FTC Greenlights Google's AdMob Purchase

Deal Makes Company Biggest Player in Mobile Advertising

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NEW YORK (AdAge.com) -- The Federal Trade Commission has approved Google's acquisition of AdMob, clearing the way for the search giant to become the leader in mobile advertising.

And for that, Google can thank Apple. "As a result of Apple's entry [into the market], AdMob's success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob's competitive significance going forward, whether AdMob is owned by Google or not," the FTC said in a statement.

The move will make Google the biggest player in mobile advertising, according to research firm IDC. Together, Google and AdMob represented 21% of mobile ad revenue in 2009, with Millennial Media as the next biggest competitor. The No. 2 ad network is said to be in support of the decision, since Millennial Media focuses on brand advertising whereas AdMob appeals to long-tail advertisers with its click-fee structures and automated sales tool, something that will surely sync well with Google's existing AdWords and AdSense tools.

Mobile apps, display and search-ad revenue are expected to nearly double in 2010 to $430 million in the U.S., hitting $1.8 billion by 2014, compared to 47% growth in 2009, according to research firm IDC.

"We think the acquisition by Google of Admob reinforces the enormous potential of mobile advertising and its ability to engage with consumers," said Paran Johar, chief marketing officer of another direct competitor, JumpTap, a mobile ad network with 6% market share, according to IDC.

Is Apple next?
The Federal Trade Commission has been investigating the deal since November, when Google announced it would acquire the mobile-ad network for $750 million. While federal regulators were evaluating whether the deal would give Google a monopoly in mobile advertising, the industry has enjoyed unprecedented growth.

In the time since Google stuck its flag in the nascent industry, Apple acquired its own mobile-ad network, Quattro Wireless, and launched the ad product iAd. With the software equivalent of flipping a switch, Quattro could become the de facto ad network in more than 200,000 apps in the coming months. According to agency executives, pricing for iAds exceeds industry norms, and Apple is asking for million-dollar commitments to be among the first advertisers to use the platform.

Before the FTC's AdMob decision had been announced, one agency executive remarked, "My clients are more concerned with Apple and iAd. Why is the CPM so high?"

The FTC or Department of Justice may be investigating Apple next for restricting competition in mobile advertising, according to a report in the Wall Street Journal. Recent changes in Apple's terms of service for iPhone apps could restrict how third parties access data -- a holy grail in any form of advertising.

"Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers," the FTC said in its statement.

In the weeks preceding the AdMob decision, developers and bloggers had come out in favor of the deal amid reports that regulators were planning on blocking it. "The investigation has no merit," said Karston Weide, industry analyst with IDC, before the announcement. "Even people who might get hurt by growth in the mobile field tell me there's no reason to block the deal. The industry is so young and so dynamic, there's no telling what's going to happen in the next five to 10 years."

"We are extremely pleased with today's decision from the Federal Trade Commission to clear Google's acquisition of AdMob," said the ad network in a statement. "Over the past six months, we've received a great deal of support from across the mobile industry -- and we deeply appreciate it. Our focus is now on working with the team at Google to quickly close the deal."

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