Google yesterday bought the leading mobile advertising provider for $750 million (£450 million) in a bid to extend its dominance of the internet advertising market into the mobile arena.

The all-share purchase of AdMob marks a significant step by the internet search giant as it seeks to dominate the fast-growing smartphone mobile sector. Thanks to the rise of smartphones that can browse the web, mobile telephone users provide fertile ground for Google to generate new revenue.

AdMob is the world’s largest mobile advertising platform. It acts as a middleman, arranging with publishers and developers to put advertisement spaces on to websites and applications and then selling those spaces to advertisers, including top brands such as Coca-Cola and Toshiba.

The company claims to serve more than 8.5 billion mobile banner and text adverts per month across a wide range of leading mobile websites and applications in more than 160 countries.

Google, which had previously concentrated mostly on mobile search advertising, said that the acquisition would enhance the company’s expertise and technology in the sector. Last month Google said that searches by mobile users on its sites increased by 30 per cent in the third quarter.

“Mobile advertising has enormous potential as a marketing medium and, while this industry is still in the early stages of development, AdMob has already made exceptional progress in a very short time,” said Susan Wojcicki, vice-president of product management at Google. “AdMob is the quintessential Silicon Valley start-up, generating impressive year-on-year revenue growth.”

Omar Hamoui, who founded the company in 2006 while still at business school, said: “I think people underestimate how important ads have been to funding the development of innovative content on the internet. As publishers and developers generate more revenue from their mobile products, they will invest more and their mobile offerings will become richer, more creative and more robust.”

Eric Schmidt, Google chief executive, signalled the company’s return to the acquisition trail last month after taking a breather during the worst of the economic downturn. Mr Schmidt said that Google would acquire on average one company a month.

Google is moving swiftly into the mobile market. Android, its operating system for mobile phones, is being used by many smartphone handset makers. Android is optimised for delivering Google websites to users who might now be targeted by advertisers using the AdMob technology.

Google has repeatedly stated its ambition to gain a significant share of the mobile advertising market. As the growth of online advertising on desktop computers slows, the potential in display adverts on high-powered smartphones such as the iPhone is expected to increase dramatically.

In a recent report AdMob said that iPhone and iPod touch traffic increased 19 times worldwide between September 2008 and September 2009 in the AdMob advertising network.

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