With so much media attention on the Google/AdMob investigation, you might expect the FTC to go to some lengths to justify its conclusion that Google's US$750 million purchase of AdMob should go ahead. After all, it believes these networks to be number one and two (that's news, by the way). The hope was that in explaining itself, the FTC statement might help to shed some light on the emerging market of mobile ad networks.
The six long months of media hype, misinformation, speculation and groundless predictions about the outcome of the investigation has reinforced just how little is known or understood about the mobile advertising business. With the unprecedented knowledge that this investigation ought to have amassed in order to come to a satisfactory conclusion, the FTC was in the perfect position to plug this knowledge gap.
Perhaps the FTC doesn't see education as part of its remit, but surely it is the FTC's duty to help people understand the decision and to explain the extent of the investigation. The danger of not doing so is that its decision will now be questioned and, worse, commentators will wonder whether the FTC actually understood the true nature of the market.
The statement lacks an explanation of what mobile advertising involves. At the very least, there should have been a clear-cut distinction between advertising on the mobile Web and within downloadable mobile applications, as well as spelling out different types of mobile ads, most obviously display and search - and the role played by mobile advertising networks in addressing these. To its credit, the FTC does distinguish between ad networks that focus on performance ads (charged by cost per click), including Google and AdMob, and those that focus on brand ads (charged by thousand impressions).
Nor is the extent of the investigation made clear. The FTC doesn't tell us if the investigation focused on mobile advertising, as a whole, or just mobile applications. The fact that "applications" is mentioned eight times in the statement, while Internet is mentioned only once (and Website isn't mentioned at all), and the preoccupation with Apple (we're coming to that) makes you wonder if the focus might have been in-application advertising.
So who's the biggest?
To properly understand the market power of AdMob and Google, we need to know: a) how big the mobile advertising market is (N.B. a lot of premium ad inventory is sold direct); b) what proportion of this is served by mobile ad networks; and c) the share of each individual network. Presumably the FTC established this, but chose not to share the information in the statement. But we are told which three (or two as it is now) ad networks generate the biggest revenues:
AdMob and Google "generate the most revenue among mobile advertising networks" i.e. they are number 1 and 2 (in unspecified order) and Quattro Wireless, acquired by Apple in December 2009, is "the third largest mobile ad network". The presence of other networks is not acknowledged.
If this "one, two, three" is an accurate picture, it is a step forward, but why couldn't the FTC have given us the top 10 with market share? Surely they must have the data? As mobile ad networks don't reveal revenue, to date the media has relied on analyst estimates for market share, which the FTC findings suggest must be inaccurate – it demonstrates just how little the experts know about this market. Oft quoted during the investigation were estimates from IDC; these put the pecking order in the US as Millennial Media, AdMob, Yahoo, Google, Microsoft, Quattro Wireless, Jumptap, AOL and Nokia. See here or here.
So what's the obsession with Apple?
The FTC shares one fascinating insight into AdMob's business:
"AdMob’s revenue and market share are derived largely from the iPhone platform."
Considering how small the iPhone's share of the handset market really is – much smaller than all the hype would suggest – it is astonishing that AdMob isn't making more headway outside this Apple niche, i.e. with all the other handsets. In 2009 the iPhone was only 2.2 percent of global mobile-phone shipments and 14.4 percent of smartphones in 2009. See these mobile stats.
Perhaps this goes some way to explain why the FTC statement appears to be as much about Apple and the iPhone as Google and AdMob.
Despite Apple's relatively small share of the phone and smartphone market, Apple appears to be central to the FTC decision to close the investigation: "…important developments in the mobile advertising marketplace, particularly actions by Apple that should mitigate the anticompetitive effects of Google’s AdMob acquisition." These actions by Apple include the purchase of Quattro Wireless and iAd (Apple's advertising platform pre-announced last month and focused solely on in-application advertising on Apple handsets – there's more analysis on iAd here.
In all, the FTC statement gives Apple 10 mentions and the iPhone nine, compared with AdMob 12, Google 13 and Android (Google's mobile operating system) seven mentions. Meanwhile the FTC didn't mention once any of the top five mobile manufacturers (by global shipments in 2009): Nokia, Samsung, LG, Sony Ericsson and Motorola, nor did it mention either of the top two smartphone manufacturers or operating systems Nokia/Symbian or Research In Motion/BlackBerry.
The only time the FTC acknowledges the existence of other cell phone manufacturers comes in the following bewildering comment: "As has been reported in the financial press, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android."
…Perhaps the FTC needs to change its reading list. Real smartphone sales statistics paint a very different picture to the media hype.
mobiThinking doesn't have a problem with the FTC decision, however the FTC statement is disappointing. The investigation generated a lot of interest in mobile advertising and exposed how little is actually known about the business. Rather than helping to address this, the FTC statement may actually lead to more confusion.
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