UPDATED 16:26 EDT / JUNE 25 2009

Mobile Ad Network Catfight: AdMob vs. The World

image Yesterday, Paul Boutin wrote over are Venturebeat about an interesting dustup forming in the mobile app monetziation world between AdMob and other mobile ad aggregation networks like Adwhirl and Tapjoy.

In the world of mobile advertisement, much like in the world of web advertisement, it often helps to hedge your bets against one particular ad provider running out of inventory to serve up on your application.  This is a strategy I’m personally familiar with since we here at SALabs are employing it in our alpha ad network. Because  the reach of a network often exceeds inventory, it’s incumbent upon the ad aggregation network (and thus the publisher) to find the inventory where it’s available to serve up to the user so as to not leave money on the table.

AdMob has taken exception to this approach, and here’s their reasoning (according to a statement issued yesterday):

AdMob will no longer serve ads requested from iPhone apps that employ ad network mediation layers such as AdWhirl or Tapjoy … We have discovered that iPhone apps that use a mediation layer generate a substantially higher volume of complaints from end users and higher number of technical issues than apps that integrate with AdMob directly. These user complaints and issues range from ads not rendering properly to ads clicking to nowhere to ads taking a very long time to load.

What we have also found over the last few months is that mediation layers significantly impair ability to optimize the selection of ads for the apps that choose to use them, by obstructing our view of these applications’ traffic profiles. These traffic profiles are a key input parameter that we use at AdMob to select the right ad for the right app at the right time.

Here’s the problem with that theory – the way the ads are served with most aggregators like AdWhirl, there’s likely no real clear way to tell if it’s a direct ad request or being rotated through a third-party.  The move comes off more as an attempt to cut off a competitor that could be exposing developers in their network to ads with better eCPMs than what AdMob offers.

image AdMob is, as has been said several times, the ‘800 pound gorilla’ in the room, with a network reach around 6 billion monthly impressions, where AdMob is currently at only a billion or so. Furthermore, according to Nielsen’s stats, AdMob is a very distant fourth in audience reach, behind Millennial Media, Yahoo, and then Google.

Given that all other ad networks up the food chain from AdMob aren’t also blocking these third party ad aggregator services, it’s an easy assumption to make that their ad networks aren’t being negatively impacted by the association.  That leaves AdMob the odd man out, and puts their motives under suspicion.

More evidence to this end is that AdMob still encourages their developers, at least with words, to continue to develop “homebrewed” ad solutions to work with other monetization solutions in conjunction with theirs.  Obviously, app developers would prefer to focus on building their apps, not ways to monetize them, and forcing them to develop the code in-house is a hedge to discourage working with multiple networks.

The Best Defense Against This is Diversification
image A recurring topic for Steven Hodson and I on our CobWEBs podcast is the instability for app developers to rest their entire business model on a single platform.  This comes up often in conversation when we talk about Twitter API developers creating an entire business that rests on the often shakey and always changing set of rules Twitter regularly hands down.

The reason why it’s not a good idea goes deeper than the fickle nature of API limits, though.

Simply put, your entire future as a company remains tied to the successes and failures of one organization. Steven says:

This problem isn’t just limited to Twitter either. It is a problem that will affect any company that utilizes a freely available API as part of their business plan. This is because you give any developer a way to access the same data that you display on your page and they will find a different, and sometimes better, way to display that data to the user. These are users who then won’t be showing up in the service’s page view counts.

What does this mean in the context of the AdMob/AdWhirl debacle?  AdWhirl has limited itself to monetizing apps on the iPhone, and thus cut out a huge market segment of apps for other platforms. While AdMob only represents a portion of the ads served by AdWhirl and platforms like it, focusing on only the hot platform of choice for developers leaves them susceptible to the whims of the market.

If you look at others in the mobile advertising business, you’ll see them diversifying to other platforms like Palm and Android in an effort to mitigate moves like this on the rest of their business as a whole.

Will This Move by AdMob Work?
Probably not.  Given their relatively weak market position, and the fact that ad aggregators continue to provide a much better value to developers than any single network can do, AdMob might be fighting a losing battle.

To win those developers back, AdMob would have to hands down be able to provide both an over-abundance of inventory and superior eCPMs than every other network, something that’s no small task to undertake.

Ultimately, I predict we’ll see AdMob pull back from their current position, or see their adoption rate by developers either slow significantly or possibly even drop.

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