In a move to gain ground in an ultracompetitive mobile advertising market, Google on Monday announced it has agreed to acquire mobile-ad technology provider AdMob for $750 million in stock. Google painted a win-win portrait of the acquisition, noting it will enhance the company's expertise and technology in mobile advertising and give advertisers and publishers more choice in this emerging market.
"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. "AdMob is the quintessential Silicon Valley startup -- generating impressive year-on-year revenue growth -- and we're excited to welcome this talented team to Google."
A $5.7 Billion Market
Google is jockeying for position in a mobile market that's projected to be worth billions in just a few years. Jupiter Research issued a recent report, Mobile Advertising: Delivery Channels, Business Models & Forecasts, that predicts the mobile-advertising market will grow to $5.7 billion by 2014.
"Regardless of mobile's advantages -- its personal nature, the facility for highly targeted advertising -- advertising will not commit more budget until they perceive that the audience for their advertisements has reached a critical mass," said Jupiter principal analyst Windsor Holden.
AdMob founder and CEO Omar Hamoui believes people underestimate how important ads have been to funding the development of innovative content on the Internet. As he describes it, AdMob's goal has been to make it possible for developers and publishers to bring their products and ideas to mobile with the same business model.
"As publishers and developers generate more revenue from their mobile products, they will invest more, and their mobile offerings will become richer, more creative and more robust," Hamoui said.
Better with AdMob
Google said the AdMob deal will help the company develop more effective tools for creating, serving and analyzing emerging mobile-ad formats. As this ecosystem continues to grow, Google expects the new marketing media to offer significant benefits.
First, Google said, advertisers will be better able to engage mobile users with AdMob's ad formats. Second, publishers and developers will be able to monetize their content more effectively. And third, users will see more relevant ads and ultimately get access to more ad-supported content and applications -- improving their mobile experience.
According to Greg Sterling, principal analyst at Sterling Market Intelligence, the AdMob acquisition accomplishes two objectives: It plugs a hole for Google in mobile display -- even though they have AdSense for mobile -- and reflects how serious the company is about mobile advertising and providing a comprehensive offering that includes both search and display.
"The quality of what Google was doing in mobile display didn't compare to AdMob's campaigns and the mobile creative they enabled," Sterling said. "Google also dramatically expands its ad network with this acquisition."