Google AdMob Deal Pits It Against Apple

Google yesterday closed its purchase of mobile advertising network AdMob, setting up a battle with Apple for digital ads served in applications on smartphones.

The search engine will commence integrating its AdSense for mobile programmes with AdMob’s mobile ad software. Google also gains the AdMob team, whose expertise made Apple come calling with an offer of $600 million (£411.5m) before Google swooped in with a sweeter $750m (£514m) deal.

Google quick off mark with AdSense features

Most attractive to Google is AdMob’s leading position in in-application ads, those ads sitting in applications users purchase and download from stores such as Apple’s iPhone App Store and Google’s own Android Market.

AdMob has created a number of ad units for iPhone and Android applications, including interactive video ad units and expandable rich media ads.

This is exactly the tack Apple is taking with its iAd mobile ad platform, fashioned from Apple’s purchase of AdMob rival Quattro Wireless.

Apple bagged Quattro in January after Google moved on AdMob last November. iAd is expected to launch with the iPhone 4.0 at Apple’s Worldwide Developers’ Conference on 7 June.

But Google has also been developing new features for in-app ads. Google vice president of engineering, Vic Gundotra said at Google I/O last week that Google will be making its “click-to-call” ad formats available to developers who run AdSense in their mobile apps.

Advertisers may use click-to-call ads to include a local business or national phone number directly in their ad text. Users can then click to call the business via phone.

“It’s clear that mobile advertising is becoming a much larger part of our clients’ and partners’ strategies and with this acquisition, it’s now a central part of our own business,” said Susan Wojcicki, vice president of product management for Google.

“In continuing to invest in this highly competitive area, we’ll be bringing together our technology, resources and expertise in search advertising with AdMob’s innovative solutions for advertising on mobile websites and in mobile applications.”

Google’s bid for AdMob seemed like a long shot at the beginning of May. The Federal Trade Commission (FTC) appeared set to sue Google to block the deal because it believed the deal would make Google too powerful in the mobile ad market.

After speaking to Google rivals and other mobile ad providers, most of whom told the commission the market is too nascent and fragmented to proclaim Google king with AdMob, the FTC blessed the deal on 21 May.

The battle between Google and Apple in mobile ads should begin in earnest when Apple starts serving ads through iAd on new iPhones this summer. Early indications are that Apple is charging $1 million (£685,785) for some iAd campaigns.