Google confirmed yesterday that it acquired Admeld, a New York-based company that helps large websites sell advertising. The transaction, Google’s 12th already in 2011, is rumored to be valued around $400 million, making it one of the technology giant’s larger acquisitions to date. Admeld is just one piece of Google’s latest effort to bolster its position in the display ads marketplace, where it competes with other internet powerhouses including Yahoo and Facebook. Three-year old AdMeld had raised $30 million in funding from investors including the Foundry Group, Spark Capital, Norwest Venture Partners and Time Warner Investments
Google says the Admeld acquisition is in response to comments from online publishers that ad management today is “mind-numbingly complicated and inefficient.” But the technology giant continues to invest outside its main search-advertising business as it believes there is huge potential in display ads. Neal Mohan, Google’s vice president of display advertising, has said he believes display-ad revenue could top $100 billion over the next several years. Google made nearly $30 billion in revenue last year, with 96% of that coming from advertising. According to SEC filings, aggregate paid clicks on Google and Google Network members’ websites increased about 16% from 2009 to 2010 while the average cost-per-click increased about 5%.
Admeld, which is known as a supply-side platform, will provide Google with ad inventory from some of the largest online content publishers, including Thomson Reuters, Fox News and the New York Post. The acquisition builds on other recent Google advertising purchases including Invite Media (demand-side ad platform) in 2010, Teracent (display advertising) and AdMob (mobile ad platform) in 2009 and Doubleclick (ad management and ad serving) in 2007.
We wrote last year that growth within the Internet/mobile advertising and analytics space would continue to excel. With major players like Google making significant investments in the advertising market, there are no sign of slowing. The Interactive Advertising Bureau and PricewaterhouseCoopers predict online advertising spend will reach $31.3 billion this year in the U.S., a more than 20% increase over 2010 spending. Coupled with the explosive popularity of increasingly capable mobile devices (mobile marketing and advertising is expected to grow at 40% CAGR through 2015), investors and acquirers will not hesitate to throw more money into the space over the next several years.
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