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The Federal Trade Commission has asked Google to provide more information about its pending acquisition of AdMob before giving that deal final approval.

Google disclosed the "second request" in a blog post Wednesday afternoon, saying "while this means we won't be closing right away, we're confident that the FTC will conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes. And we'll be working closely and cooperatively with them as they continue their review."

When Google first disclosed plans in early November to acquire AdMob, a leading provider of mobile advertising services, for $750 million, it said that it expected the federal government to take a closer look at the deal. Google even prepared a special Web page for the media and regulators explaining why it believed the deal did not pose any competitive threats, which is becoming standard practice at Google as it deals with increasing scrutiny from the government.

However, the second request could push back Google's initial expectation that the deal could close "in the next several months," although that's a statement with an awful lot of wiggle room. Google is also facing a delay with its proposed acquisition of On2 Technologies, which seems to be having trouble gaining the necessary number of shareholder votes in favor of the deal.

When the long-expected development of smartphones and handheld devices into primary computers reaches maturity, Google wants to make sure it occupies just as strong a position on the small screen as it does on the big one.

Google set the stage for that future Monday when it announced a $750 million all-stock deal to acquire AdMob, which is considered one of the strongest ad network providers for the mobile-computing world. It's a familiar strategy; just as Google bought DoubleClick in 2007 to blend search ad expertise with display ad expertise, so it plans to add AdMob's network of partners to its own mobile search ad efforts.

For all the work Google does in other areas--Google Apps, Android, Google Voice--advertising has always been, and will likely remain, its most important source of cash. It dominates the most lucrative segment of online advertising (search) and wants to expand its efforts in display advertising as well with a revamped DoubleClick Ad Exchange and increased efforts to court the major advertisers of the world.

But unlike the PC-based Internet, the mobile Internet-advertising business is still very small and very fragmented, with dozens of companies claiming to play a leading role. AdMob founder and CEO Omar Hamoui said he had no idea how much market share his company had in the business of providing mobile ads to Web site publishers, although AdMob is considered by outsiders to be one of the strongest companies in this area due to its work with ad units for iPhone applications.

Google's AdMob deal is about blending the respective advertising strengths of the two companies in a fast-growing market.

(Credit: Google)

Few doubt the staying power of mobile computing, however. Even with mobile advertising accounting for just a fraction of overall online advertising in 2009 ($416 million out of a total online spend of $24 billion according to eMarketer figures quoted by Google), AdMob has been cash-flow positive for about a year as advertisers show increasing interest in trying out mobile ads on smartphones like the iPhone and Android-based devices.

Google said it thought getting AdMob's 140-person team inside its company was "a pretty unique opportunity," said Vic Gundotra, vice president of engineering at Google, in an interview following the announcement of the deal. Gundotra and Hamoui both cited the cultural fits between the two companies as helping to streamline a deal; San Mateo, Calif.-based AdMob counts three Google veterans among the 10 executives listed on its management page.

It's not clear yet how Google will integrate AdMob into its existing structure. Google already operates DoubleClick Mobile, an ad delivery service that allows publishers to sell mobile ads directly to advertisers through a variety of ad networks, including AdMob's. What it doesn't have is its own display ad network with the reach and heft of AdMob's 15,000 and growing name-brand advertisers, which allows mobile publishers to essentially outsource their ad sales.

AdMob's success with iPhone ad sales has gotten it to this point.

(Credit: AdMob)

It's also not clear whether AdMob will now become "the" ad network for DoubleClick Mobile customers, but that might exclude a lot of business: Google lists its own AdSense, the MBrand and Decktrade networks from Millennial Media, and AdMob as just some of the ad networks if offers for DoubleClick Mobile customers.

In addition, Hamoui said AdMob would continue to sell ads across many different types of phones, rather than focusing on Google's Android. The whole reason AdMob has grown to the level it has was because it was able to separate its technology from specific phones like the iPhone or Android, which gives advertisers a much broader reach than if the ad network focused on any one phone, he said.

Google is now positioned to offer a one-stop shopping experience for companies interested in online advertising, combining search and display ad possibilities on both regular Web sites and mobile sites and applications. As has been the case for so many Google products and initiatives this year, that will likely raise an eyebrow among federal regulators.

As such, Google said while it doesn't expect to encounter significant regulatory issues with the AdMob purchase, "closer scrutiny has been one consequence of our success. On that basis, we wouldn't be surprised if there were some regulatory review before the deal closes." Google said it hoped to wrap up the deal "in the next several months."

Google took great pains Monday to point out how small a deal this was in the grand scheme of the advertising market. It created a Web site devoted to the deal where it quoted competitors in support of its point that mobile-ad budgets are tiny at the moment compared to the overall amount of money spent on online ads.

But Google's willingness to cough up $750 million in stock--making this its third-largest acquisition once it's finalized--shows just how important it thinks this market will become over the next decade.

When asked how quickly Google might see a return on this deal, Gundotra emphasized the future possibilities over short-term financial concerns.

"Getting that group of talented people into our company is an unbelievable return," he said. "It's likely lead to products and innovations we haven't even thought of yet."

Updated at 9:53 a.m. PST with additional details. See subsequent story for more analysis on the buy.

Google's back on the acquisition front, spending $750 million in stock Monday to acquire mobile display ad company AdMob.

AdMob founder Omar Hamoui

(Credit: AdMob)

AdMob is perhaps best known for serving display ads on iPhones, but it also recently started a business unit focused on ads for Android phones. The start-up would appear to fit well into Google's advertising business model, giving Google a leg up in the still-small but fast-growing world of mobile advertising.

"I'm excited because I believe this will be an important moment for everyone involved in producing, consuming, or monetizing engaging products on mobile," wrote AdMob founder and CEO Omar Hamoui in a blog post Monday. "The truth is that the mobile industry has had no shortage of creative energy, amazing products, and talented entrepreneurs. But until now, it has always felt like those of us involved in this space played second fiddle to our online brethren. I believe that time is over."

AdMob was founded in 2006. The company runs its Mobile Advertising Network across thousands of Web sites, serving up ads from big names such as Ford and Coca-Cola. It also collects and publishes data on mobile trends gleaned from the traffic it manages.

"Despite the tremendous growth in mobile usage and the substantial investment by many businesses in the space, the mobile Web is still in its early stages," wrote Google's Susan Wojcicki, vice president of product management, and Vic Gundotra, vice president of engineering, in Google's own blog post. "We believe that great mobile advertising products can encourage even more growth in the mobile ecosystem. That's what has us excited about this deal."

Representatives from Google and AdMob are expected to talk about the deal in greater detail later on Monday. This is a friendly takeover, as both companies have already approved the deal, they said in a press release.

It should come as no surprise that Google is back in a buying mood, after several weeks of talk from CEO Eric Schmidt and other company executives about Google's renewed prospects now that the company believes the worst of the advertising recession is past. At $750 million, the acquisition would rank as one of Google's largest deals, trailing DoubleClick at $3.1 billion and YouTube at $1.6 billion but edging out Postini's $625 million selling price.

Google's stock was up 1.81 percent to $561 on news of the deal.

Mobile advertising start-up AdMob announced on its blog on Thursday that it has added $12.5 million to the Series C funding round that it began amassing last fall.

The money comes from the Draper Fisher Jurvetson Growth Fund and Northgate Capital, adding to the round's existing lead investor Sequoia Capital and repeat investor Accel Partners. The funding brings its Series C total to $28.2 million.

AdMob recently launched a business unit specifically to handle advertisements on Google's Android platform. The reason for the Series C round, the company said, is to keep up growth, even as the advertising industry takes a hit. It'll be focusing on some new international markets, as well as expanding its sales and business development teams in the United States.

"We believe that now is a critical moment for us to cement our leadership position by making the investments that will help us to come out of this challenging economic environment even stronger than when we went in," AdMob's blog post read. "As mobile Web and application usage continues to grow rapidly worldwide, and smartphones--from the iPhone to the G1--gain in market share, we see a real opportunity to expand the mobile-advertising market."