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Advertising - Monday, January 22, 2007

Google To Spend Half A Billion Dollars On In-game Advertising's Adscape

The Wall Street Journal weekend issue reported that Google is in talks to acquire San Francisco-based Adscape Media, which places ads in video games. Today analyst Trip Chowdhry of Global Equities Research, asserted that price would be about $500M. That's a lot of wampum for a company that does not have significant revenues.

True, Microsoft last year acquired Adscape rival Massive for close to $200M but we have to image that somewhere some accountant at Google is going to get white-faced when he calculates that multiple.

Chowdhry says there could be multiple bidders for Adscape, with Google competing against Microsoft and Sony and Yahoo. Chowdhry says that the company “probably does not have any significant revenue.”

Chowdhry doesn't seem to have a problem with this number as he asserted that the market for in-game ads could be $2.5B within 2-3 years. Investor HIG Capital must be elated. They have not even been able to install a CEO at Adscape and the startup is soaring.