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Why mobile M&A deals are taking so long

Ever since Google snapped up AdMob in 2008 and Apple bought Quattro Wireless in 2009, the mobile advertising technology and marketing communities have eagerly awaited a rush of follow-on mergers-and-acquisition activity in the sector. 

Yet, despite the continuing migration of consumers from desktop to mobile devices, few significant deals have been struck. There was the acquisition of Amobee by Singtel and the successful IPO of ad network Millennial Media, but the overall pace of M&A and IPO activity in mobile has been spotty.

The reasons are many.

Three?s the charm
First, while hundreds of early and mid-stage companies touch some aspect of mobile advertising technology and marketing, very few have posted earnings sufficient to entice either ?strategics? or private-equity buyers.

Next, mobile marketing remains somewhat of an afterthought for most major brand advertisers. 

Couple that with the fact that mobile CPMs are even lower than desk-top CPMs, and you have a marketplace that has yet to sort out who the long-term winners will be. 

This uncertainty is causing most potential acquirers to take a wait-and-see approach to mobile. 

Finally, most companies within the mobile ecosystem are venture-backed.  Value expectations ? based on some of the early, seminal deals ? are understandably high.  

The gap between what buyers are willing to pay and the expectations of the venture capitalists who control a large segment of the inventory remains wide.  

This will not be the case for much longer.

Eyeballing future
Somewhat similar to the evolution of the desktop advertising ecosystem, there is now a huge disparity between the time spent on mobile devices (eyeballs) and the amount of marketing money chasing those eyeballs.  

This disequilibrium will resolve over time, sending more dollars toward mobile.  

In addition, companies across the digital-advertising spectrum will look to acquire mobile product offerings as mobile is accepted as a mainstream advertising channel.  

Google?s recent announcement that advertisers must include tablets on their ad buys ? even if they only want to reach desktop users ? marks just the beginning of this trend.  

Facebook now receives 23 percent of its revenue from mobile, a dramatic increase over a year ago, with substantial growth still to come.

Mobile will eventually not be viewed as a columnar advertising channel, but one that cuts across the entire digital spectrum.  

In other words, mobile marketing will not be treated as a separate and distinct channel.  

Instead, it will become an integral and growing component of all digital campaigns, somewhat analogous to social.  

As this day dawns, major bets will be placed by the entire digital advertising ecosystem, from old-line direct marketing companies and ad agencies to the newest big-data ad-tech suppliers and pure-play digital ad networks.  

WITH ALL THE understandable hype around mobile, a wide variety of companies are already contemplating how best to buy their way into this fast-growing digital sector.  

The mobile landscape is still composed of a dizzying array of early-stage companies.  

From mobile ad networks and mobile couponing to application analytics, and from DSPs, DMPs and SSPs to mobile commerce, tomorrow?s winners are taking shape. As they do, increased M&A activity will surely follow.  

Jeffrey L. Dearth is Washington-based partner at media and marketing services investment bank DeSilva + Phillips. Reach him at