Apple to buy Quattro for $275MM - Revenue Models?

So according to the rumors Apple was in a bidding war with Google to buy Admob which has lead to speculation that Google may have over-paid.

Today’s news:

Google made huge waves in the mobile industry when it acquired mobile ad network AdMob for $750 million. Now Apple, which is increasingly in direct competition with Google, has countered its new rival.

According to All Things Digital, Apple has entered into an agreement to acquire Quattro Wireless, a mobile ad platform similar to AdMob but smaller in scale. The announcement may come as soon as tomorrow.

From Mashable http://bit.ly/74JfGt

My question is, where are these valuations coming from. Even if Google over-paid I can’t imagine it was by that much. Furthermore, where does that leave Baltimore’s own Millennial Media (MM)? MM is comprised of many Advertising.com alumni from the CEO, COO, CTO, SVP of sales on down to operations and now sales (after AOL’s VSP). They also just raised a new round of capital which leads me to believe they are in it for the long haul.

So if Admob is worth $750MM and Quattro is worth $275MM and MM is the highest in impressions where does that leave MM from a valuation standpoint? And who would want to buy them?

Some inside sources at Admob tell me that they get a huge chunk of their ad dollars from gaming the iTunes store top 25. So this means that a lot of the ad dollars are from app developer companies trying to jockey their ads into the top 25 list on the iTunes app store so they get more downloads of their app. So where does their money come from? Admob as well? Or is it Millennial Media that are bringing the true advertisers to the table?

So is the business model working like this?

$$$ from VC -> Admob to promote app -> slice of $ to apple -> $$ to app developer on subscription model to pump up valuation -> $$$$$$ back to founders and VC

$$ from advertisers -> slice of $ to MM from Advertisers -> slice of $ to app developer -> $$$ back to VC for funding the app developer

Clearly #1 is more lucrative in the short term. I know nothing about Quattro but I think they have a model more like MM.

In the long term however, #1 doesn’t have scale and it’s almost like a money laundering pump and dump shim sham for the VC and as soon as the app market cools off or shifts to Android with less of a controlled walled garden iTunes scenario that will collapse.

#2 though lower margin and lower quick valuation pump up value, I think is more scaleable and I think positions MM for acquisition by a media company or IPO from a scalable business model because their dollars are coming from corporate american ad budgets.

Anyway all of my knowledge on Admob, Quattro, and MM are purely speculative and based on assumtions….and we all know what happens when you ass-ume.