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11
Nov
2009

Google bets on AdMob to deliver revenues

POSTED BY Global Administrator

“When you were little,” my six year old son asked the other day, “Did you have plastic?”



This came in the middle of a conversation where I was explaining that in the good/bad old days, when I were a lad, we didn’t have such new-fangled inventions as DVDs, satellite telly, mobile phones, Uncle Tom Internet and all. And Max, being understandably unaware of the chronology of synthetic polymer development, wasn’t sure if plastics dated back to that distant time (unknown to him) when Pater was in short trousers and playing with Stickle Bricks on the rug in front of the fire. To him, plastic is an ever-present solid fact, like DVDs, satellite telly, mobile phones, the Internet. It has always been there; it is everywhere, ubiquitous.



“Did you have Google?”



No, he didn’t ask that, but he could have; other wide-eyed innocents, engaged in similar conversations, possibly will, with good reason: the friendly, multi-coloured logo will in many instances provide their formative experience of searching the Internet, or of navigating the world from above (Google Maps) or via a virtual stroll through a city (Street Maps). For them, it too will always have existed.



In a decade, Google has become a powerhouse brand (the company was recently ranked at No. 7 in the Businessweek/Interbrand list of 100 Best Global Brands, comfortably the youngest company in the higher echelons). Having achieved domination in the search engine space on the desktop, it then turned its attention to mobile: to a mobile OS (and, boy, has Android made the competition nervous), and, naturally enough, to mobile search. And, crucially, to making money from mobile search. Enter AdMob.



While much of Google’s growth has been organic, the company has made shrewd acquisitions where and when it feels its portfolio would benefit: in the past two years, purchases have included the online ad serving and management services company DoubleClick, the mobile social networking site Zingku and microblogging site Jaiku. And now AdMob, the leading global mobile advertising network, has caught its eye, and its wallet.



AdMob has achieved its own stellar position less than four years after it was founded. By August 2006, its network was serving 250 million page views per month; this increased to 1 billion per month by July 2007 and 2 billion by December 2007. Cumulatively, the number of ads served passed 20 billion in April 2008, 50 billion in January 2009, and 125 billion a few days ago. That is a whole heap of adverts; hence the seven hundred and fifty million greenbacks that will shortly be changing hands.



So what does this mean for the mobile advertising marketplace? Firstly, it means that there is one. There has been substantial hype about advertising providing the next major revenue stream for just about everyone in the mobile value chain; it was, apparently, going to provide the next major revenue stream in 2005, but when the mobile value chain then looked expectantly at the brands, the brands suddenly developed short arms and long pockets, and the next major revenue stream had to wait a while. But slowly, steadily, the momentum has been growing: mobile Internet usage has increased dramatically, handset user interfaces have improved (almost literally beyond recognition), analytics have become more accurate... And, oh, we’ve had this recession, during which advertisers re-evaluated their strategies in terms of maximising efficiencies of adspend, transitioning from above-the-line to below-the-line spend and presenting a much greater emphasis on engagement with the end-user; a recognition that reach in itself was not going to deliver results. And on this count, mobile presented the optimal opportunity with the optimal measurement techniques.



At present, mobile accounts for a negligible level of total adspend: yet as our recent report made clear, we envisage that it will rise from just over $1 billion in 2008 to more than $6 billion in 2014. Even then, this will account for just over 1% of the global total across all distribution channels. But as usage of rich media services via the mobile continues to increase, so will this proportion. I was asked earlier whether I felt that Google’s move constituted a gamble on its part. If it's a gamble, I said, then they've backed a horse with form...