Google is trying to make mobile phone ads pay
COMPANIES have spent years trying to work out how to make advertising on the mobile phone work. In many ways, it should be a no-brainer: unlike the PC, we’ve always seen our phones as something to spend cash on – whether we’re buying calls, texts, ringtones or data services. They are an unashamedly commercial device that would surely benefit from advertisements.
But there have always been obstacles: small screens have meant that advertising has felt intrusive, and most of us see mobile phones as something personal – to get adverts that are made relevant by reading our text messages or working out our location might seem an intrusion too far.
Google is hoping to crack the problem and, based on its track record, it’s the only firm that has a chance of doing so. It is buying mobile ad network specialist AdMob in an all-stock deal worth some $750m, showing just how determined it is to make this kind of advertising work.
Analysts say that the acquisition is a good one, while the market is happy that Google is back on the buyout trail after a period of credit crunch-induced abstinence. But it’s also a sign that this is an area where the web behemoth cannot go it alone – it needs AdMob to make it work. Similarly, AdMob needs a firm like Google to give it the economies of scale that could actually make its technology profitable.
Google is a strong player in mobile search advertising, but mobile display advertising has proven hard to master. AdMob currently serves around 8.5bn mobile manner ads and text ads a month, across 15,000 mobile websites in 160 countries. Those brands that are willing to dip their toes in these uncharted waters tend to enlist AdMob to run their campaigns.
But what makes AdMob stand out is its obsession with using data to target adverts at the right users. It records metrics that analyse location and device type, enabling to work out what campaigns are effective for each type of customer. A campaign aimed at iPhone-using, professional Londoners might not work for entry level Nokia users in Glasgow, for example.
Although Google tends to go it alone, it has proven that it can make acquisitions like this work. Back in December 2007, it bought DoubleClick to boost its position in display advertising, an area where it had fallen behind because the algorithms it has based its whole business model on are much more suited to text ads.
If Google can integrate AdMob effectively, and crack a market that has proven elusive to almost everyone else, its status as the world’s biggest advertising firm will be secure.