Google reportedly shares mobile ad revenue with key partners

Google reportedly shares mobile ad revenue with key partners
Google’s Android mobile operating system is gaining considerable traction in the smartphone market. According to a report from mocoNews, the secret behind Android’s success is a series of revenue-sharing agreements that Google has signed with carriers and even some handset manufacturers.

The specific details are somewhat hazy, but the report cites unnamed sources who say that Google is giving its partners a cut of the advertising revenue generated by its mobile users. These deals are said to be isolated to the companies that are shipping Google Experience devices—handsets that come preinstalled with Google’s branded mobile applications.

Mobile advertising is still at a relatively nascent stage of its evolution. A New York Times article that was published earlier says that mobile ads in 2009 generated less than one-third of one percent of all total ad revenue. Despite the current lack of compelling demand for mobile advertising, there appears to be a whole lot of potential for growth, which is why Google and Apple are both making big investments. Google’s $750 million acquisition of mobile advertising firm AdMob is pending and Apple reportedly paid $275 million for Quattro, one of AdMob’s competitors.

The availability of Android’s source code and the absence of licensing fees helps to make Android adoption an easy choice for carriers and handset makers, but the revenue sharing is possibly how Google seals the deal and attracts loyalty.