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2012 has been ‘the year of mobile’ but the big mobile ad acquisitions were made three years ago

VatorTV had an article this morning reporting on the growth in mobile advertising. They note from the eMarketer chart inset right that US mobile ad spend is up 180% this year to $4.1bn and say that “after years and years of every year being proclaimed as the ‘year of mobile’ it finally happened in 2012”.

I wouldn’t argue with that, but the interesting thing is that the landmark mobile adtech acquisitions happened three years ago when Google acquired Admob for $750m in Nov 2009 and Apple followed with the acquisition of Quattro Wireless for $275m in Jan 2010.

If you look back at eMarketer’s earlier data they sized the US mobile ad market at $320m in 2008 and $416m in 2009 showing that in this case the leading acquirer in the space deemed the market large enough to make a high value acquisition when it was well sub the $0.5bn level. (The earlier eMarketer data is here and here. It’s interesting to note that the each set of predictions has larger numbers than the one before, showing that growth has accelerated faster than expected.)

After the Admob and Quattro deals we had the near $1bn Milennial IPO earlier this year. I would posit that we may have seen the last big exit from a pure play on the mobile ad market (i.e. network model) and that going forward the strategic multiples will be going to companies that make the market work better rather than companies that simply make the market work. My point is purely about the stage of the market and there is no judgement implied here. In fact it takes more vision and is usually harder to ‘simply make the market work’ than to make an existing market work better.

One way that the mobile advertising market could work better is via more realtime buying and selling of inventory. This is the space our portfolio company StrikeAd plays in.

Finally, a quick note on the drivers of growth in mobile advertising this year. Google was most of the story, taking their mobile search and mobile display revenues from $750m to $2.2bn. The other big player was Facebook who went from $0 in mobile ad revenue last year to a forecast $339m this year. Apple (iAd) is stuck down at $124m, and all the players outside the top six shared $750m between them.

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