Google's AdMob acquisition gives weight to mobile ads

Search giant Google (NASDAQ:GOOG) today announced plans to buy mobile advertising provider AdMob to delve deeper into the burgeoning market for mobile ads. The $750 stock deal is one of Google’s biggest since it acquired YouTube three years ago.

AdMob already provides mobile ads to several Android applications, but the acquisition will provide further integration between Google’s mobile presence and AdMob’s ad engine. It will also strengthen Google’s competitive stance against Yahoo! and Microsoft, as they all look to dominate mobile search and advertising. For AdMob, the tie-up with Google will substantially help AdMob’s competitive positioning against mobile ad players, including Enpocket, acquired by Nokia, AOL’s Third Screen Media and Microsoft’s own Screentonic.

Google already has its own online auction-style ad network, AdSense, and a mobile ad delivery system, DoubleClick Mobile, following its acquisition of DoubleClick in 2008. Both AdSense and AdMob operate on a cost-per-click business model, which requires billions of ad impressions to make it a business. Google said it is acquiring AdMob to strengthen its mobile ad offering and crack open a potentially lucrative market.

Even with the challenging business conditions, the vendor has grown on mobile in the past year. It also has its advertisements on Android’s biggest competing platform, the iPhone, since the launch of the original version, as well as placement with Research In Motion’s BlackBerry line of smartphones. Many in the industry believe the poor economic conditions will help the industry achieve more growth over the next few years as brands realign their budgets to mobile.

“I'm excited because I believe this will be an important moment for everyone involved in producing, consuming or monetizing engaging products on mobile,” wrote Omar Hamoui, CEO of AdMob, in a note on the company’s Web site. “The truth is that the mobile industry has had no shortage of creative energy, amazing products and talented entrepreneurs. But until now, it has always felt like those of us involved in this space played second fiddle to our online brethren. I believe that time is over.”

Hamoui started AdMob as a graduate school student in 2006, and while he attributes the rise of mobile innovation largely to Apple, he noted that the market today is much more advanced than it was when AdMob came onto the scene. There are literally hundreds of competitors of all sizes, he said, and he expects more to result from Google’s growing presence in the space. AdMob is not going away, though, Hamoui added. It will work with Google to accelerate the pace of innovation in mobile.

“Our product and engineering teams will keep building great products for all of our customers,” Hamoui said. “Our business development team will keep working to maximize ad revenue for the more than 15,000 mobile Web sites and applications that make up AdMob's publisher network. Our sales teams will keep working with our thousands advertisers to deliver successful campaigns, and our marketing group will keep pushing to get the word out about mobile. It's just that now we will be able to do an even better job for all of our customers.”