed Marcus, take note! ), picture frames, on and on...

Add to that my speculation that by this time next year there will be over 100 different Android phones from carriers all over the world.

So its a safe bet that "far behind" bit will need to be re-visited. It's called "The Long Tail" method!