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Google throws its hat fully into the mobile ring

Chris Andrews

Acquisition of AdMob could signal rapid expansion of mobile advertising

If there is any doubt that the mobile web and mobile advertising are set to continue at pace, cast your eyes on Mountain View California. This week Google announced an agreement to acquire mobile display and advert technology provider AdMob for $750 million in (increasingly attractive) Google stock.

You will recall that back in 2007, Google made a similar acquisition of online display advert company DoubleClick, for some $3.1bn, with the deal completing in 2008. Now Google is setting its stake in the mobile arena, adding mobile display and in-application ads to its already relatively lucrative mobile search ads. Of course, mobile advertising is currently small potatoes in overall terms, but this is set to grow.

According to eMarketer, total online spend for 2009 will be $24bn, with mobile advertising accounting for only $416 million, but as larger screened smartphones continue to gain in popularity, and use of mobile applications (there are currently some 100,000 mobile apps available to purchase for the iPhone, for example, according to ABI research) and mobile video hopefully gains in popularity, so increases the display advertising potential. AdMob’s own annual revenue is in the region of $45 to $60 million. Again, this is small change in Google terms, but the potential growth is obviously there.

Discussing the acquisition on its blog, Google said that despite the tremendous growth in mobile usage and the substantial investment by many businesses in the space, the mobile web is still in its early stages (which is, of course, where Google shows its metal, getting in on the ground floor). It said it believed that ‘great mobile advertising products can encourage even more growth in the mobile ecosystem’.

This dovetails well with a speech from AOL’s President, Global Advertising and Strategy, Jeff Levick, at this year’s IAB Engage conference. Levick said that now was the first real opportunity for building brands online as reality TV, which many don’t want to be associated with, was making marketers switch budgets. “The future of online is brand advertising, as we currently move into a critical stage for digital”.

Levick said that the life cycle of online is entering its third stage: the first, between 1990 and 2000 was about getting people online, between 2000 and 2010 it was all about connectivity and platforms; and beyond this the ‘third act’ is all about content. This means that opportunities for advertisers will be as co-creators of content to drive growth through brand building – especially across multiple platforms of mobile and video.

He described the challenge for marketers as “niche is the new mass media. In online there isn’t a massive panacea where you invest in five properties and you’re done. The real opportunity and also challenge for brand advertisers is to define these niche audiences.”

He argued that brands have yet to figure out what the right ‘media cycle’ is and that in the future there will be “lots of campaigns and creatives and formats. We’re back in the infancy of the internet,” he said.

Google, of course, is hoping to capitalise on this. “For publishers of mobile websites and applications, this deal will mean better products and tools and more effective monetization of their content — allowing them to focus more on their users and less on how to generate revenue,” it said on its blog. “For advertisers who want to reach users when they are engaged with mobile content, this deal will bring better, more relevant ads and greater reach. It will also mean more interesting, engaging ad formats.”

Hopefully this will indeed be the case. What developers need to avoid is obtrusive, uninteresting or non-relevant ads. On a desktop monitor these can be forgiven, but on the small screen they will no doubt lead to increased ad-blocking, and if the model is going to work, then obviously nobody wants that.

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