Google's Mobile Ads Now a $1 Billion Global Business

Worldwide Growth Driven by Boom Among Smartphones, Android Devices; Aided by Apple

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NEW YORK (AdAge.com) -- Amid third-quarter earnings, Google revealed a startling number: Mobile ads are now a $1 billion business worldwide, annualized based on the prior quarter.

These numbers come in only five months after Google began to integrate its newly acquired mobile ad network AdMob, acquired in a $750 million deal late last year. Since then, Google has worked to bring its expertise in ad serving, infrastructure and client relationships to the nascent mobile industry. "Mobile is going to be an increasing part of the strategy in terms of sales," Google's head of mobile advertising, Omar Hamoui, told Ad Age in September.

AdMob was the second-largest mobile ad network by revenue in the U.S. last year, according to research firm IDC's estimates. Through the acquisition though, Google jumped to No. 1 with 21% market share.

When it was acquired, AdMob's revenue was less then $100 million, but in the past year smartphone sales and use have exploded; Apple bought Quattro Wireless and entered the market, and it started charging marketers $1 million just to ante up for its new mobile format, iAd.

Google's mobile operating system, Android, is growing faster than any other. It rocketed from 3.9% global mobile-operating-system market share in 2009 to 17.7% this year, according to Gartner.

EMarketer estimates U.S. mobile ad spending at $743 million, up 78% from $416 million a year ago. Google's number is global and includes markets where mobile use exceeds PC use, such as India.

"Smartphones have increased as a percentage of all mobile users and smartphone users are far more active than those with features phones," said Noah Elkin, mobile analyst for eMarketer. "The combination of Apple and Google entering the market in a big way provides a snowball effect to the industry."

Apple gave Google a little help this year. After it bought Quattro Wireless, it shut down its network business, giving up all inventory on non-Apple devices to focus exclusively on iAds. Apple devices, however, are open to networks such as Google, which serves ads in mobile apps as well as on mobile web pages.

While Android and Google's mobile ad business are separate, Android is helping grow the smartphone universe and thus search hits on phones.

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