Google Inc is buying mobile advertising network AdMob for US$750 million, underscoring the Internet search leader’s determination to ensure its marketing machine reaches the growing number of people surfing the Web on phones.
The all-stock deal announced on Monday also represents the latest sign that Google’s leaders are feeling better about the economy’s direction, encouraging them to spend more freely after clamping down through much of this year.
Once it closes within the next few months, the AdMob acquisition would become Google’s most expensive purchase since it bought online ad service DoubleClick for US$3.2 billion in March last year.
It took a year to close the DoubleClick deal, far longer than Google anticipated, as US antitrust regulators took time before deciding the DoubleClick combination wouldn’t stifle competition in the online ad market. Google expressed confidence that antitrust regulators won’t need as long to vet the AdMob deal because there are still several other mobile ad networks from which to choose.
AdMob shares at least one similarity with DoubleClick: AdMob’s system specializes in delivering more visual messages, known as display advertising. Google makes most of its money from text-based ads connected to search requests, but has been trying to become a bigger player in display ads — a format that tends to be favored by big-spending companies trying to promote their brands.
With the increasing sophistication of handheld computing devices such as Apple Inc’s iPhone and Motorola Inc’s just-released Droid, millions of people are regularly connecting to their favorite Internet services when they are away from their home or office computers.
The trend is opening new opportunities for advertisers to peddle their wares.
Research firm eMarketer Inc expects US mobile advertising to approach US$1.6 billion by 2013, up from an estimated US$416 million this year.
Although the traditional online ad market is far larger — estimated at about US$23 billion this year — Google and rivals such as Yahoo Inc and Microsoft Corp have all been jockeying to get an early start in mobile marketing.
Yahoo, Microsoft and AOL all have made acquisitions in the field since 2007. Meanwhile, Google has been building a mobile operating system, Android, to make phones more Web-friendly, largely because it hopes to plumb a new advertising channel.
Google’s decision to pay such a rich price for AdMob is bound to trigger more acquisitions and investments in the mobile ad niche, eMarketer analyst Noah Elkin said.
Other emerging mobile ad networks include JumpTap, Millennial, Mojiva, Mobclix and Quattro Wireless.
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