By Keith Mitchell
Last week RIM announced new functionality that will enable developers to include advertising within their mobile applications (http://bit.ly/aOvbcs). Revenue from these ads will be split 60% to the developer and 40% to RIM; standard terms for the industry and a pretty good deal for RIM. Not content with just this, RIM is rumored to be considering a mobile advertising acquisition of their own (http://bit.ly/aYOCOM). If (some say “When”) this happens, it will be the latest step in what appears to be a rapidly consolidating industry. Microsoft kicked off the festivities with its acquisition of Screen Tonic (5/2007) followed by the purchase of aQuantive, AdECN, Rapt, and YaData, all of which have been rolled into their Microsoft Advertising division. Other high profile party goers include Google with their purchase of AdMob (11/2009), Apple with their purchase of Quattro (1/2010) and the ensuing absorption of that business into iAd (9/2010), and Opera with their acquisition of Ad Marvel (1/2010). (For additional background see the SLA Mobile blog entry from January 2010.)
The fact that acquisitions take place is nothing new; large tech companies tend to purchase smaller tech companies. What makes these acquisitions somewhat remarkable is lack of maturity of this market. Mobile advertising is still young and has only taken its first steps. Consolidation at this level is usually reserved for a market that is up and running.
What is the story behind this race? Experts have demonstrated with gusto the potential for mobile advertising. Statistics show that people spend increasing amounts of time looking at their mobile devices, but that advertising spend continues to go to “traditional” off-line mediums (http://bit.ly/9V9gh4). The experts tell us that we can expect a correction to take place as advertising spend moves to where the customers are, so the theory goes.
However, simply throwing ads on a mobile platform is not enough. An intimate knowledge of customer demographics and psychographics, where they are and what time it is there, what device they use and how often they use it; these pieces of data that will drive the success of mobile advertising. We believe that this type of targeted advertising will soon become the industry standard. And the wireless carriers that can server up this information to advertisers will lead the way.


