Google bets big on mobile advertising in $750-million acquisition of AdMob

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Google Inc. has shown which way it believes the winds are blowing by forking over $750 million for mobile advertising firm AdMob, one of the Web giant’s largest acquisitions to date.

As AdMob itself has described, the volume and effectiveness of mobile advertising has been skyrocketing over the last several years as more advanced smartphones have caught on, making it easier to deliver more kinds of graphical and text-based advertising to phone-toting consumers.

In a recent report, AdMob said that the number of mobile ads it served had increased nearly 540% from September 2007, to 10.2 billion per month from 1.6 billion.

As mobile phones morph further into pocket Internet devices, and consumers grow accustomed to performing online functions like search, gaming and instant messaging on their handsets, opportunities for advertising companies like Google will grow rapidly, analysts expect.

Google says the number of searches performed by smartphone users has increased by a factor of five over the last two years, led primarily by iPhone users and owners of Google Android phones. At least a dozen new Google-powered phones, such as last week’s launch of Verizon’s Droid, are expected to be released in the coming year.

Google also says that marketer spending on mobile advertising is growing at 30% annually.

AdMob was founded in 2006 by Omar Hamoui, a Web entrepreneur looking to generate traffic for his mobile-based website. The company has taken funding from venture firms such as Sequoia Capital, Accel Partners and Northgate, and the company’s clients have included Ford, Coca-Cola, Electronic Arts and Paramount Pictures.

Google, which already owns a major stake in mobile advertising with its DoubleClick Mobile unit, said it expects regulatory scrutiny of the AdMob deal but hopes the pact will be approved within a matter a months.

-- David Sarno