Less than a month ago, Google Inc. (GOOG) said the worst of the recession was behind it and to expect acquisitions that would further its video, mobile search and Android operating system projects. On Monday, the Internet giant confirmed that it has purchased AdMob, a mobile display advertising company, for $750 million in stock.
Rumor also had it Google was on the verge of announcing a $30 million takeover of VoIP startup Gizmo5, which Skype reportedly was close to buying in October. The Gizmo5 deal, sources told the Washington Post, has closed.
The AdMob transaction gives Google another mobility edge. With Android, Google’s operating system, running on new devices such as the Motorola Droid, AdMob’s technology will push Google’s online ad expertise into the mobile world.
The benefits span different sectors, Google said. In a press release, the company noted that advertisers will be “better able to engage mobile users” with AdMob’s ad formats. Publishers and developers also are expected to be able to better monetize their content, which Google predicts will help the “wider mobile ecosystem.” Finally, Google said, users will see “more relevant ads” that deliver useful information.
The AdMob acquisition comes as mobile search demand has grown five-fold over the past two years, executives Susan Wojcicki and Vic Gundotra wrote in Google’s blog on Monday. A quarter of iPhone and Android users spend up to 90 minutes each day using mobile apps, they wrote.
However, “despite the tremendous growth in mobile usage and the substantial investment by many businesses in the space, the mobile Web is still in its early stages,” said Wojcicki and Gundotra, vice presidents of product management and engineering, respectively. “We believe that great mobile advertising products can encourage even more growth in the mobile ecosystem. That’s what has us excited about this deal.”
Wall Street seemed excited, too. Google’s shares were up 1.8 percent to $561 at 2:20 p.m. Eastern.
Meanwhile, if Google has indeed also bought Gizmo5, it’s furthering its efforts on the IP telephony front. Google Voice – which is under scrutiny by the FCC amid AT&T Inc.’s complaints – uses one phone number to distribute a user’s calls to her mobile, work or phone number, according to set preferences. Gizmo5 would extend Google Voice’s reach into the VoIP and instant messaging realms, creating, in essence, a new Skype rival. It also would let Google Voice users make or receive PSTN calls from their computers.
Google has yet to say whether it has purchased Gizmo5.
Google’s sudden flurry of activity stems from its improved financials, which supposedly reflect the end of the global economic recession. In the third quarter alone, the company’s net income jumped to $1.64 billion, up from $1.29 billion during the same period of 2008. Sales, too, rose, by 1 percent to $4.38 billion.