AdMob gets Googled

Google is making good on its promise to venture into the mobile advertising market, through its announcement to buy international advertising network AdMob for $750 million (R5.6 billion).

The Internet giant announced the purchase agreement late yesterday afternoon. The deal will need to visit the US competition authorities before it is given the go-ahead.

The purchase could have local implications for the growth of mobile advertising in SA, since the country generates the highest revenue for US-based AdMob.

However, the revenue is generated by South Africans clicking on international adverts, and local companies are missing out on gaining from the ad spend that is generated.

Since Google opened an office in SA, the company has focused on mobile as a growth and access opportunity. The acquisition of AdMob, combined with the local revenue success of mobile advertising hit rates, could prove to be the boost Google needs in the South African market.

He says locally the deal will bring several benefits that will boost the company's presence in SA. “Our ads will become more relevant, our products more robust, and our monetisation capabilities more significant.”

Details around the deal are still sketchy; however, St Clair says the company will maintain its current staff complement and will essentially work as AdMob. “There will be no changes in the way we operate. We will keep our team and our focus will be on mobile advertising.”

Essentially, he says, AdMob will operate as a subsidiary of Google, as opposed to being swallowed by the company.

St Clair says there is a good synergy between Google and AdMob, which he hopes will translate into innovation. “I have one important thank you left and it is for Google. We've been blown away by their entrepreneurial attitude, their speed, and their insight.”

Google's international statement on the deal says it made the acquisition in preparation for a booming mobile market.

"Mobile advertising has enormous potential as a marketing medium and while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time," says Susan Wojcicki, VP of product management at Google.

Locally, Google can only benefit, since the country's mobile handset penetration is at 100%. AdMob research shows some of the traffic driving the growth in SA is from high-end smartphones; however, low-end handsets are increasingly generating traffic on mobile Internet sites.

Some 70% of the phones in SA can connect to the Internet and, of those, 60% do connect to the Internet. Both Google and AdMob can look forward to an increase in mobile advertising in SA with the coming Fifa 2010 World Cup.

Google has already upped its local content development in anticipation of the event, and will likely market its acquisition well if the deal is approved by the international authorities.

Local Google head Stephen Newton was unavailable to comment at the time of publication.