Boston’s Mobile Startups React to Google’s $750M AdMob Purchase

11/9/09Follow @wroush

I was at the offices of uLocate, a Boston startup with a suite of location-aware information services for mobile phones, when I heard today’s news about Google’s $750 million acquisition of San Mateo, CA-based AdMob, which runs one of the largest mobile advertising networks. “It’s a very good thing,” commented Walt Doyle, uLocate’s CEO, who was clearly impressed by the figures involved. “It’s a very good thing that Google, or any company, is willing to pay close to a billion dollars for a company involved in mobile.”

And that’s the dominant message today from the mobile companies around Boston that I’ve reached about the AdMob deal. No one’s fretting (publicly, anyway) that a Google-AdMob combination will overrun the still-fragile market for mobile advertising, or that there’s one less exit path for other startups, now that Google has already bought itself a mobile ad network. Instead, the consensus in the company’s public statements is that Google’s move offers an important boost for the whole mobile media industry.

“We actually think it’s great for the industry, because it really shows the importance of the mobile advertising market, and how important it is for advertisers and publishers to have access to mobile specialists who know how to make the most of that medium,” says Lynn Tornabene, chief marketing officer at Waltham, MA-based Quattro Wireless. Quattra presents itself, of course, as one of these specialists—it works with major brands such as Ford, Netflix, Procter & Gamble, and Visa to get their ads into the most advantageous mobile venues.

“Google is a sophisticated company with deep resources, and yet they really saw the need to acquire a specialist to gain traction in the space,” Tornabene says. “So that really validates the business model of all the mobile ad networks.” (By the way, when it comes to Google, Tornabene knows what she’s talking about—she used to be head of communications for Google’s DoubleClick division.)

That word “validates” came up a lot today. “The announcement is causing tremendous excitement as it validates the enormous potential of mobile advertising,” says Paran Johar, chief marketing officer at Jumptap, a Cambridge, MA-based provider of targeted mobile ads. “We predicted consolidation in the industry and Admob’s broad high volume business model is highly synergistic for Google.”

The $750 million price tag—making Admob Google’s third largest purchase ever, after the $3.1 billion deal to buy DoubleClick and the $1.65 billion purchase of YouTube—surprised some observers today, including me. (AdMob had raised some $46 million in financing since its founding in 2006 from Silicon Valley venture firms Accel, DFJ Growth Fund, Northgate, and Sequoia Capital, which makes the Google acquisition an extremely lucrative exit by current venture standards.) The odd thing, to me, was that the business of placing ads on mobile websites or inside mobile applications is still so new that much of the time, there aren’t enough ads to fill all the available slots. The ads that are available are often bottom-of-the barrel material that bring publishers a pathetically small fee.

But Tornabene argues that Google’s decision marks a certain maturation in the market. Fill rates, the percentage of available ad inventory that’s filled with an ad, have been going up gradually, she says. “Not every Web publisher has 100 percent fill either, but we have seen those numbers go up over the past year,” Tornabene says. “Quite a few things play into that, but one of the key ones is that many of the large brands and direct markets have really seen this year as one in which to invest in mobile. At Quattro and AdMobs business grew in a year when we were in a recession and advertising over all was not growing. It shows that there is that investment.”

And Google may have seen AdMob as a particularly appealing acquisition, given that its model for selling and placing advertisements, like Google’s, is largely automated. Quattro, too, has a self-service option, says Tornabene, but also has a firm lock on what she calls “premium” mobile advertisers. So she isn’t too worried that AdMob, now that it will be able to tap into Google’s own ad networks and the search firm’s involvement in the Android mobile operating system, will leave the rest of the mobile ad industry in the dust.

Doyle, at uLocate, expressed admiration and even wonderment over Google’s aggressive move into the mobile media business. “Google is just running away with mobile,” he says. “They are much more heavily invested in the space now than just a couple of years ago, from the operating system through to the apps and the services and the monetization. They identified mobile as being extremely important and they went after it at every level.”

Could Google be the tide that lifts all boats in the mobile business? Tornabene thinks so. With Google getting serious about its mobile ad efforts, more advertisers may decide it’s time to jump in, she says. “Having a company such as Google say that this is an important market, important enough to be our third-largest acquisition every, I really think brings a focus to the marketplace, not only within the financial community but also within the advertising community,” says Tornabene. “There may be advertisers now saying, ‘Oh, we haven’t looked at this market as closely as we should have.’”

Wade Roush is Chief Correspondent and Editor At Large at Xconomy. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

By posting a comment, you agree to our terms and conditions.

  • http://friendfeed.com/benenhaleybrian Brian Benenhaley

    With the fast growth of the mobile industry I am sure that this is just one of the next major moves Google is going to make.