Google Buys AdMob. What Took So Long?

November 11, 2009

admob_googleBloggers and tech watchers are all a buzz today with the news that Google has acquired mobile ad leader Admob. Great move for Google and a massive congrats to Omar and the AdMob team. They’ve built up quite an impressive business in a few short years; not only becoming the largest mobile ad network, but also amassing an amazing amount of data on how people are using and engaging in mobile applications.

As noted by Forbes, Google now has access to a ton of competitive data that will bode well in the mobile platform war just heating up with Apple. I’m not discounting AdMob’s ad business but if it was the ads Google wanted then why did they wait so long to make the buy? I remember attending Dealmaker Media’s Under the Radar Mobile conference in 2007 where Omar pitched Admob to an audience of eager web heads and a panel of investors. If I remember correctly, one investor remarked, “if you can grow this you’re perfect acquisition bait for Google”. Grow it they did but Google didn’t previously step in.

AdMob has grown leaps and bounds, even making its own acquisitions to maintain it’s mobile ad leadership position. I often wondered why in such a hot space they hadn’t been acquired either by Google, or better yet, by Microsoft. Why wouldn’t Redmond step in and get a leg up by acquiring a company serving billions of mobile ads?

AdMob is located literally 20min down the road from the Googleplex. Their ad platform takes a lot of queues from AdWords. Perhaps Google played supportive big brother to Abmob’s success behind the scenes? Here’s my far fetched theory; Admob grew the business on venture money and lots of skill and technical aptitude, and possibly benefited from mentoring by folks at Google. When it got to a point that the ad business was mature enough and the data valuable enough, the acquisition was a understood formality. Microsoft, Yahoo, etc. new of the close relationship and knew that any approach would be rejected outright. Crazy?

Well, no matter what the facts are Admob is a great success story on it’s own and now a very valuable business, data, and team for Google. My conspiracy theories aside, congrats to all involved.

 


TVEverywhere: I’m Not a Dumb Pipe

November 1, 2009

tv-everywhereA lot is being written recently about TVEverywhere, the initiative being led by Comcast and Time Warner Inc. to provide the same great programming we enjoy on our TV sets online, but on a subscriber basis; if you’re a cable/telco subscriber than you can get the same programming online through the respective company portals. If you’ve never heard of TVEverywhere check out NewTeeVee’s write-up. Comcast is actually calling their effort OnDemand Online and along with TW have begun trails.

This is a big initiative. Real BIG. It’s difficult enough for a large complex company (like a cable or telco) to implement their own authentication, single sign-on, or video asset management and supply chain system (trust me, we’ve done it), but to do it in conjunction with another big industry player? Summon the rabbit foot. I’m not saying it won’t happen; on the contrary I believe it definitely will. It’s the last stand.

It started with torrents, then pirated video on YouTube, then legitimization through Hulu – but the operators are still left out in the cold. All efforts to provide the programs and movies we know and love over the web, have been what are called ‘over the top services’; content and services provided on the web running on the network we call the internet. The network (read web) is provided to us by the Internet Service Provider; usually your local cable or telco provider. We pay them for access but they don’t get a cent from what we actually buy or watch online. It’s the same thing as paying for utilities; you power company doesn’t get a cut of the light bulb you buy at the store. You power company is the ‘dumb pipe’. Today’s cable/telco are fighting not to become a utility. TVEverywhere (or similar efforts by Verizon and AT&T) will either make the pipe smart or dumb.

The promise of TVEverywhere is that you get online what you already pay to watch on TV. But will it work? Whether legal or not, the fact is you can find almost any TV show or movie online or on a P2P network. The number of people canceling their cable service and simply watching online grows daily. With the ability to simply connect your computer to your TV, or stream directly to your TV, it’s a great way to save $50-$100 a month. If I want to go all legal then I can go to the ever-increasing content catalog at Hulu, licensed content on YouTube, or even directly to network or cable channel websites (I can watch a lot of Seinfeld on TBS.com) – all ‘over the top’ services where studios publish direct to consumer, bypassing network providers. People are canceling their cable/satellite services; they can get content without them. But, it’s a pain.

People are inherently lazy. Some of us actually like working, some go to the gym regularly, and some climb mountains; but the vast majority want things nice and easy (it’s the reason the drive-thru was invented). We don’t want to search the web for our shows; we want to turn on our TV and get everything easily.

The promise of TVEverywhere is that Advertiser and programmers will maintain their existing business models, and for consumers get what we want online. It’s a bet that:

(a) The vast majority of people are not all web savvy, connect my computer or stream directly to my TV geeks

(b) Studios won’t all flock to Hulu

(c) Advertisers will continue to value the 30 sec TV spot more than anything online (which is the reason for (a))

(d) The basic paradigm of new content fueled on advertising dollars will stay the norm (because of (c))

Can you imagine a world where all content we have is paid for with money generated by online ads? I don’t think that $25 CPM is going to pay for the new season of 24. Hulu is doing a great job of monetizing content but I submit that the reason studios can afford to monetize on Hulu is because they’re making the real money on TV. Without TV, Hulu can’t survive.

TVEverywhere is a good bet by the ISPs to drive traffic to their own online portals instead of other services. The promise is that there won’t be a cost to existing subscribers; idea being that with more traffic, the portals will become a cash cow of advertising dollars. Provided they can get through the operational and tech hurdles to can make it happen, there are two opportunities to really realize success:

1. Lower subscriber fees so that people will be less incented to go ‘over the top’ for content

2. Offer an online-only subscription. Even in the event that the paradigm changes and the majority start going online to watch, the big ad dollars will follow

The wild card is still the cost of bandwidth, and the ability for ISPs to make costs viable. Net neutrality concerns aside, ISPs could hamper competing ‘over the top’ services by requesting they pay to have their service streamed on the good part of the pipe (i.e DOCSIS 3.0). You want to use our pipe and take our customers? Pay me.

How things shake out will depend on the same group that always has the last say:  Us. Where, how, and when we get our video will shape the future of the industry. You’ll be able to get your movies everywhere, so keep the popcorn hot and take your pick.


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