Report: 2010 A Year of Consolidation for Mobile Advertising

LOS ANGELES — A new report by Reuters suggests that the coming year will be a bright one for mobile advertising networks, which may find themselves the target of a merger or outright acquisition.

The traffic and revenue boosting trend is credited to Google's $750 million takeover of AdMob — a move that its competitors may seek to emulate and counter by grabbing up players such as Admarvel, Velti and YOC.

"There will be a period of external growth," Screen Digest analyst Julien Theys said. "You can definitely bet on Microsoft, AOL to make purchases (of mobile ad companies)."

While some observers predict that mobile advertising could become a $10 billion business over the next four years, the AdMob deal seems optimistic, given its pricing at more than 16 times sales, which have been estimated at $45-$60 million annually.

Highlighting that seeming optimism are other estimates, which put the market at $1.5-$3.1 billion over the same period. Regardless of the real value of the mobile advertising market or the companies currently in play, however, larger firms may be willing and able to pay a premium to establish themselves in this growing space.

"The big companies don't want to miss the train," Union Investment fund manager Wassili Papas said, "which is why further M&A activity is likely."

The extent of that activity, just like the extent of the market, is still up for debate, however.

"I think there will be more consolidation in mobile (ads) of course (but) proof of the pudding is in the eating," opined WPP CEO Martin Sorrell.

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