Commentary

Google Eats AdMob: Round Up the Usual Suspects

Yesterday, some of the media seemed shocked... shocked... to discover that Google was interested in mobile marketing. While the dowry of $750 million seemed overly generous to most of us, the marriage itself is unsurprising. AdMob's self-service model and roots in performance advertising map nicely against Google. Some recent stat from Google revealed that it sees 50 times more searches coming from iPhones than any other mobile source, and AdMob is rumored to have a large share of the display market on that platform. It all makes sense on paper. 

Until we see how Google invests in and integrates AdMob, I am not as inclined as most to call this a "game-changer." Having seen that "game-changing" AOL buyout of Third Screen years ago, Microsoft's acquisition of Screen Tonic and Nokia's of Enpocket, I prefer to wait and see what talent stays or goes and how much Google subordinates the mobile ad network to everything else. Given the checkered history of mobile ad network buyouts, it is unclear what a larger Web company really wants to do (or knows what to do) with a mobile network and its technology. Things change when a company gets eaten, especially by a company whose bread is buttered so well elsewhere. The more interesting piece will be how the rest of the ad networks respond over time, whether Google comes back to eat another one of the fish in the pond, or whether some of the remaining fish start eating one another.

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I prefer to take the approach of Captain Renault in "Casablanca": AdMob has been eaten, round up the usual suspects. I pinged all of the CEOs at the ad networks that didn't get tapped for this deal to ask their first impressions. And yes, almost all did say that it "validates" the market for the rest of them.

But just to get it out of the way: Paul Palmieri, CEO of that other enormous mobile net Millennial Media, calls the deal "astounding" insofar as Google seems to be acknowledging in the buy that mobile is not a mere extensions of the Web.. "Today Google validated what many companies including Millennial have thought for years - that mobile is a different market with a huge potential for advertising; possibly a bigger opportunity than online media."

Dave Gwozdz, CEO of Mojiva, liked the fact that Google was willing to pay dearly for AdMob. "The market has definitely matured to the point where it makes sense for online behemoths to try to combine networks, analytics and delivery technologies in the hopes of capturing a share of this growing market," he says.

JumpTap, which claims its search and carrier data gives it superior targeting capabilities in the market, says it anticipated consolidation. When I spoke with CEO Paran Johar for the current OMMA magazine cover article on the mobile ad net "wars," he noted the inevitability of a shakeout.

Yesterday in a statement, Johar acknowledged that Google/AdMob does put some competitive pressure on the market. "The industry front runner will be determined by who can deliver the most advanced targeting capabilities for better ROI for advertisers and publishers."  

Like Palmieri, Quattro Wireless's Andy Miller sees Google recognizing the need for discrete technology and skill sets to deploy mobile well. Additionally, he says, "This is a catalyst event, so likely it will make other players take a look at what they need to do to take advantage of the growth in consumer, advertiser and publisher interest in mobile to impact their own growth."

While the ad nets see Google's buy-in as acknowledgement of mobile's exceptional nature, ADObjects CEO Matthew Snyder comes at it from the opposite angle. "This is an indication of the convergence of mobile and online," he says. The traditional Web players are positioning themselves to extend dominance onto the mobile Web. They are in the better position to buy their way onto carrier decks, and so the remaining ad nets may do well to look for their own Google. "If the others do not exit fast to the likes of AOL, Yahoo, [and] Microsoft, then the mobile-only approach will start to suffer, as there is really only one Internet."

Joy Liuzzo, Senior Director of Mobile Research at InsightExpress, echoes my sense that this deal all boils down to what Google really wants to do with AdMob. There is a tremendous opportunity here for great ad targeting from search box data as well as a richer, more monetizable development platform across both iPhone and Android. "Mobile doesn't need to be validated, it needs a huge infusion of cash to drive development and get over some serious hurdles," she says. "Money is what Google can provide, and they are getting a nice base -- and proven reputation -- to build from."

And lest we forget: How long ago did Google buy DoubleClick? Meanwhile, the proliferation of ad networks only widened. Finally, in the last few months we see Google making its more serious attempt to integrate these businesses in the new ad exchange. The game has barely started, let alone been changed.   

 

  

7 comments about "Google Eats AdMob: Round Up the Usual Suspects".
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  1. Tamara Gruber from Crisp Wireless, November 10, 2009 at 4:16 p.m.

    Perfectly summarized! Google represents the behemoth of self-service performance advertising online and AdMob is the cream of the crop of performance advertising when it comes to mobile. Yes this partnership validates the market and the needs of the long-tail, but leaves plenty of room for others to address the needs of premium publishers and premium brand advertisers.

  2. James Briggs from Briabe Media, November 10, 2009 at 4:49 p.m.

    On the surface I believe that this is excellent news for mobile marketing and most definitely for the Ad Mob folks. However, given Google’s history as of late, in addition to all of the positives that I see coming out of the acquisition, there are reasons for concern. The company is definitely a very strong proponent of the ‘free’ business model and if it determines that giving mobile ad away is better for its overall business a lot of companies could be in big trouble.

    In my opinion the powers that be responsible for evaluating these things should ensure that no one player is able stifle competition or development in a nascent industry that could become the source of thousands of jobs.

  3. Susan Marshall from ExactTarget, November 10, 2009 at 5:03 p.m.

    Remember that AdMob's network has its limitations, as the company mainly focuses on smartphone traffic (about 17% of all phones). Having said that, there is plenty of room for innovation and competition in the mobile advertising space.

    In spite of of smartphones rocket growth, SMS will remain a strong channel within mobile. In the end, it's all about what the brand is trying to achieve with mobile advertising. We believe in a multi-channel approach. SMS and display make the most sense, with a heavy emphasis on conversational SMS when you are trying to reach youth.

  4. A m Clark from Academy Leader, Inc., November 10, 2009 at 7:35 p.m.

    This doesn't seem to be news. Google eats up small players in other advertising spaces all the time. Sometimes, they do it just to see how that particular niche "tastes." Sometimes, they eat a technology in the way a primitive hunter would eat the heart of his dead quarry, in an attempt to imbue himself with the animal's characteristics.

    This buy-out doesn't validate the mobile market as much as it validates AdMob's business model: be a mobile ad agency until Google (or someone else) buys you out. That, itself, is already a validated model in the broader tech sector, though.

    So, why, then?

    As Mr. Briggs mentions, there is some cause for concern, in that this move by a powerful player in the advertising marketplace could stifle a budding industry. This would appear to be the most likely motivation, as Google's pattern has been to attempt to disrupt established and nascent advertising business models.

  5. Lisa Foote from MixMobi, November 11, 2009 at 1:44 p.m.

    Great column, Steve. Surprised no one has commented on Google's new analytics for Mobile. Unlike Google Analytics previous service, these analytics purportedly detect acdtivity on mobiles not running JavaScript (which is to say non-smartphones).

    This, plus their acquisition of AdMob, tells me they're thinking through smartphones and featurephones alike (and probably won't neglect SMS either!). Outstanding news for our sector.

  6. Michael Molin from GeneTechnics, November 12, 2009 at 2:54 a.m.

    Hello Steve,

    I think that mobile advertising just needs a method that works without intervening with people's privacy. I suggest the solution that's called "personal advertising screen" - http://genetechnics.webs.com/

    Best regrads,

    Michael

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