VOD, TEF Invest in Mobile Ad Startup
Vodafone Group plc (NYSE: VOD) and Telefónica SA (NYSE: TEF) have become strategic investors in mobile advertising startup Amobee Media Systems . The investments give a dose of credibility to mobile operators' plans for mobile advertising and show how the battle is shaping up between operators and the Internet giants, like Google (Nasdaq: GOOG), for mobile advertising revenues. (See VOD, TEF Invest in Amobee.)
The two mobile operators have made strategic minority investments, for undisclosed sums, in Amobee and join Sequoia Capital , Accel Partners , and Globespan Capital Partners in the completion of Amobee's second round of funding.
"These guys are taking mobile advertising seriously," says says Patrick Parodi, Amobee's chief marketing officer and general manager for EMEA. "They can create relevancy for mobile advertising. Operators are in a much better position to decide which ad gets served to which user at what time and what location."
"It's time that someone made sure that Google, Yahoo Inc. (Nasdaq: YHOO), and Microsoft Corp. (Nasdaq: MSFT) don't dominate a market where quite frankly they don't have a lot to add right now," adds Parodi. (See Yahoo Moves on Mobile Ads and Google Makes Mobile Move.)
Vodafone CEO Arun Sarin has been a fan of mobile advertising for some time and typically gives a mention this new revenue source in earnings conference calls. The operator has launched commercial advertising services using Amobee's system in Greece, the Czech Republic, and Spain. (See Vodafone Takes MySpace Mobile, Amobee, Vodafone Spain Team, Vodafone Rakes in Data Revenues, and 75% Spaniards Receive SMS Ads.)
In Vodafone's half-year earnings call earlier this month, Sarin referred to Google's mobile intentions and indicated that mobile operators were better positioned in mobile advertising.
"Google is interested in coming to our industry. They think that mobile is the next place where digital advertising is going to go," said Sarin on the conference call. "We have good customer relationship management and billing systems to help monetize all of this."
But he added that the market was still nascent.
"It's very early days for mobile advertising," said Sarin. "It's early days to say we've landed on a business model."
Amobee's Parodi says the big year for mobile advertising will be 2009 and his company aims to be the "wholistic" ad server for the mobile operator. It can serve ads over seven different formats, including SMS, WAP, video, music, and games. And SMS-based advertising looks likely to be the biggest revenue driver.
"SMS will generate a huge amount of advertising inventory," says Parodi. "That will be for us what search is to the Web in terms of ad revenue."
Amobee operates on a revenue share model with operators. "We don't charge to deploy the platform," says Parodi. "As soon as operators start generating revenue from advertising, we expect to get a cut of that."
— Michelle Donegan, European Editor, Unstrung