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Summary:

Google and Apple have picked off two of the biggest startups in mobile advertising, but as last week’s tie-up between Amobee and RingRing Media indicates, M&A activity in the space this year will largely center on smaller players. And there will be a lot of it.

The mobile ad space continued to heat up last week with Amobee’s acquisition of RingRing Media, a 2-year-old London-based startup, for an undisclosed sum. The move surely isn’t anywhere near the magnitude of Google’s $750 million AdMob buy or even Apple’s $275 million pick-up of Quattro Wireless, but it’s the kind of smaller-scale deal we’re likely to see many more of this year as the segment consolidates.

Mobile ad startups are hot commodities once again thanks largely to in-app marketing, which has given the segment a much-needed lift over the last year. Established Internet companies and software development companies alike are scrambling to gain a foothold in the space, much like in 2007, which saw a flurry of activity including AOL’s acquisition of Third Screen Media, Yahoo’s pick-up of Actionality, the Microsoft ScreenTonic buy and Nokia’s tie-up with Enpocket. While 2010 may not see as many blockbuster deals, the number of tie-ups could end up surpassing that of three years ago, Rich Wong of Accel Partners told me last week:

Brand managers now are spending in this medium. It’s real, and it’s genuine. I do think it’s going to be hard to have a quarterly earnings call as a major Internet company and not have an answer to the question, ‘What’s your mobile strategy?’

Data provided by IDC

The landscape is far different now than it was just three years ago, though, when a handful of startups were quick to emerge in the nascent space. Recent figures from IDC indicate that Millennial Media is clearly the largest startup left on the field (see chart); the mobile search firm JumpTap is the second-largest potential acquisition despite a mere 4 percent market share. Yahoo and Microsoft claim a combined market share of only 19 percent — which may prompt the high-profile players to make an acquisition or two this year in order to build their mobile businesses.

The field also teems with smaller player that specialize in targeted areas such as search or that serve specific geographic regions. And recent growth in the space has given rise to a host of startups that play supporting roles by providing analytics and other tools. Flurry, which pocketed $7 million on the heels of its recent tie-up with Pinch Media, may be especially attractive to ad companies that don’t have their own mobile analytics operations.

So while we may see one or two more big-budget acquisitions in mobile advertising this year, most of the M&A activity will center on smaller startups. Entrenched firms with deep pockets will look to fill out the holes in their mobile ad businesses, and independent players will forge alliances to better compete with their larger counterparts. Those deals won’t make headlines, but they will reconfigure the landscape of mobile advertising in 2010.

Thumbnail image courtesy Flickr user floodllama.

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  1. Andrew Finkle Sunday, January 17, 2010

    The funny thing about this space is that all the acquirees are the exact type of ads that will become irrelevant as time moves on. Mobile ad spend will be HUGELY successful, but not the little text links from Admob that we see today. If you want to see the future of Mobile advertising, you should be looking at QR Codes and the Foursquares of the world. This is where the space is going.

    http://twitter.com/A_F

  2. Jubaloo Mobile — Mobile Marketing Agency & Mobile Media Placement Sunday, January 17, 2010

    [...] Read this article: Smaller Startups to Fuel M&A Fire in Mobile Ads This Year – GigaOM [...]

  3. while generic banner ads are growing on mobile, we have been quite successful with local only ads such as ads from cable companies, restaurants etc that pay for a click or call generating up to $60eCPMs. In 2009 we did a few $M in revenue that would be a good share of the chart above. Mobile and local go hand in hand. Watch out for our geo-ads coming up later this quarter.

  4. Brian Benenhaley Monday, January 18, 2010

    There is no way to get around it, the world of M&A’s are going to be changing almost as fast as we can write about it. I am excited to see some of the smaller companies get in on the action.

  5. Opera Rides the Mobile Ad Bandwagon With AdMarvel Buy – GigaOM Wednesday, January 20, 2010

    [...] $15 million more if certain financial targets are met over the next two years. The move comes amid a flurry of M&A activity in the space in recent [...]

  6. Those revenue numbers are nowhere near being accurate. Also, Jumptap is essentially out of Mobile Search and has been for quite some time.

  7. How the iPad Helps Mobile Ad Firms — and Hurts Traditonal Online Advertisers – GigaOM Thursday, January 28, 2010

    [...] Traditional online ad firms have struggled mightily to gain a foothold in wireless, with many having to buy their way in via acquisition if they want a piece. So if the iPad can find a sizable audience, it could substantially increase the value of the pure-play mobile ad guys still left on the field. [...]

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