Thursday, May 6, 2010

Google spearheading new mobile ad eco-system

As the world points to mobile as the next great communications and advertising frontier, corporate partners pull their wagons in a circle to set up camps of competition. Google, as usual, appears to be leading the way. The concern now will be, whether the Federal Trade Commission will allow it.

More details below from today's AdAge.

When Google proposed a search deal with Yahoo, Madison Avenue turned out in force to block it. But in Google’s proposed acquisition of AdMob, they’re taking a different view: They like it, and fear the Federal Trade Commission will needlessly block the deal.

Following reports that the FTC plans to challenge Google’s $750 million acquisition of the mobile ad network, executives interviewed during the six-month investigation — even AdMob’s competitors — are coming forward to say they recommended the agency approve the deal.But some have expressed fears that FTC staffers have already made up their minds to block the deal, even though they appear to have a limited understanding of the mobile ad ecosystem.

“We’re a bit surprised the [FTC] staff is close to making a recommendation, given how unsophisticated their understanding of the mobile ad market seemed over the phone,” wrote Rob Sarvis, co-founder of app developer Wertago, in a blog postendorsing the Google acquisition.

“I’m surprised more people aren’t speaking out to defend the tech industry against the government being overbearing,” he told Ad Age. “There’s no way that generalist lawyers and economists can out-think the market.”

Wertago is a relatively small entertainment app by downloads and staff; Mr. Sarvis says he spoke to the FTC about 10 days ago. FTC spokesman Peter Kaplan declined comment.

While Wertago’s voice is arguably the most scathing, it’s not the only one publicly criticizing the FTC’s prolonged AdMob investigation. Consultant Greg Sterling, who spoke with the FTC, agrees that the lawyer he spoke to had limited understanding of the mobile ad industry.

“My sense from the questions I heard and their underlying assumptions is that the FTC was inclined to block the deal from the start,” he wrote on the blog Search Engine Land. Another app developer agrees that the FTC’s mind seemed made up.

A direct AdMob competitor, mobile ad network GreyStripe, is in support of Google’s acquisition. CEO Michael Chang says big companies like Google and Apple entering the mobile advertising space bodes well because they bring attention and investment to an emerging industry. Mobile advertising in 2009 represents less than $1 billion in spending vs. almost $25 billion online, according to eMarketer.

These testimonials came days after Bloomberg Business Week reported the FTC will urge filing suit to block the deal announced last November. If the deal goes through, Google will be the mobile-ad leader with 21% market share, according to market research firm IDC.

What worries some isn’t Google’s market share, but recent changes that limit the flow of data from apps to third parties. That’s one reason the FTC or Department of Justice may investigate Apple for restricting competition in mobile advertising, according to a report in the Wall Street Journal.

Recent changes in Apple’s terms of service for iPhone app could restrict how third parties access data, which could affect targeting, frequency capping and performance tracking — all things integral to mobile advertising. “If it is true that Apple has banned third-party data networks, then that does seem to be worthy of an investigation,” said one developer.

“If Apple enforces their new Terms of Service, they could block or significantly disadvantage developers from being able to work with third-party companies to help them generate revenue or to track and improve the performance of their applications,” AdMob’s general manager for North America Jason Spero said in a statement after Apple released its new terms weeks ago.

Presumably, Apple will keep that data with Quattro, the ad network it acquired in January. Apple has yet to clarify those terms, though they won’t go into affect until its new operating system launches this summer.

“It’s a huge issue if they [Apple] enforce that to the strictest letter,” said Mr. Chang. “For analytics companies, ad networks or social platforms, it would make it hard to operate on the iPhone platform.”

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