RIM, the Canadian mobile phone manufacturer, is looking to acquire its own mobile advertising network according to inside sources at RIM who contacted the Wall Street Journal.
The Wall Street Journal reports that RIM is currently in talks with Millennial Media, which has its own network of mobile sites and ad brokers for other mobile networks.
Due to the recent sale figures achieved by rivals AdMob and Quattro Wireless, which were acquired by Google and Apple respectively, Millennial has asked for between $400 million to $500 million. However, RIM is unwilling to pay such a price.
The Competitive Landscape
In November 2009, Google acquired AdMob for $750 million, marking a significant move in the mobile advertising space. Shortly after, in January 2010, Apple acquired Quattro Wireless for an undisclosed sum, further intensifying the competition. These acquisitions have set a high benchmark in the industry, making it challenging for other players like RIM to enter the market without substantial investment.
Although RIM still holds 17.8 percent of the global smartphone market, this figure has slipped from 19.1 percent last year. The decline in market share indicates that RIM is feeling the pressure to respond to Apple and Google’s aggressive strategies in the smartphone market. The acquisition of a mobile advertising network could potentially provide RIM with a new revenue stream and help it to better compete with its rivals.
Strategic Implications for RIM
Acquiring Millennial Media could offer several strategic advantages for RIM. Firstly, it would allow RIM to integrate advertising capabilities directly into its mobile platform, providing a more seamless experience for users and advertisers alike. This could lead to increased user engagement and higher ad revenues.
Secondly, owning a mobile advertising network would enable RIM to leverage data analytics to better understand user behavior and preferences. This data could be used to deliver more targeted and relevant ads, thereby improving the effectiveness of advertising campaigns and increasing advertiser satisfaction.
Moreover, having its own advertising network could help RIM to diversify its revenue streams, reducing its reliance on hardware sales. This is particularly important in a market where hardware margins are shrinking, and competition is intensifying. By building a robust advertising business, RIM could create a more sustainable and profitable business model.
However, the high asking price of $400 million to $500 million for Millennial Media poses a significant challenge for RIM. The company needs to carefully evaluate whether the potential benefits of the acquisition justify the cost. Additionally, RIM would need to ensure that it has the necessary resources and expertise to successfully integrate and manage the advertising network.
Both RIM and Millennial have declined to comment on the report by the WSJ, leaving industry observers to speculate on the potential outcome of the negotiations. If the acquisition goes through, it could mark a significant turning point for RIM, helping it to regain its competitive edge in the rapidly evolving mobile market.
In conclusion, RIM’s potential acquisition of Millennial Media highlights the growing importance of mobile advertising in the smartphone industry. As competition continues to heat up, companies are increasingly looking for ways to differentiate themselves and create new revenue streams. Whether RIM decides to move forward with the acquisition or not, it is clear that the company is actively seeking ways to adapt to the changing market dynamics and secure its future growth.
Via
Latest Geeky Gadgets Deals
Disclosure: Some of our articles include affiliate links. If you buy something through one of these links, Geeky Gadgets may earn an affiliate commission. Learn about our Disclosure Policy.
