Google Gets Out in Front of Mobile Ad Market
Google (GOOG) CEO Eric Schmidt has said, "we make money, and lots of it, it turns out, from advertising on mobile phones." And since the company snatched AdMob out from under Apple (AAPL), that amount is only going to get larger.
According to IDC, the $750 million acquisition of AdMob will give Google a 24 percent mobile advertising revenue market share. That's a huge chunk, and yet not so large that it is likely to cause the Department of Justice to release the hellhounds of its antitrust group. The 24 percent number comes from estimates by IDC analyst Karsten Weide:
- Millennial Media: $51 million
- AdMob: $40 million
- Yahoo! (YHOO): $32 million
- Google: $28 million
- Microsoft (MSFT): $23 million
- Quattro Wireless: $21 million
- Jumptap: $11 million
- AOL: $7 million
- Millennial Media: 18%
- Ad Mob: 14%
- Yahoo!: 11%
- Google: 10%
- Microsoft: 8%
- Quattro Wireless: 7%
- Jumptap: 4%
- AOL: 2%
- Other: 26%
The revenue numbers are based on the number of ad impressions served by these entities (either as published by them, or estimated based on their audience reach and an industry-average number of impressions per user) multiplied by an estimated average CPM rate (cost per mille, cost per 1000 ad impressions).Granted, these are figures for the U.S. only, but they help put some things into perspective. For example, why is Android so important to Google? Because it gives the company a chance to control more mobile advertising. Why is the dropping smartphone market share of Windows Mobile such a problem for Microsoft? Because CEO Steve Ballmer is hot for ad revenue as a way to fuel growth (because products alone aren't going to do it) and the company faces an uphill battle at the desktop. Now it's facing an increasingly steep slope on handsets as well. Even if it can sweet talk Yahoo into handing over that part of advertising as well (probably unlikely), it's still behind the Google eight-ball.
I'm guessing that we're going to be seeing Microsoft look at some acquisitions, or at least some deals, in this space. Millennial Media, which just raised $16 million in C round equity funding, looks like a ripe candidate. Given that it's somewhat bigger than AdMob, any guesses on how much it would take to make a purchase?
Image via stock.xchng user straymuse, site standard license.