One Year Later, AdMob Making Its Mark on Google

Mobile Display and Search Integrated Into Larger Infrastructure

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One year after regulators gave Google the green light to acquire AdMob, the union of search giant and mobile ad network is beginning to bear fruit. The first signs are that AdMob and mobile display ads are bubbling into the larger Google infrastructure.

2.3 times more
mobile searches worldwide in fourth-quarter 2010 from the prior period
of overall restaurant search queries were mobile in January
of overall auto search queries were mobile in January
of overall "flowers" search queries were mobile on Mothers Day
6 p.m.-9 p.m.
time of day Google sees the highest volume of mobile search
of mobile search queries have local intent

Above all, the $750 million acquisition crystallized Google's commitment to mobile advertising as another revenue stream beyond its core search business.

"Mobile first" was a mantra repeated many times by former CEO Eric Schmidt. New chief Larry Page is said to also continue the charge. But even on phones and tablets it's largely a search game. When including search, Google is the mobile advertising market leader by far, holding 59% of overall U.S. revenue in 2010, far ahead of No. 2 Apple's 8.4%, according to IDC Research. But in mobile display ad revenue, Google is neck-and-neck with Apple, which sells its own brand of mobile ads, iAd.

That means Google could likely face similar challenges in mobile that it has in growing revenue from banner ads online. Google also bought its way into that market; in 2007, it made a splashy acquisition -- Doubleclick for $3.1 billion -- to get into online display ads, its first major bet outside search. While Google has since taken in 10% of overall revenue from display ads, according to eMarketer, search continues to be the cash cow. David Hallerman, principal analyst for eMarketer, calls Google's growth in online display to date decent, but not remarkable.

"Part of what Google has going for it is relationships with all the major brand advertisers," he said. "Anything that can make ad buying easier in a complex ecosystem gives the company a leg up in both buying and selling. So, [display revenue] has reasonable growth but not outstanding."

In the mobile sphere, both search and display are growing exponentially, largely thanks to the millions of new smartphones hitting the market. "We're seeing mobile as the fastest growing media in history," said Karim Temsamani, Google's global head of mobile. Google is seeing 50% of new internet connections globally coming from mobile devices.

More smartphones mean more mobile internet users -- and that means more ad impressions from apps and mobile web browsers. From January to April, Google saw 2.7 billion calls to its server for mobile display ads, an increase of 35%. Advertiser demand is growing, too, and Google is able to fill the vast majority of those calls with ads, said Jason Spero, director of mobile, Americas. That's promising, because piping enough advertiser demand into to fill all the mobile traffic has proven tough in the past. But that bigger supply of ads is also thanks to Google feeding ads from its search ads platform AdWords to fill mobile display slots

growth of traffic from tablets since October
2.7 billion
display ad requests per day globally in April, up from 2 billion in January
$1 billion
in projected yearly revenue, according to Google last fall
150 million
Apple and Android devices on the network, up 50% since January

Last fall, Google projected it would make $1 billion in mobile ad revenue globally, including both search and display.

Since AdMob joined the family, Google has also spread the new team's mobile expertise across the entire mobile ads business. Mr. Spero, a former Admob exec, now oversees both search and display for his region. Google did lose AdMob founder Omar Hamoui just months after federal regulators approved the acquisition, but even without him Google and Admob have made headway on his goals for the integration, namely using Google's established infrastructure to fix the plumbing in mobile ads, by third-party measurement and creative standards.

In the most recent major step, the company extended Doubleclick to apps that serve AdMob ads, bringing the same tool most agencies and advertisers use in evaluating online ad campaigns to mobile. For the next year, Google Mobile Ads will focus on local search, ads for tablets and better rich media for mobile.

Google has also added new engineering talent to mobile ads. Longtime Googler Clay Bavor was named head of mobile display ads, after working on core Google products such as online search and display.

But it's not all smooth sailing. Google has plugged mobile into its larger sales force. If an advertiser calls for a campaign, mobile is included as part of the proposal if that makes sense to do so. While that may help bring Google's long list of advertisers into mobile for the first time, it's causing frustration for some mobile agency execs. After the acquisition, AdMob's regional sales team was collapsed into Google sales forces, which is organized around verticals such as consumer-packaged goods or autos. That means mobile buyers have traded their one AdMob guy for multiple salespeople, one for a cereal client and another for an automaker.

"Integration is complex," added Mr. Spero.

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