In the budding world of mobile advertising, whoever can control the app developers and gain access to the ad inventory on their apps will eventually win the game. Keep that in mind as you try to understand the very strange acquisition of AdWhirl by AdMob.
You see, AdMob is perhaps the largest independent mobile ad network and AdWhirl is a fast growing mobile ad exchange which allows mobile app developers to switch from AdMob to other competing mobile ad networks such as Quattro, VideoEgg, or Mobclix. Although it launched only last April, AdWhirl was quickly becoming the preferred advertising interface for many developers because they could still serve AdMob ads through it, but not be tied to AdMob if a better deal came along.
AdMob didn’t really like this so it threatened to stop supporting AdWhirl’s “mediation layer” and basically pull out of it altogether. That plan didn’t go over too well with the app developers AdMob needs to keep happy, so it quickly reversed itself and decided to delay its decision to withdraw from AdWhirl. Since it couldn’t take its toys and go home, it did the next best thing. It bought AdWhirl. Problem solved.
Except that now, who is going to trust AdMob to maintain AdWhirl as a neutral exchange rather than use it to funnel more of its own ads to developers? Or worse, to track all of the ad impression data of its competitors to improve its own ad products?
Our source who told us about the acquisition claims that AdWhirl has already been giving AdMob this data on the sly in the hopes that it would be acquired. He also claims that ” there is a lot of stuff under the covers to favor AdMob: in the code, in the data, and biased ad calls to AdMob.” The source, who thinks developers will get the short end of the stick in this deal, also seems to think that AdMob will eventually just shut AdWhirl down, blaming the other ad networks for a lack of cooperation or technical integration issues. We’ll see how that plays out.
But for now, AdWhirl still generates too many impressions for the other ad networks to simply abandon it. But that is exactly what they should do if they want to counter the combined power of Admob and AdWhirl. “I don’t understand how it remains unbiased or why other networks would want to be a part of that,” says Mobclix co-founder Sunil Verma, who has built a competing mobile ad exchange.
AdMob is trying to calm fears of bias by promising to open-source the underlying code which powers AdWhirl. But again, it is not so much the code, as how it is used that is the issue. “No matter what, AdMob will still have access to the data and it will become biased as to who gets the first ad call,” worries Mobclix’s other co-founder Krishna Subramanian. If other mobile ad networks and developers share those concerns, AdMob will have a bigger problem than it did with AdWhirl. It will lose the trust of the developers it needs to survive.
Update: AdMob CEO Omar Hamoui has given us the following response regarding the acquisition:
Our open source solution will be both for the client and the server. We anticipate there will be many independent servers run by developers, and possibly our competitors as well. Once we release the code into the community, we think it will be adopted widely.
Most developers use mediation layers for percentage based inventory allocation. This is not something that you can game or manipulate. The mediation component either fulfills the percentage allocation or not. We are committed to making this solution as open as it needs to be to make everybody comfortable. We also expect the market will hold us accountable to this course of action.
The AdWhirl team has visited our offices over the past several days as we have worked through this deal. However any claims that we have historically been sharing data with AdWhirl or manipulating how it works for our benefit is completely false.
Since the news broke we’ve been talking to developers and they agree that the key is an open and transparent solution. We expect to be held to that.