The Next Mobile Ad Merger

The Next Mobile Ad Merger
Elizabeth Woyke, 01.07.10, 06:00 PM EST
Google's AdMob purchase and Apple's Quattro deal will likely kick off a new wave of acquisitions.

First came Google, with its November acquisition of AdMob, then Apple with its recent purchase of Quattro Wireless. Now, a host of Internet firms, device makers and even wireless operators are expected to snap up their own mobile advertising networks in the coming months. The challenge? There are only a few--possibly just two--ad firms left that are widely viewed as attractive candidates.

A series of new deals would represent a second wave of merger and acquisition activity for the mobile ad market. The industry experienced an earlier burst of M&A in 2007, when Nokia ( NOK - news - people ) bought Enpocket, AOL acquired Third Screen Media and Microsoft ( MSFT - news - people ) absorbed ScreenTonic. Rajeev Chand, a managing director at Rutberg & Co., says there are three reasons for a resurgence of interest: the strategic growth of the mobile Internet, a renewed interest in making acquisitions as the economy improves, and a greater number of potential acquirers.
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Google ( GOOG - news - people ), in particular, is driving the deal-making, says Karsten Weide, program director of digital media and entertainment at researcher IDC. He estimates Google and AdMob together would control 21% of the U.S. mobile ad market, a chunk large enough to give them a comfortable lead over competitors (one reason the U.S. Federal Trade Commission is investigating the purchase.) The disparity will force other tech companies with mobile advertising ambitions to follow suit, says Weide.

Apple ( AAPL - news - people ) was the first to counter Google, announcing its Quattro buyout Jan. 5. Insiders say Yahoo! ( YHOO - news - people ) and Microsoft are likely to be next. Yahoo!, which holds an estimated 10% of the mobile ad market, likely wants to increase its share--and has the cash on hand to make such an acquisition, says Weide. Microsoft, which IDC estimates has an 8% slice of the market, is probably interested due to its "laser-like focus on search," he adds.

Other potential buyers include handset makers, which increasingly view their devices as platforms for tapping into mobile Internet traffic; publishers investing in digital content; and carriers looking for a new way to generate revenue. "Publishers are very interested in the mobile device market," says Noah Elkin, a senior analyst at eMarketer. "The same logic that applies to Apple [buying a mobile ad firm] could apply to a Hearst as well."

AOL is not on most analysts' short lists. The media giant, which is focused on a turnaround, currently lacks the means and "attention span" required for such an acquisition, says Weide.

The choicest targets appear to be Millennial Media and Jumptap, two U.S.-based firms that operate their own mobile ad networks and each command at least 5% of the mobile ad market, according to IDC. Analysts say the companies are likely meeting with potential buyers, or will be soon. Yahoo!, in fact, held talks with Millennial back in 2007, but walked away because the firm wanted too much money, says one analyst. IDC estimates Millennial's 2009 mobile ad revenue at $35 million and Jumptap's at $18 million.

Millennial and Jumptap declined to comment on acquisition rumors, but acknowledged that the AdMob and Quattro acquisitions have spurred interest in their own firms. "For people who thought the AdMob deal was a fluke, the Quattro deal validated the huge opportunity for mobile advertising ... the opportunities are just starting," says Jumptap Chief Marketing Officer Paran Johar.

But will there be opportunities for firms besides Jumptap and Millennial? Other companies, such as Amobee and Greystripe, are small enough that analysts don't track them. "It's hard to know how well [some of these companies] are doing and how much traction they have," says Julie Ask, a vice president at Forrester Research.

Some smaller players contend they're a better value. Bob Walczak, chief executive of the mobile ad tech firm Ringleader Digital, notes that Millennial raised $16 million in new funding in November while Jumptap secured more than $26 million in its last round, in August 2008. "They've put themselves in a higher price category," he says. "They'll have to show a lot of value to warrant an exit to their [venture capitalist investors]."

Analyst Weide says if Millennial and Jumptap garner the same high multiple Google paid for AdMob, they could be acquired for about $600 million and $300 million, respectively.

Google Conquers Time

Google Conquers Time
Quentin Hardy, 12.07.09, 04:50 PM EST
Real-time search, translation, location--everywhere?

MOUNTAIN VIEW, Calif. -- Years ago, Google defined its mission as "organizing all the world's information," which seemed to many like a slightly pretentious way of talking about Internet search. On Monday the company introduced products for simultaneous translation, real-time Web information and location-based awareness--in other words, evidence Google was serious about its boast.

At a press briefing at the Googleplex, the company displayed features like instantaneous recognition of photos taken with a mobile phone, translation of spoken speech from one language to another (also via a mobile phone), improved voice-based search on phones, maps that show nearby locations of any location pressed on a touch screen, and real-time search results based on updates from sources like Twitter, Facebook and MySpace, in addition to traditional sources. Google ( GOOG - news - people ) said the real-time product is already crawling 1 billion objects a day.
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The functions Google showed are all, of course, based on the Internet, and largely dependent on the millions of computers inside the "cloud" of Google's data centers. Yet the features increasingly attempt to draw the physical world into the Web. In another feature, Google teamed with Best Buy ( BBY - news - people ) to offer real-time inventory information about product availability at local stores.

Google likely assumes it can make a bundle from all this immediacy. For one thing, its utility means we will spend even more time on the Internet, searching for the most recent facts and looking at even more Google ads. In addition, it's likely that the information Google collects as it watches people search and navigate in all these systems will increase the value of the ads it auctions. Better understanding of behavior, after all, makes if more likely Google can offer the appropriate advertisement.

In one demonstration, Google vice president of engineering Vic Gundotra spoke the words "Pictures of Barack Obama with the French president at the G-8 Summit," and received the appropriate images. The service, already available in English and Mandarin, was announced for Japanese, and Gundotra said Google's aim is to offer it for all the world's major languages.
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01/06/2010 5:34PM ET

Searching for images via phone pictures is still somewhat limited--a demo using a wine bottle label flopped, and Gundotra had to rely on taking a photo of an image on screen (doubtless, already inside Google's servers). The product is likely being released so Google can build up a database of images and behaviors, to improve quality.

Baidu launches (legal) online video company

Baidu launches (legal) online video company

Shades of Hulu

By Austin Modine • Get more from this author

Posted in Music and Media, 6th January 2010 22:47 GMT

A Hulu-esque online television channel is being created for internet users behind China's Great Firewall.

The country's top o' the heap search engine Baidu said Wednesday it plans to form a new online venture that will serve free (and legal) copyrighted video content to Chinese internet users.

Baidu will spin-out a new, yet-to-be-named independent company to provide the service, which will generate revenue through online advertising. The search firm said it intends to stream a variety licensed movies, TV series, sport events, animation, and other content on the service, but didn't provide any details on specific licensing deals or partnerships.

Baidu was not immediately available for comment.

The online video venture will be helmed by Yu Gong, formerly the chief executive of China Mobile's 12580 hotline logistics service.

"By establishing this new company, we will be able to better serve our users and customers with superior content and focused resources," said Xuyang Ren, Baidu's vice president of business development in its English-language statement.

Ren said Gong's "strong" industry experience would enable growth through product innovation and a network of partnerships with content providers."

Baidu hasn't always been terribly concerned with copyrights when serving content. In fact, the company owes much of its popularity to a "deep links" unlicensed MP3 music scheme The Reg described in detail a year ago.

More recently, however, China's government has taken a harder hand against its home-grown online music services.

It wasn't mentioned how Baidu's licensed online video foray will affect its investment in PPLive, a separate Chinese web site that streams licensed movies and shows gratis. ®