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Jumptap disputes IDC revenue estimates for mobile ad networks

Mobile ad network Jumptap is disputing the findings of an IDC study that estimates the revenue and market share of the major mobile ad networks.

Prompted by Google?s recent acquisition of AdMob, the IDC report ?Mobile Ad Market Share Estimates Show Yahoo and Microsoft Must Follow? estimated the market share of eight major U.S. players in the mobile ad segment. Google and AdMob combined for total revenues of $68 million, or 24 percent market share, which would make the combined companies the No. 1 mobile ad network.

?The starting point was Google's acquisition of AdMob, as other players and the media were interested to know if this would trigger any antitrust action, so we ran the numbers for AdMob, Google and the other major players,? said Karsten Weide, San Mateo, CA-based industry analyst at IDC. ?The results show that if you add Google and AdMob, they get 24 percent market share, which places them ahead of Millennial.

?It puts them in a leadership position, but antitrust action is unlikely?there?s going to be a review, but we don?t think there?s going to be any action coming out of it,? he said.

While no antitrust action from the government is likely to result from the Google-AdMob deal (see story), it is likely to heat up mergers-and-acquisitions discussions in the mobile-advertising space.

?If you look at the combined market share of Google and AdMob, and the estimated market share of Yahoo and Microsoft, GoogleMob is two times the size of Yahoo and three times the size of Microsoft,? Mr. Weide said. ?That means Yahoo and Microsoft must acquire mobile ad networks to keep up with GoogleMob, and the two best candidates are Millennial and Quattro.

?Yahoo was in discussions with Millennial, but it seems like Millennial asked for too much money, so Yahoo walked away, and then the recession hit,? he said. ?Now that the recession is waning, and all the big guys are getting back into the acquisitions game?both Microsoft and Yahoo are talking to potential acquisitions in the mobile ad network field to make up for that missing market share.

?I would expect news out of Yahoo in the next six months or so, nine months maybe, 2010 at the latest. The Google-AdMob deal kicked off the next round of consolidation in the mobile ad network field, but it usually takes a while to get those deals done.?

The controversial list
The results of IDC?s report show the estimated 2009 U.S. gross mobile advertising revenue, including traffic acquisition costs, and percentage of market share based on IDC's forecast for 2009's total U.S. mobile advertising spend of $287 million:

? Millennial Media: $51 million, 18 percent
? AdMob: $40 million, 14 percent
? Yahoo: $32 million, 11 percent
? Google: $28 million, 10 percent
? Microsoft: $23 million, 8 percent
? Quattro Wireless: $21 million, 7 percent
? Jumptap: $11 million, 4 percent
? AOL/Third Screen Media: $7 million, 2 percent

The remaining 26 percent of market share is made up of other players such as Mojiva, Crisp Wireless and Greystripe.

The revenue numbers are based on the number of ad impressions served by these entities (either as published by them or estimated based on their audience reach and an industry-average number of impressions per user) multiplied by an estimated average CPM rate (cost per mille, cost per 1,000 ad impressions).

?The availability of data is pretty poor?this is not reality, it?s an estimate,? Mr. Weide said. ?Most of those ad networks publish the monthly impressions they sell, so we took those numbers and multiplied them by an estimated industry average CPM, average price for every thousand impressions served of a particular ad.

?This is a rough estimate to get an idea of where people are,? he said. ?It?s a model, and it is what it is.?

This IDC report has already created a lot of discussion in the industry.

A similar stir was created when Nielsen released a report this past summer that cited the top-five mobile ad networks in the U.S. in terms of potential monthly reach as Millennial Media with 45.6 million monthly unique visitors, AOL/Platform-A's Third Screen Media with 28.6 million, AdMob with 25.7 million, Microsoft's MSN Ad Network with 25.4 million and Jumptap with 23.4 million (see story).

Mobile ad networks? response
All of the companies listed are privately held and thus do not release revenue figures. Most declined comment on the IDC study or did not respond to inquiries in time for publication.

However, both Jumptap and Mojiva did go on the record to discuss their respective opinions of the IDC?s findings and methodology. Here is what they had to say:

Paran Johar, New York-based chief marketing officer of Jumptap
The numbers were drastically wrong. I?m concerned where the impression numbers were taken from, as we were never contacted by the analyst.

According to the analyst, they took self-reported impressions multiplied by an average CPM for all the ad networks. Many of these impression counts were drastically overstated because they included impressions an ad network has access to, but does not serve. This does not provide an apples-to-apples comparison.

Our revenue numbers were drastically understated because the average CPM used was significantly lower than our average for our premium inventory.

The difficulty in calculating an average CPM rate lies with the quality of the inventory.

While some of the ad networks position themselves as a remnant with low-quality inventory, Jumptap maintains exclusive and non-exclusive relationships with some of the top-tier content publishers and media companies in the world. The average CPM rate therefore ranges dramatically between remnant networks and Jumptap.

The industry needs consistency. We as ad networks must come together to establish standards for measurement with third-party partners.

These kinds of reports are extremely misleading and only cause more confusion in the mobile advertising marketplace and for advertisers.

Ultimately an advertiser will realize the difference in quality of ad networks by the ROI they achieve. The winners in mobile advertising will not be based on size, which is simply the cost of entry, but on the relevancy they can provide an advertiser message.

Dave Gwozdz, CEO of Mojiva, New York
We?ve tried to figure out the size of the market, the number of ads served by each network, and took whatever numbers we had available as far as impressions and CPMs, but a lot of it is guess work.

It?s not easy to predict the revenues of multiple players in the industry when nobody reports anything, so the IDC report is as good as you could guess?it?s as good as you could do with back-of-the-napkin math.

The AdMob number was the guess that I had. I don?t think Millennial is quite as high as listed, but I?m not sure, I could be wrong. Maybe Jumptap or Quattro will question the numbers, I don't know.

It?s hard to get good numbers, because a lot of what ad networks do is mediate other ad networks to a certain extent, and there?s a little cut that they take in between.

A lot of the biggest players are selling inventory from the same sites?MocoSpace, eBuddy, MySpace, Cellufun and a few others that account for billions of impressions. These are the types of sites that make Millennial and AdMob the size that they are.

However, these are often on a CPC model, which doesn?t perform extremely well, with tons of impressions per click. The nature of the content is that you don?t get a lot of clicks but you blow through a ton of impressions, which would bring down the average CPM.

A lot of the bigger networks serve the same inventory, a couple of mobile Web sites with massive numbers of impressions, but some of the smaller networks serve more premium sites.

It?s hard to put a guess at it, but I would put the numbers in relatively similar order, but maybe flip-flop AdMob and Millennial.

I?m glad I don?t have to do the math, but in general the pecking order seemed pretty accurate.