Google turns to mobile

11 November 2009

MOUNTAIN VIEW, California: Google, the online search giant, has announced the acquisition of AdMob, the mobile advertising network, for $750 million (€501m; £450m) in stock, and is currently pursuing a number of other initiatives as it seeks to heighten its presence in this growing area of the ad market.

Figures from Morgan Stanley, the investment management firm, have shown that users of devices like Apple's iPhone and those powered by Google's Android operating system access the mobile web considerably more often than owners of other handsets.

Previous research from AdMob itself has also found that consumers using these sorts of phones typically spend around 90 minutes a day utilising the various applications now available via such platforms, making them an attractive audience for brands.

AdMob, which focuses on mobile display advertising, was established in 2006, and boasts clients including Coca-Cola, the soft drinks manufacturer, Procter & Gamble, the consumer goods specialist, and Ford, the automaker.

Susan Wojcicki, vp of product management at Google, said "mobile advertising has enormous potential as a marketing medium, and while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time."

Google further argued that the takeover would offer "more effective monetisation" for publishers of mobile websites and applications, while giving marketers more relevant ads, greater reach, and a wider range of formats to choose from.

Noah Elkin, an analyst at eMarketer, wrote in a company blog that the Mountain View-based organisation's move "sends a strong signal about the importance of mobile advertising in general and its growing centrality to the marketing mix."

The research firm has previously predicted that the value of mobile advertising in the US will grow five times over between 2009 and 2013, with mobile search enjoying an even more substantial uptick.

More specifically, it said search and display took a 45% share of mobile adspend in America last year, a total that will rise to 72% by 2013, boosted, in particular, by the growing number of smartphones in circulation by this date.

Google launched its Android mobile software in 2008, making it "open source" so that manufacturers could update it to suit their needs, but it has since worked closely with telecoms providers like T-Mobile USA and Verizon Wireless as it seeks to tackle the dominance of the iPhone.

Verizon Wireless, the US wireless giant, is also now spending an estimated $100m on promoting its latest offering, the Droid, which was produced by Motorola and runs on Google Android.

One ad for the new handset says it "swaps semi-functional giggling-brat-vanity for a bare knuckle bucket of does", and the campaign also champions the Droid's "wave-shredding web speed."

However, Bill Ho, an analyst at Current Analysis, said the phone "skews heavily male, and I don't gauge it as an iPhone killer. It's a good iPhone defender; Verizon needs it to stop the bleeding, but I don't see it pulling people from other carriers."

In March, Google unveiled Google Voice, which provides consumers with one number for all the phones they own, as well as services ranging from free calls and texts within the US to transcribing voicemail messages so they can be read on the web.

Late last year, however, the company lost out in a face-off with Microsoft to become the default online search option for Verizon's range of cellphones.

Data sourced from Wall Street Journal, Google, AdAge; additional content by Warc staff