Apple buys Admob competitor Quattro for $275M

The battle with Google heats up as Cupertino jumps into the mobile advertising game.

Apple is set to announce that it has acquired Quattro Wireless, a mobile advertising platform for $275 million, according to Kara Swisher. The move comes shortly after Google bid $750 to snatch Admob, the mobile ad sector leader, out from under Apple’s nose.

Waltham, Mass.-based Quattro has raised $30 million from Highland Capital Partners and Globespan Capital Partners. Founded in 2006, its clients include Ford, Disney, the NFL, P&G, NetFlix, Time Inc., Visa, and CBS Interactive

Though Apple has generally steered clear of the advertising market, it’s not hard to imagine why its jumping in now, the day before Google introduces its own iPhone competitor. Google is likely to apply its ad-based business model to the mobile world, driving the cost of its hardware down, and Apple will be forced to compete.

Besides, the mobile ad market is set to explode, just like online advertising did a decade ago. Google conquered then because it figured out how to target advertising based on context (AdSense). The behavioral and contextual information that mobile devices catalogue—personal geolocation, purchasing, social networking, media consumption patterns—constitute a quantum leap forward for ad-targeting potential, and, therefore, revenue. At the Web 2.0 conference this October, Morgan Stanley Internet guru Mary Meeker explained that Mobile is even bigger than most people think, in part because consumers are already accustomed to paying for services on and through their phones.

Apple and Google will be the two main innovators in this space. Competition between the two has intensified since Google CEO Eric Schmidt left Apple’s board over concerns about increasing conflicts—the two now have their own browsers, operating systems and, as of today, smartphones.  Interestingly, the purchase of Quattro is likely to help Google convince the FTC that its purchase of Admob does not hurt competition. That deal is under scrutiny because it would give Google between 40 and 75 per cent of the mobile-advertising market.

The two deals are likely to set off a mobile ad network buying spree, similar to the ad network feeding frenzy of 2007 when corporate buyers including AOL, Google, Microsoft and Yahoo were all compelled to buy ad networks like Blue Lithium, Tacoda, Quigo, and RightMedia, usually for several hundred million.

Look for Microsoft (which recently became Verizon’s search and display ads partner) and possibly Yahoo and AOL to grab up some of the remaining mobile ad networks like Millennial Media, JumpTap and Mobclix.