AdMob purchase opens door to new funding models

Published: Monday, November 9th 2009

The AdMob purchase by Google paves the way for some interesting developer funding opportunities

It's just been announced that Google is set to buy AdMob for $750M in an all-stock deal. This is the third biggest purchase Google has ever made (the only two bigger are YouTube and DoubleClick).

AdMob started in 2006 so they have capitalised very well for a 3 year old business. Indeed they've been cash positive for a while now so this is a great acquisition by Google. The full gory details of the deal can be found here and a press site by google here

We know this is all aligned to Google's interest and in particular their big appetite presently for anything Mobile. However this also opens up some enormous opportunities for developers.

This acquisition brings with it some great opportunities for in-application display advertising that is delivered contextually but also based on Google AdWords auctioning technology. Along side this I can then use the same advertising account to drive ads on my mobile website that compliments my application and then use standard ads on my main website that provides additional information / community support etc.

All of a sudden a possible revenue opportunity opens up that was kind of there previously but wasn't very smart. Over the last 18 months in particular we've been watching the rise of free-ad-supported applications as well as paid-no-ad versions of the same application. I would expect to see a lot more of the ad-supported apps once this deal goes through.

The reason for this is twofold:

  1. As a developer I can manage all of my advertising spaces with one vendor. I don't really want to have to deal with all these businesses I just want to get some beer money for my app that I'm spending my non-work hours producing.

  2. With contextual ad serving, I can make certain elements of data within the application available and use that to generate calls to the Ad Server - much the same way AdWords works with a web page or in Gmail. This means the ads that are served will be more relevant to the content which should lead to higher Click Through which then leads to potentially more revenue for me (see note above about beer money)

This makes a lot of sense for an advertiser as well. Certain applications have huge amounts of uptake - twitterific on iPhone or Twidroid on Android for example. Imagine having contextual ads served based on the content of your twitter stream. Twitter might resist it but it could make some serious cash for the app developers.

Overall I think this will really blow the top of mobile advertising. Advertisers who have been a little shy in the mobile space will be comforted by the fact it's Google doing it. App and mobile site developers stand to gain some good funding from it and it be relevant for their audiences and as the world goes increasingly smartphone mobile mad over the next 18 months this will be worth serious $Billions in the next 5 years or so.

Cross posted to Citrus Agency Blog

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"AdMob purchase opens door to new funding models"
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Monday, November 9th 2009
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