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Wednesday, August 18, 2010, 07:50 pm PT (10:50 pm ET)

RIM shopping for ad network to take on Google AdMob, Apple iAd

BlackBerry maker Research In Motion is seeking to buy a mobile advertising network to better position itself against Google's AdMob and Apple's iAd programs.

According to a report by the Wall Street Journal, RIM has entered talks with a number of ad networks, including Millennial Media.

Clash of the ad titans

Apple started the platform-integrated race when it entered talks with AdMob last fall, only to be outbid by Google, which paid $750 million to get ahold of the ad network.

Apple then snapped up second place Quattro Wireless for a reported $270 million, then convered the company into its iAd program of interactive, HTML5-based ads that open within apps rather than sending users to external web links in their browser when clicked.

Apple then changed the terms of its iOS developer agreement to forbid developers from using ad networks that collect private data without its approval, a move that is expected to greatly reduce the value of ad networks that rely upon targeted ads to generate results.

Millennial prefers independence

That restriction may play into Millennial's disinterest in being acquired by RIM, as being affiliated with the competing BlackBerry smartphone platform would further limit the ad network's ability to serve targeted ads to iPhone, iPod touch, and iPad users, who represent one of the largest and most valuable mobile demographics globally.

Millennial chief executive Paul Palmieri said in the report that his company preferred to launch a public offering rather than be acquired, noting, "We are on the path of being an independent company."

RIM also balked at the price Millennial asked, reportedly $400-500 million. That's almost twice what Apple paid to enter the mobile ad business, and nearly half what Google shelled out for AdMob. As the largest independent ad network, Millennial is unlikely to give up the ability to sell iOS ads without getting paid top dollar. Other independents, including Greystripe and JumpTap, may also be potential targets for a RIM acquisition.

Strategic alignments in the mobile world

RIM has struggled to keep pace with Apple's iPhone growth and new competition from Google's Android platform. Android has taken over as Verizon's flagship phones after the miserable launches of every iPhone-like model shipped by RIM.

RIM's beleaguered launches include the BlackBerry Storm, Storm2, and the recent debut of the BlackBerry Torch, which reportedly shipped just 150,000 units at launch, a figure in the same dismal ballpark as Sprint's Palm Pre and HTC EVO 4G. IDC says RIM's share of the global smartphone market slipped from 19.1 to 17.8 percent over the past year.

Apple has worked to remain competitive by bolstering its iPhone platform with the iPod touch and then the new iPad, and is expected to launch a TV oriented iOS product next month. Apple also recently added iAd into its iTunes App Store mix to provide developers with an alternative business model to paid apps. RIM is still working on building a tablet device, and lacks both a vibrant software store as well as anything like iTune's media sales.

Meanwhile, Google is entering the both tablet and TV markets with a mix of licensed Android and Chrome OS products, and is promoting ad-sponsored apps as its primary business model, a strategy that is reflected in the inability of developers to sell Android apps outside of the few countries Google currently supports for paid apps in Android Market.

The company has also unveiled a Chrome web apps store that only collects 5 percent fees on purchases, indicating that Google plans to migrate its development toward ad sponsored models, the company's core competency, rather than trying to copy Apple's iTunes-centric model of a curated online store. In contrast, Microsoft has outlined a strategy for its upcoming Windows Phone 7 that works very much like Apple's iTunes