Apple Enters the Mobile Advertising Space

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For the past few years there have been huge advances in moving the internet from your desktop to your pocket. Right now there is a big battle to dominate the mobile space–the hottest players are Google and Apple. This battle ensures a bright future for mobile advertising and Apple, Inc. wants a piece of the pie. On July 1st, Apple will bring a new kind of advertising exclusively to their devices. They call them iAds.

You might be wondering why Apple would want to enter the mobile advertising business. Well, it turns out that Apple has a ginormous portion of the mobile smartphone market and it wants to leverage that market share to make tons of money.

Consider these statistics:

  • Over 100 million users of Apple’s iOS worldwide.
  • Users have downloaded over 5 billion apps.
  • Users spend an average of 30 minutes per day using apps on their iOS device.

Let’s put this into perspective: Nielson reports that there are 114.9 million homes with TVs in America. There are already over 100 million iOS devices sold. Perhaps that makes it a little more clear why Apple wants a piece of the in app mobile advertising pie in a market they essentially created.

Why iAds may be awesome

When mobile advertising is served on an iPhone, you tap the ad and it removes you from the app and takes you to the landing page. Getting back to the place where you left off can be annoying or nearly impossible. I know I don’t like it, so I hardly ever tap on an ad.

With iAds, the user never leaves the app. Tap on an iAd and an interactive ad pops within the app. It could be a game, a movie, or (of course) a call to action. You can exit the ad at any time, and you go right back where you left off. You can even share the ad with your friends.

Other cool details:

  • Download apps or itunes from within the app.
  • Save branded images to your photo library or as your device wallpaper.
  • Save coupons and bar codes to scan at retail locations.
  • Share the ads content via email or through your social networks.

Why iAds may not be so awesome

Apple revolutionized the way we use our phones with Apps. Most of the apps are free. Developers make their money through advertising inside the apps. For ads inside the app, Apple now requires developers to use either iAds or another small independent ad format (so pretty much anything but AdMob). Apple will pay out 60% of their mobile advertising revenue to the developer and keep 40% for itself.

Apple is using its huge user base to force its will on the developers–the very people they need to have continued success. This comes right on the heels of Apple proclaiming Adobe’s Flash, which is not supported in iOS, as essentially dead, which has sparked a fairly public war of words.  At this point it would be easy for a developer to walk away from Apple to a more open platform like Android.

Apple vs. Google

Its hard ignore that Apple is slamming the door on AdMob. Google, who owns AdMob, is going to lose a lot of money if they are shut out of the biggest mobile advertising platform. This is just another chapter of growing competitiveness between Apple and Google, and competition is good for the consumer.

If history is an indicator…

It’s important to remember that Apple has had the golden touch over the past few years with iPod, iPhone, iPad and iTunes. I am in the advertising business, and when I saw the iAds demo, I was very impressed with how engaging they appear to be. Perhaps their golden touch will extend into mobile advertising as well. Hopefully the ads are a huge success for developers and we will see more free apps in the App Store.

I’ll be buying the new iPhone… see you in line.