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6/14/2013
04:17 PM
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Google Grabs Half Of All Mobile Ad Revenue

Despite its dominance in the mobile market, Google soon could face serious competition from Facebook.

Google I/O: 10 Key Developments
Google I/O: 10 Key Developments
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Google collected $4.61 billion in mobile ad revenue worldwide in 2012, a figure that represents more than half of the $8.8 billion mobile ad market and almost a third of all digital ad spending that year, according to metrics firm eMarketer.

Google's share of worldwide mobile ad spending is expected to increase from 52% to 56% in 2013, reaching $8.84 billion, with spending on mobile ads worldwide almost doubling, reaching $15.82 billion by the end of the year.

Such success fuels Google's critics like FairSearch.org, a group backed by Microsoft, Oracle and competing industry-specific search engines. In April, the group filed a complaint with the European Commission that claims Google "uses deceptive conduct to lock out competition in mobile."

[ Do your Internet Explorer users depend on Chrome Frame? Read Google To Retire Chrome Frame. ]

This vocal airing of grievances appears to have had some effect. On Friday, Reuters reported that European antitrust authorities have begun asking mobile carriers and handset makers whether their Android contracts limit their ability to do business with Google rivals. The inquiry could lead to a second anti-trust investigation, just as Google is trying to settle the European Commission investigation of its search business.

FairSearch.org said it was ready to help the European Commission with its inquiry.

In January, Google settled a Federal Trade Commission inquiry into its search business by agreeing to change some of its business practices. Among its findings, the FTC concluded that despite allegations of anti-competitive behavior in the desktop and mobile markets, there wasn't enough evidence to take action against Google.

Google doesn't have the mobile ad business all to itself.

Facebook took the second largest share of mobile ad dollars last year, an estimated $470 million. Although that represents only about a tenth of Google's global mobile ad revenue, Facebook is expected to close the gap significantly this year. The social network's mobile ad revenue in 2013 is expected to reach $2.04 billion, an increase of more than 334%.

Krishna Subramanian, chief marketing officer of mobile ad technology company Velti, said in a phone interview that Facebook has seen a lot of success over the past few quarters as the company has developed mobile ads that promote app installations.

Twitter is also expected to see significant ad revenue growth, both in the mobile and digital ad arena. eMarketer anticipates that Twitter's share of worldwide mobile ad spending will reach about 2% this year.

Subramanian believes Amazon.com, which already generates significant digital ad revenue, will become important in the mobile ad market because of the company's deep data assets. Amazon in March launched its Mobile Ads API, which allows Android app developers to display Amazon-supplied mobile ads.

The winner, Subramanian argues, will be the company that can bring the big advertising brands into the mobile market. "It's not just about click-through rate or the number of eyeballs," he said. "The value that mobile will provide is data connected to consumers."

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