It's just been announced that Google will buy the world's largest mobile advertising provider: Admob. The online search giant will buy out AdMob's stock which at current prices would total $750 million.
Admob's system allows developers to sell their apps for free and make money on ads. Many developers have found that the arrangement works better over the long term than a regular upfront sale of their apps, because the ad revenue continues to come in.
The large online companies like Google, Yahoo, and Microsoft hare in fierce competition to grab a piece of the mobile market. Since there are more mobile phone users in the world than computer users, the growth in that sector is considered to be much more potentially lucrative than traditional online advertising.
Omar Hamoui, Admob's founder, started AdMob in January 2006 while he was still a student at the University of Pennsylvania. He originally just sold web links from his dorm room, but really built his business on the iPhone's success, as he noted in his announcement:
We were so excited by the promise the iPhone represented that we shifted a significant portion of our attention to that device in its very early days. We launched the first iPhone ad units focused on the web and quickly added the capability to run ads in applications. Now with the addition of excellent devices from Palm, Nokia, RIM, and plethora of Android powered smartphones, we have all the preconditions necessary for what will be a tidal wave of mobile browsing and app usage. But let there be no mistake. Our business, and the mobile industry in general, owes Apple a debt of gratitude.
image via AdMob