Apple Lobs First Grenade in Mobile Ad Wars

Acquistions are one thing, and rollouts are quite another. This week, in the world of mobile advertising, Apple beat Google to the punch in its demonstration of new mobile advertising platform iAd as part of its iPhone OS 4 announcement.

Clad in his iconic black turtleneck, Apple CEO Steve Jobs Thursday showed developers how iPhone and iPad app users won't have to leave their apps to view ads that include features such as movie trailers and even games.

The advertising platform "combines the emotion of TV ads with the interactivity of Web ads," according to Apple. In a jab at Adobe, Jobs noted that the ads are built entirely using HTML5. That is, no Flash functionality required.

Play Ball

Google and Apple have been in a much-discussed struggle to get to the mobile ad market first with a popular, much-used platform that will draw developer attention. That struggle initially played out with acquisitions. Google led off by buying AdMob, a corporate transaction still under FTC scrutiny. Then, Apple purchased Quattro Mobile. That move has translated directly into a platform -- ready in time for the iPhone's new operating system and arriving during the first week of availability of Apple's new tablet computer, the iPad.

The move starts a new ball game with mobile advertising, according to Carl Howe, director of anywhere research with the Yankee Group.

It "ensures that there will be some competition," he told MacNewsWorld.

Google, he noted, is "unlikely to have quite the same dominant position as they do on the Internet," when it comes to ads served up to mobile devices.

In addition, since consumers already are accustomed to ads in mobile applications, they likely won't balk much at the change, predicted Howe.

"We don't have to worry too much that it will disrupt the market."

Developer Ease Benefits Consumers

What the iAd platform may disrupt is the developer world, though. As is its tradition with iPhone apps, Apple continues to court application developers by making their lives easier, according to Adam Christianson, publisher and producer of Apple-focused podcast MacCast.

"In the first wave of iPhone apps," he told MacNewsWorld, "things got really competitive and drove down pricing."

However, most developers can't make a living at a US$0.99 price point, he explained. Easy-to-implement ads will provide an additional revenue stream to developers, allowing them to keep app pricing relatively low.

Developers will get a 60 percent cut of ads sold through iAd, and Apple will do the selling, according to the company. That's down from the 70 percent currently given to developers selling applications through the App Store, but it brings the ratio to industry standard, said Apple.

What makes the deal sweet for developers is the fact that iAd is "integrated right into the development tools they are already using," noted Christianson, because it's so closely aligned with the operating system.

"It provides an additional incentive for developers to choose the iPhone OS platform over other mobile device platforms," he said.

User Interface Consistent

Anyone familiar with Web ads knows the jarring experience of clicking on an image or link and being transported to another site with another user interface. The same thing occurs with mobile ads, which generally dump users out of their applications and into the mobile browser. It can be difficult to return to an app after the transport.

"It sounds like a small thing," said Christianson, but it may make a world of difference. The demonstrations Thursday included ads that allowed users to watch videos and even make purchases without leaving the original app.

"It's a significant change," Christianson stressed.