Mobile advertising is hot, thanks to surging smartphone sales, increased traffic on the mobile web and the explosion of mobile apps. So Google’s (s goog) recent $750 million acquisition of AdMob is likely to spark another round of M&A activity in the space next year.
Several mobile ad startups were swallowed in the feeding frenzy of 2007: AOL bought Third Screen Media, Yahoo (s yhoo) picked up Actionality several months later, Microsoft (s msft) bought its way onto the field with the pickup of ScreenTonic and Nokia (s nok) jumped on the bandwagon with the acquisition of Enpocket. Those tie-ups were just a small sub-segment of the overall digital ad space, though, which saw more than a dozen acquisitions including big-name players such as DoubleClick and Publicis.
And there are still quite a few attractive startups that may be seen as ripe for the picking. Google and AdMob collectively account for 24 percent of the total ad revenue generated by major U.S. mobile ad networks, according to recent figures from IDC, but with an estimated $51 million in mobile ad revenue this year, Millennial Media claims an impressive 18 percent. Quattro Wireless is expected to generate $21 million to give it 7 percent of the market, IDC said, and JumpTap’s 4 percent of the market will bring in $11 million in 2009.
As to the potential suitors? Either Microsoft or Yahoo may feel compelled to snap up one of the remaining players to keep pace with Google, while a lesser player like AOL could make a bid in last-ditch attempt to become relevant in mobile.
AdMob’s lofty valuation — at roughly 10 times its worldwide revenue this year — could have set an artificially high bar, raising the price for all its rivals in the space. But mobile advertising is likely to get serious legs as the economy recovers, making the major startups even more attractive in an age where traditional advertising remains uneven. The mobile ad space may not see another buying spree like it enjoyed in 2007, but more M&A activity is surely on the way in 2010.