The mobile advertising pioneer is a Silicon Valley success story that emerged in 2006, when Omar Hamoui founded the company after being frustrated by a lack of ways to generate traffic for his mobile site, claiming it was too hard to engage users.

“I’ve been working in mobile for over seven years now. Before AdMob, I founded two separate mobile startups that never got significant traction. It was so frustrating to build what I knew was an incredible service only to find myself unable to distribute or monetize the product without a carrier or handset deal. Turns out, I wasn’t the only one. Talk to any veteran in mobile and they will tell you just how hard it was to get things done only a few years ago,” wrote Hamoui in a statement.

These days AdMob is serving targeted and personalized advertisements on the mobile web through the use of its mobile advertising platform. According to the company website, the network claims to have served over 125 billion impressions.

The acquisition is the fourth biggest publically-disclosed deal in Google’s history, at least if Wikipedia’s metrics can be trusted. Upstaging the AdMob deal in price tag is the landmark $3.3 billion (US $3.1 billion) the company paid for DoubleClick, plus the $1.8 billion (US $1.65 billion) shelled out for YouTube and the cool $1.08 billion (US $1 billion) paid for a 5% stake in America Online – more commonly known as AOL – back in 2005.

Word also leaked that Google is rumoured to be acquiring Gizmo5, which was swallowed up in the hype surrounding the AdMob deal. The search giant is allegedly writing a cheque for US $30 million for the VoIP startup, though no official confirmation has come through yet.

Car manufacturers were the first to get in on the action, with Mitsubishi and Holden both shelling out coin to have their own videos promoted on generic search results. A scan for the term “4×4” or “car” in YouTube will put a sponsored link to Mitsubishi’s video channel next to the normal list of search results. If you try this at home, don’t be tempted to click on the “Is your tongue kissable?” clip that also shows up, as it’s a highly unwatchable skit for an electric toothbrush.

 YouTube’s Jay Akkad was in town to promote the launch of the service, which has been available in the US for more than a year. According to Akkad, the pricing of the service is done on a cost-per-click basis and is showing strong click-through results.

It isn’t all milk and honey with Google’s marquee clients on the project, as Simon Dunwoody, search director at Mediaedge:cia – the company that developed Mitsubishi’s YouTube campaign – told ITWire that he was in discussions with the search giant as to why the click-per-view cost had proved higher than the 5-10 cents he had been anticipating.

Despite these teething problems, Dunwoody expects Mitsubishi to continue using the service as it has boosted the subscriber numbers for the company’s YouTube channel. The Mitsubishi-themed channel has received 6,059 views since its launch on the 20^th of April this year and currently has 23 subscribers.

YouTube has also admitted that there is nothing stopping derogatory videos appearing in the organic search results next to promoted links. A spokesperson from the company told The Sydney Morning Herald that advertisers can combat this by adding negative terms to their campaign, to prevent the sponsored videos showing up next to certain results.