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 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.

The Indonesian mobile market has more than doubled in the last year and for a lot of users there, their mobile phones are the most important on-ramps to the Internet. As InMobi points out in its press release, strong competition among carriers has brought prices down and made mobile phones more affordable in the last year. While the BlackBerry is generally regarded as a business phone with a focus on email, it is currently beating the more web-centric iPhone in Indonesia when it comes to mobile web usage.

InMobi estimates that the average user in Indonesia generated 592 page views, while the global average is only about 250. About 80% of all the handsets sold in Indonesia are web-enabled - though most of them obviously don't give users access to the rich experience smartphones can offer.

As for BackBerry's lead in this market, it's important to note that AdMob's last metrics report from July (PDF) points out that both Apple and RIM only have a small share of the Indonesian handset market. BlackBerry currently holds the lead against Apple, though, and judging from InMobi's data, it looks like it also has the momentum to extend this lead.

The data about how iPhone users discover apps is quite interesting. It doesn't come as a surprise that most users are looking for a specific type of app, but it is also clear that the Top 25 lists in the store play a major role in most users' purchase decisions. 46% of all iPhone users rely on recommendations from friends, while about 20% find new apps through ads in other applications and about 19% base their download decisions on news articles and blog posts they have read.

Given the size of the store at this point, it only makes sense that users rely on popularity as a measure of quality. Sadly, the App Store doesn't allow users to organize apps by ratings. Judging from this data, any app that becomes a bestseller and reaches the Top 25 can probably look forward to a long life within this list.

How Many Apps Do They Use?

About 40% of all iPhone users use about 4 to 6 apps at least once a week. Only about 5% use more than 20 apps per week. Given how many apps most users download per month, these results validate some other reports we have seen which argue that most iPhone apps are disposable and are discarded after a few days of usage.

The Power of Brands

Being an ad company, AdMob also asked the survey respondents if they would download apps from well-known brands. Over 70% answered that they had already downloaded apps from brands and over 60% said that they would be interested in doing so.

As AdMob is more interested in selling ads than revenue from app sales, it makes sense that the company didn't differentiate between paid and free apps in this survey, though it would have been interesting to see more data about how much users pay for their apps on average and what percentage of the apps they downloaded was free.

Methodology

As always, it is important to note the methodology used for this survey. On August 6, AdMob recruited participants through ads in applications that use AdMob's advertising technology. Overall, AdMob received 190 responses from these ads, which the company feels is a significant sample size and provides a representative sample of the larger iPhone app market.

"Mobile advertising is rapidly maturing, and we believe the iPhone is leading the industry forward. Advertisers are excited to connect with consumers in new ways on the iPhone through social and rich media ad units that deliver increased impact and engagement," said AdMob VP/GM, Jason Spero. The new ads build on the high-performing iPhone ad units the
company launched last year and will begin running July 1st.

AdMob is also working with app developers to help them prepare for the new iPhone 3.0 OS. The company feels their new version of the iPhone SDK "delivers a better experience for consumers through the ability to dynamically update a given advertisement's look and feel, which in turn helps developers better monetize their applications," according to the company's press release.

As we reported last week, the iPhone/iTouch group of smart mobile devices accounted for 43 percent of ads served via mobile websites and 65 percent of ads served through HTML requests.

Results were based on user-generated requests for mobile ads during April 2009 as well as on a Gartner report on smartphone sales in Q4 2008.

So, in the smartphone category, which devices were most conducive to consumer interest in ads? We're sure advertisers are dying to know, but this also gives a good picture of browser usability and speed as well as connection reliability.

The iPhone/iTouch group led the pack with 43 percent of mobile web and 65 percent of HTML requests, all on an 8 percent share of the smartphone market. Devices with the Android OS represented less than one percent of the market but accounted for three percent of mobile web and nine percent of HTML ad requests. Though none of us here majored in higher maths, we see this as a sign that if Android devices can capture more of the smartphone market, they might be able to outstrip Apple devices in mobile web use.

The disappointing underacheiver of the report was undoubtedly the Symbian OS, which had 52 percent of the smartphone market but generated only 36 percent of mobile web and 7 percent of HTML requests. This is a fairly good indicator that the Symbian OS might - just might - not be bringing the Internet to life in its truest, most usable form. Satisfied users of Symbian-running devices are invited to rebut this speculation in the comments.

The top devices for web use were from Apple, Sony (the PSP), and HTC.

Overall, smartphones' use of the mobile web (again, according to AdMob) as compared to all mobile devices is up about 10 percent from last year. However, Apple devices' domination of the market has slipped slightly over the past five months, falling from 48 to 43 percent of mobile web use for smartphones.

AdMob will allocate ad impressions based on the quantity and quality of the inventory that each member contributes.

Given that developers have relatively few outlets to promote their applications outside of Apple's App Store, this looks like a good way for developers to get the word about their applications out to users. Given that the ads appear in other apps, the targeted users are obviously already interested in downloading iPhone apps.

The launch partners for the Android platform include AccuWeather, TapJoy, and Jirbo. According to AdMob, the new advertising units will also be able to use Android's GPS to deliver location based advertising.

What About Google?

Google has shown relatively little interest in doing advertising for mobile applications so far. It will be interesting to see if the advertising giant is going to hand this market over to other providers, or if Google will release its own solution in the near future. So far, Google only lets advertisers target AdWord ads on mobile sites for the iPhone and G1, but doesn't provide a solution for mobile apps yet.

Just looking at the smartphone market, Apple also continues to solidify its dominance. In America, the iPhone now accounts for 48% of all traffic to Admob's network, which is more than RIM (19%), Palm (9%), and Windows Mobile (15%) combined.

It's All About Usability

As we pointed out last month, Apple has created a user-experience that makes its users want to use the mobile web on its devices. It is probably safe to assume that most iPod touch users could easily have used their desktops or laptops to access the web instead, but for quickly looking up the news or reading email, the instant-on experience of a phone is often preferable over the more fully featured desktop experience.

The iPhone is Apple's Netbook

Steve Jobs once said that the iPhone is Apple's netbook, and this usage data does lend some credence to this. Most of these WiFi requests probably come from people using the iPhone on their couch at home or in a coffee shop, and often, these users might be quickly checking their email or the weather from their phone instead of booting up their netbooks or laptops.

It makes good sense for Google to get start offering this new feature now, as mobile Internet usage on smartphones and other mobile devices is starting to take off. Other companies like AdMob and JumpTap have already carved out some lucrative niches for themselves, so Google is clearly trying to protect some of its home turf here.

International Expansion

While its focus has been mostly on the U.K. and the U.S., AdMob has also seen a lot of growth in India, Europe, and a number of African countries, including South Africa. As Jason Spero, AdMob's VP of Marketing pointed out to us today, this international growth has been driven largely by AdMob's self-service advertising platform. However, the company is also planning to invest most of its newly raised money to establish and expand its staff and services in Western Europe, India, and South Africa. The company already has offices in London and Mumbai.

Downturn is Not Affecting Mobile Advertising (Yet?)

While speaking to Spero this morning, we also talked a bit about AdMob's reaction to the current economic downturn. Spero pointed out, that AdMob is not seeing any major cutbacks in mobile advertising spending so far, and that a number of companies are actually planning to expand their mobile advertising budget in 2009.

Android

AdMob is also quite bullish about Google's Android platform, though Spero also noted that any phone with a good user-experience for the mobile web is going to be a positive for the mobile advertising market. One handset Spero highlighted is Samsung's Instinct, which did not get a lot of hype from the tech press, but is doing very well on AdMob's advertising network.

The Right Time to Grow

While Sequoia has been quite downbeat about the economic downturn, this new round is drawn from its Growth Fund, which is geared towards later-stage companies. As Jason Spero pointed out to us, AdMob's partners think this is the right time to grow the company aggressively and tackle the international market more directly.