AdMob, founded in 2006, serves display ads on behalf of its customers to Apple's iPhone as well as phones running Google's Android operating system.
The deal, which is subject to regulatory approval, is one of the largest Google has ever entered into and reflects the company's ongoing push into the Internet display ad market. In September, Google debuted a display ad exchange, which the AdMob acquisition is expected to support, based on technology acquired in its 2008 purchase of DoubleClick. Last month Google released a new feature for its AdSense for Mobile ad-serving application, allowing publishers to run much bigger ads than is the norm on smart phones that have full Internet browsers.
The mobile ad market is still a small part of the $24 billion currently spent on Internet advertising. Research company eMarketer estimated that display, search and message-based ad expenditures on smart phones total about $416 million annually and are expected to reach $1.56 billion by 2013.
The use of smart phones in the U.S. is growing strongly. ComScore estimated that smart-phone adoption grew by 63% year-over-year in August, and touch-screen handset use jumped 159% in the same period.