Madison Avenue Backs Google-AdMob Deal

Googmob

Agencies and even rival mobile ad networks appeared to welcome Google's proposed $750 million acquisition of AdMob announced Monday as a ringing endorsement of the emerging mobile ad market.

The hefty sum that Google is willing to spend to snap up the leading mobile ad network -- launched only three years ago -- shows that the long-hyped potential of mobile advertising is finally becoming a reality, they say. While the move is likely to shake up the competitive landscape in the short term, overall, it helps legitimize mobile as an advertising medium.

"It's great validation for the mobile market, and sends a clear message to publishers and media buyers that there are real opportunities to make money off the sector," said Eric Litman, CEO of Medialets, which supplies rich media technology and ad-serving for mobile applications.

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Others echoed that sentiment, likening it to Google's $3.1 billion acquisition of DoubleClick to accelerate its entrance into online display advertising. "It should help not only to provide more relationships with mobile ad publishers and buyers, but also to provide a tested technology platform for monetization of mobile inventory and the delivery, tracking and reporting of mobile ad campaigns," wrote Ben Schachter, a digital analyst at Broadpoint AmTech.

For advertisers, the deal stands to make Google even more of a one-stop shop across search and display advertising both on the desktop Web and on mobile devices. Already, the company holds a share of mobile search roughly equivalent to the dominant two-thirds proportion it has online.

"It makes Google very attractive to large advertisers in terms of reach, and in terms of targeting, AdMob can offer all the standard flavors across demographics, geography, and the like," noted Greg Sterling, who leads the mobile search practice at Opus Research.

Google in June signaled its ambitions for mobile display advertising by opening up its AdSense program for mobile applications -- putting it more directly in competition with AdMob, which generates much of its traffic from the iPhone and iPhone apps. So AdSense campaigns automatically run not only on the PC, but also in mobile unless a marketer opts out of mobile ad-serving.

While that process has led to problems in some campaigns with ad landing pages not being optimized for mobile phones, Sterling expects that AdMob's expertise would help iron out technical kinks. "I would imagine AdMob will rectify that, and in short order we'd see Google address that issue so they're not simply dumping ads into apps and mobile Web pages," he said.

AdMob overall now serves more than 10 billion monthly impressions across 15,000 sites worldwide.

By streamlining the notoriously fragmented mobile ad-buying process, the move may also encourage increased spending. "This could be a tipping point for other advertisers getting into mobile," said Phuc Truong, U.S. managing director of Mobext, the mobile marketing arm of Havas Digital.

That in could help boost pricing in mobile advertising, where CPMs this year have fallen, often to a third of what they were due to fierce competition among the more than dozen mobile ad networks.

A study commissioned by mobile ad network Millennial Media last week found that 60% of non-mobile marketers plan to buy mobile advertising in 2010. It also projects agencies' mobile spending next year, with more than half planning to spend up to $250,00. Overall, Forrester Research forecasts mobile advertising will grow 70% to $391 million this year and hit $1.3 billion by 2014.

In the meantime, Truong and others predict that Google's mobile land grab will spur a wave of consolidation as big online players vie for their own piece of the mobile action. That includes everyone from Yahoo, Microsoft and AOL to companies like ValueClick and WPP's 24/7 Real Media that run big online ad networks.

"I would think this deal is a good indicator that this will fuel a lot more activity in the marketplace because competitors will need to feel like they're getting a leg up to in the mobile space," said Bob Walczak, CEO of Ringleader Digital, which has shifted from the ad network business to focus on providing mobile ad technologies. But he expects AdMob competitors like Millennial Media and JumpTap to soon become the target of acquisition offers.

Increased M&A activity could also help to revive venture capital investing in the mobile sector, which has dropped to $1.5 billion in the third quarter compared to $3 billion a year ago, according to mobile research firm Chetan Sharma.

Given Google's powerful position in online advertising, one might expect its latest acquisition bid may run into regulatory hurdles. It could also add to the controversy around privacy and ad targeting, which have come under increasing scrutiny this year by Congress and federal agencies.

But the fact that mobile advertising remains just a tiny fraction of overall spending may weigh in its favor when it comes to antitrust concerns. "One saving grace for any company is that it's so early in terms of mobile that were just starting to have some idea how of how people are using the mobile Web and mobile devices," said David Berkowitz, senior director of emerging media and innovation at digital agency 360i. He expects the deal to be approved.

For its part, Google in a prepared FAQ about the deal online said it didn't expect any regulatory problems with the deal, "but closer scrutiny has been one consequence of our success. On that basis, we wouldn't be surprised if there were some regulatory review before the deal closes."

It was also proactive in addressing the issue of privacy, saying the company has a strong track record in that regard and recently launched a new privacy dashboard allowing users to take control or opt out of data collection.

Furthermore, "Google has strong safeguards to protect users' privacy on their mobile phones and uses the same innovative privacy controls as the desktop," the company stated. In that vein, its privacy dashboard may be about to get bigger.

3 comments about "Madison Avenue Backs Google-AdMob Deal".
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  1. Krishna Subramanian from Mobclix, November 10, 2009 at 11:08 a.m.

    It is highly likely that this will only encourage more online Web advertisers to move more aggressively into the mobile advertising space in order to keep pace with Google. Just as there are many winners in the Web space, there will be multiple winners in the mobile space!

  2. Tamara Gruber from Crisp Wireless, November 10, 2009 at 8:43 p.m.

    I don't see any reason why the FCC would block this acquisition. Google and AdMob are closely aligned to serve the performance advertising marketplace. There is still plenty of room for competition in serving the premium marketplace.

  3. Anna Talerico, November 11, 2009 at 9:15 a.m.

    Great article. At some point, I hope mobile landing pages become more than a one-line after thought. We need to be more focused on what happens when someone actually engages with a mobile ad and optimizing experiences for the mobile user. Without optimizing the post-click mobile experience it is unlikely that mobile campaigns will meet the marketing objectives they set out to achieve.

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