DoubleClick’s acquisition by Google in 2008 cemented Google’s lead over other ad-networks and combined with its dominance in search provided a complete end-to-end solution to advertisers thereby transforming Google into the global advertising giant it is today.
Since 2008, the world has changed and mobile ads are the fastest growing category. In the Mobile ads space, Google does have many apps such as Google search but doesn’t own a dominant ad-network such as DoubleClick. Google’s AdMob is a network in this space but it doesn’t have any major advantages compared to some of the other competing ad-networks and could be a slow path to gaining market share with AdMob in the Mobile Ad space.
Unity offers one of the best game development platform and hence Unity’s ad-network has access to all game developers at the ground level (top of the funnel) immediately when they start developing a game. Currently, Unity’s problem is that when it’s ad-network is bidding programmatically for an ad, it doesn’t have the data about the user to whom this ad is going to be served and hence can’t bid its highest price whereas a network such as AdMob, AppLovin may be able to bid higher if they have the first party data about the user to whom this ad is going to be served. Hence a combination of Unity and Google’s AdMob would be a complete solution, where Unity has access to game developers (supply side of the ads) and AdMob has access to first-party data (customers of ads) and provide the complete solution to advertisers.
So why are we talking about this now, well, AppLovin announced a non-binding proposal to combine with Unity which will compete directly with AdMob and makes AppLovin a compelling end-to-end solution to compete against Google’s AdMob. Hence a move by Google to combine AdMob and Unity would be a force to reckon with in the Mobile Ad space just like DoubleClick was in 2008 for the desktop space. Moreover, AppLovin’s offer to acquire Unity is a stock offer and markets seem to be unimpressed with the offer as Unity’s stock price hasn’t seen a bump which means markets expect that either Unity will reject AppLovin’s offer or AppLovin’s price will fall enough that the premium paid in stock value by AppLovin will vanish by the time the deal is completed. This provides Google a window of opportunity to acquire Unity.