Google's $750m deal for AdMob
24 November 09

Google is to buy AdMob, one of the largest mobile advertising networks in America, for $750m. Privately-held AdMob makes technology for serving graphical, display ads on mobile phones and maintains a network that allows advertisers to place display ads on mobile web sites and directly within specialised smartphone applications.

Google's agreement to buy AdMob in an all-stock deal would give it a key asset as it seeks to extend the reach of its online advertising business from the tethered world of PCs to the smartphones that consumers increasingly use to access the web while on-the-go.

Google's free Android operating system already provides the basic software that powers many of the newer iPhone competitors, including the recently released Motorola Droid.  The current revenue opportunity is still modest by Google's standards - J.P. Morgan analyst Imran Khan pegged AdMob's annual revenue at $45m to $60m - but analysts said the deal underscores Google's belief that the market is set to grow. "They've made it pretty clear that mobile is one of the biggest opportunities they see," said UBS analyst Brian Pitz.

The deal represents the third largest acquisition in Google's history, behind the 2008 acquisition of DoubleClick for $3.1bn and the 2006 acquisition of YouTube for $1.65bn. In an interview with Reuters, Google executives declined to say whether the deal would have a positive or negative impact on Google's profitability, or provide details about revenue expectations.