Google’s Acquisition of AdMob

Yesterday Google announced that it had reached a definitive deal with mobile ad delivery platform AdMob to acquire the company for $750 million.  This was very big news, and the eye-popping valuation Google has placed on AdMob definitely brings to light the importance that mobile advertising will have in the future.  This greatly changes the situation for app developers wanting to deliver ads in their mobile apps.  Google has suddenly become the only game in town.  Not that their Adsense Mobile was much in comparison to the graphically rich display ads of AdMob, and arguably, they both were intended for different uses as Google shows below:

But in (20/20) hindsight, this is kind of a no brainer.  I, in my naive haze, just assumed that Google would try to create their own rich media display ads to compete with Admob, but why compete when you can just buy!

Erick Shonfeld over at TechCrunch did some interesting analysis of AdMob yesterday.  He revealed that AdMob is currently grossing $100 million a year, of which they keep 40%.  And that in September, they served up 10.2 billion ad requests across 15,000 mobile web sites and applications. Erick points out that while both these numbers don’t seem to justify a $750 million price tag, Google is positioning itself for what most agree will be the “next battlefield,” as  Richard Wong of Accel Partners calls it in the article.

Either way, in the short term, Google’s acquisition of AdMob should streamline the insertion of mobile ads into applications for developers.  However, I see trouble down the road as Google’s already large share of Search (and hence ad delivery) grows even bigger.  I certainly hope not, but my concern is that all of a sudden you have to either play ball with Google, on their terms, or you won’t play at all.

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