Google bids to become 'Google' of smartphone ads

The search behemoth paid around £450 million in a share swap deal to secure control of AdMob, which acts as a broker between site owners, publishers and application developers and advertisers. AdMob accepts contracts from clients operating advertising and marketing programs and arranges to have content placed where smartphone owners will access it.

AdMob said it places more than 8.5 billion mobile adverts per month in over 160 countries. According to Millennial Media's latest State of the Industry report there will be a a 15% rise in mobile advertising revenues during 2010.

Google's bid was also prompted by its own findings that searches from mobile phones on its sites had soared by nearly a third during the September quarter.

Google claimed that its acquisition of AdMob 'will bring new innovation and competition to mobile advertising, and will lead to more effective tools for creating, serving, and analyzing emerging mobile ads formats,' and that it 'will provide users with more free or low cost mobile apps.'

Google was also quick to fend off accusations that the deal will reduce competitiveness in the growing smartphone market and reproduce Google's near monopoly position in the PC search advertising market.

'The mobile advertising space will remain highly competitive, with more than a dozen mobile ad networks. The deal is similar to mobile advertising acquisitions that AOL, Microsoft, and Yahoo have made in the past two years,' the company claimed.

Google first signaled its intent to become a big player in the smartphone market when it released its smartphone OS, called Android, in November 2007. Since then the OS has been slow to make an impact, but a new wave of Android phones are beginning to appear. Google said it expects there to be around 20 by the year's end, including Motorola's high profile Droid handset.