The mobile advertising industry is still buzzing over the estimated $1 billion Google and Apple spent to acquire AdMob and Quattro Wireless, respectively. And no wonder: Overnight, the mobile advertising story appeared to change from one of an emerging industry to a battle of internet titans.
Clearly, these deals validate mobile advertising's potential, as do the industry numbers. Last year, mobile advertising spend topped $416 million, up 30 percent over 2008, according to eMarketer. Mobile spend is projected to grow to $593 million this year and exceed $1.6 billion by 2013, eMarketer says.
Now compare the 2009 mobile ad spend to the $22 billion in total advertisers invested online last year, or the $31 billion projected for 2013 (note that mobile is part of the overall online ad spend figures).
These deals were certainly good for AdMob and Quattro. It will be interesting to see if they equate to a good marriage for mobile advertisers. At the end of the day, it's not clear whether the AdMob or Quattro acquisitions will help advertisers or publishers significantly. However, if the vast resources of Google and Apple are put to use correctly, these acquisitions could definitely result in positive things for the industry as a whole.
Both acquisitions helped Google and Apple achieve scale. The question is: Does scale alone benefit advertisers and publishers? For entrepreneurs, the precedent for a profitable exit has now been attached to size. But what about unique technology plays? Better targeting? More interesting ad formats? More engaged consumers?
If you're a publisher, for example, there is no linear connection between scale and mobile ad revenue. The number of publishers a mobile ad platform serves is irrelevant. What is relevant is how the mobile ad network performs for the publisher. If the technology aligns to a publisher's business requirements, and the network's sales team is the most responsive they have worked with, then it doesn't matter if the network has 10 or 10,000 publishers in it.
Likewise, if you're an advertiser, it's the quality of the publishers in a network that matters, not just the quantity. How quickly, easily, and cost-efficiently can the network target the publishers and demographics you want to reach? How thorough and customizable is the network's measurement and reporting? Can the network support all of the mobile platforms, advertising formats, and technologies your creative team wants to use?
I'd bet that these factors are the areas the industry will now be focused on investing in, and improving, for advertisers and publishers alike.
When I look back on my days at DoubleClick, I see some parallels to what is unfolding today in the mobile advertising space. My opinion is that, without a doubt, these acquisitions will be seen as a turning point in the industry's history, but only the first of many. We're still early in the industry's storyline, as the aforementioned revenue figures reflect.
Mobile devices, including smartphones, tablets, and e-readers, continue to evolve, and the advertising and publishing technologies will evolve with them. What these devices can do today will change dramatically tomorrow, and in some cases they will deliver functionality we can't even imagine right now. This is already happening, to some degree, with location-awareness, IP telephony, streaming video, form factors, and operating systems.
Will mobile devices even need to handle voice calls? Will all calls be video? Will we be watching TV on-demand on our mobile devices? We are consuming more and more of our computing, information, and entertainment on mobile devices, and it's an unstoppable trend.
I believe that these acquisitions will attract more talent to the field, spur mobile ad companies to improve their technology, and remind brands that mobile is a crucial piece of the marketing puzzle. When we look back on these deals in 20 years, they will likely been seen as an important moment when two industry giants validated the potential of mobile advertising. But in the overall scheme of things, we must remember that we are talking about more than just size. It is also about the ability to effectively, through technology, market individually to billions of consumers around the globe, through tens of billions of mobile devices, all of which are still evolving.
Dave Gwozdz is CEO of Mojiva Inc.
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