Google Scoops Up AdMob; Feeds It’s Mobile Presence
Google has made yet another move into mobile space and purchased mobile ad agency AdMob for a whopping $750 million on Monday. As mentioned in a previous post, it is obvious that Google is keen to make big moves into the mobile space. The dimension that this latest acquisition provides for Google is the graphic display ads that show up on web pages and mobile applications. In other words, this will help Google diversify from their predominantly search ad driven mobile revenue stream. AdMob also provides substantial demographic information on mobile users, allowing for the targeting of professionals, teens, or early adopters as well as the premium costs associated with it.
Some have speculated that Google have paid too much in the acquisition, especially considering they paid in Google stock, which has seen considerable growth lately. AdMob generates an estimated $45-$60 million in annual revenue. With their 60:40 split with publishers, that leaves the network with about $20-$25 million, or 40% of the total. Furthermore, none of AdMob’s 15,000 publishers are under contract, meaning any or all of them could leave at any time. In turn, what Google sees in this deal is definitely long term, and comes with some fairly obvious explanations.
First off, the simple fact is, mobile is going to be HUGE. Whether it is in 5 or 10 years, the handheld device will replace the home pc. This move drastically increases Google’s presence and influence in the mobile market in one clean swing. A few million dollars here or there means nothing to Google with the growth potential involved. The amount of iPhone and Android users is on the rise. They currently browse the internet more often than anyone else, with a quarter of them spending nearly 90 minutes per day using applications on their devices.
I think this a good move for Google, who clearly have a hard on for mobile. They have grown their mobile search by five times over the past two years. Although Google serves mobile display ads through Adsense, too many eggs were in the search basket and they needed to address mobile applications and web pages. AdMob not only provides a good slice of this market, but a solid framework and some talented developers. Google has filled a gap in it’s mobile presence by adding the much need know how to progress into the growing world of mobile browsing and applications.
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