- April 9, 2010
- Posted by: admin
- Categories: Agile Applications, Blog, Business Dynamics
The growing rancor between Apple and Google has been generally fed by Google’s attempt to outdo Apple’s iPhone with its Android software. But now Apple is taking aim at Google’s bread-and-butter–online advertising–with plans to introduce a mobile advertising platform called iAd along with the release of the iPhone OS 4.0 software later this summer.
Apple’s strategy is to give iPhone developers and corporate marketers a way to incorporate sophisticated and compelling ads in iPhone applications by essentially allowing them to build an application within an application. CEO Steve Jobs demonstrated several ads created using iAd, such as an ad for the upcoming Pixar film “Toy Story 3” that included trailers, games, and other content that could be accessed from a portion of the screen at the bottom of an application.
Users probably aren’t going to like it, but developers struggling to build businesses around free iPhone apps will. Corporations looking for better ways to reach potential customers will. And a new breed of firms specializing in marketing services around iAd will.
Google put on a rosy face Thursday. “This is more evidence of how quickly mobile advertising is evolving and growing,” it said in a statement primarily intended for the Federal Trade Commission lawyers potentially gearing up to block its $750 million acquisition of AdMob, a company Jobs acknowledged Thursday that Apple also tried to buy.
But this sets up a battleground for how advertising evolves on mobile platforms. Apple is declaring that the best way for marketers to reach mobile users is through iPhone applications, rather than the Web at large. Google and AdMob, on the other hand, are much more focused on ads delivered in the browser on mobile Web pages. And Apple made some compelling arguments Thursday about why its plan could be more effective. 
Jobs said that the average iPhone owner spends 30 minutes a day using applications. So there’s an awful lot of potential ad impressions at play, but mobile ads inside iPhone apps are even more annoying than desktop ads because should you happen to click on one, you’re taken away from the app and into the browser.
iAd will allow marketers to make ads that essentially stay within the app, and that will also allow them to make ads that take advantage of all the features the iPhone operating system can offer. This could potentially be more compelling to users (assuming they aren’t cold to the idea of ads in general) and will definitely command premium prices within applications, as compared to Web ads.
It’s also a manifestation of Apple’s desire to control the entire experience on the iPhone from top to bottom. Ads will likely have to go through some sort of review process, although Jobs indicated that it wouldn’t be quite as strict as the app review process itself.
How will Google respond? It could offer something similar within Android applications, although it would be a bit of a departure from Google’s desire to offer an open software platform and promote the idea of Web ads and applications as superior to desktop ones.
The problem for Google is that the mobile world is much farther behind the desktop world when it comes to exchanging native apps for Web apps. The iPhone itself is evidence of that: software developers practically demanded native access to the iPhone after Jobs initially tried to convince them to build mobile Safari applications, and those applications have proven to be the most compelling way of interacting with the Internet for iPhone users.
And Google’s essential strength–search technology–is not the primary way of discovering new products and services on the mobile device. App stores are that bridge at the moment: AdMob CEO Omar Hamoui recently compared the mobile world to the early days of Yahoo, when its directory-style approach was an effective way of organizing the Internet.
Someday that will likely change, and mobile search is already a significant part of the mobile experience. But until then, iAd will deny Google the ability to provide its huge group of ad partners the most compelling advertising experience on the one of the premier mobile devices on the planet. Even if the AdMob deal goes through and Google is able to sell Web-based ads in iPhone applications, Apple will control the premium experience, and give developers 60 percent of the revenue from iAds.
Apple has stewed for years as it has watched Google encroach on its territory with products like Android, Chrome, and eventually Chrome OS. Thursday, it struck back, and Google’s response should be interesting.
Reference: http://news.cnet.com/8301-30684_3-20002079-265.html?tag=TOCmoreStories.0
no i dont think so because google has more reach out to people as compared to apple.
Links:
* http://www.yummytotummy.com/
* http://ks-money.blogspot.com/
* http://an-expression.blogspot.com/
You are missing out the key aspect to the offering of iAd by Apple. That’s coz AdMOB has been acquired by Google, something which Apple badly wanted. Steve Job himself admitted of missing out on the ADmob acquisition, they instead had to settle with Quattro Wireless another mobile advertising provider. With iAd they are offering a rival platform like Admob to the App developers. This is an effort to control what goes on in the Advertisements inside the Apps and also creates another revenue window for Apple and developer. But on the flipside the developer will be losing out if they accept the iAd terms coz of the 60:40 revenue share. The current one is 70:30.
So things have got heated up in the mobile ad space, nothing more.
iAd is just for the iPhone, which does limit its reach. By introducing iAd, Apple has opened up the path for Google’s aquisition of AdMob. So things are just getting started here.
I think Google does have the larger reach, but rumour has it that Apple will introduce its own search engine for OS4 – a rumour I give little credit to, as that would need a lot of expertise Apple doesn’t yet have. I think a move to using Bing or Yahoo is more likely.
So overall the playing field isn’t even set yet, we are at the very early stages of this game. Google does have more knowledge with adverts, but Apple has a platform, which nobody can really interfere in.
I also do not think that this is possible via single-digit market share percentages.
Hi Ali,
No, but having an own platform means ownage of the data.
Best regards,
Gianluigi Cuccureddu
Links:
* http://agoramedia.co.uk/blog
Google failed so miserably at mobile ads, they had to buy AdMob for $850 mil. And who knows if that’s going to go through, actually.
Apple really isn’t trying to outdo Google with ads–but it makes sense for them to want a slice of ad revenue from free ad-supported iPhone content. And since they can craft the API to support ads, they can make ads far more compelling and valuable. Having done ad campaigns on iPhone before, I’m convinced most of the clicks are accidental and/or not very valuable.
I’m surprised Facebook, MySpace, etc. didn’t do the same years ago. Apple is just giving away valuable ad revenue to third parties that they could do a much better job harvesting themselves.
Now if Apple bans other ad networks, that’s a different story. Hopefully the don’t, and iAd will have to compete against Google etc. for features and rates. Although Apple building native iAd support into the iPhone has a permanent competitive advantage.
Google really should think about a similar feature for Android. Paid apps are such a failure on Android for a few reasons (the return button, and the horrible Google Checkout experience)…the least they can do is make it possible to reap rewards from ads and microtransactions. (They need an Android billing API for microtransactions too)
he growing rancor between Apple and Google has been generally fed by Google’s attempt to outdo Apple’s iPhone with its Android software. But now Apple is taking aim at Google’s bread-and-butter–online advertising–with plans to introduce a mobile advertising platform called iAd along with the release of the iPhone OS 4.0 software later this summer.
Apple’s strategy is to give iPhone developers and corporate marketers a way to incorporate sophisticated and compelling ads in iPhone applications by essentially allowing them to build an application within an application. CEO Steve Jobs demonstrated several ads created using iAd, such as an ad for the upcoming Pixar film “Toy Story 3” that included trailers, games, and other content that could be accessed from a portion of the screen at the bottom of an application.
Users probably aren’t going to like it, but developers struggling to build businesses around free iPhone apps will. Corporations looking for better ways to reach potential customers will. And a new breed of firms specializing in marketing services around iAd will.
Google put on a rosy face Thursday. “This is more evidence of how quickly mobile advertising is evolving and growing,” it said in a statement primarily intended for the Federal Trade Commission lawyers potentially gearing up to block its $750 million acquisition of AdMob, a company Jobs acknowledged Thursday that Apple also tried to buy.
But this sets up a battleground for how advertising evolves on mobile platforms. Apple is declaring that the best way for marketers to reach mobile users is through iPhone applications, rather than the Web at large. Google and AdMob, on the other hand, are much more focused on ads delivered in the browser on mobile Web pages. And Apple made some compelling arguments Thursday about why its plan could be more effective.
Jobs said that the average iPhone owner spends 30 minutes a day using applications. So there’s an awful lot of potential ad impressions at play, but mobile ads inside iPhone apps are even more annoying than desktop ads because should you happen to click on one, you’re taken away from the app and into the browser.
iAd will allow marketers to make ads that essentially stay within the app, and that will also allow them to make ads that take advantage of all the features the iPhone operating system can offer. This could potentially be more compelling to users (assuming they aren’t cold to the idea of ads in general) and will definitely command premium prices within applications, as compared to Web ads.
It’s also a manifestation of Apple’s desire to control the entire experience on the iPhone from top to bottom. Ads will likely have to go through some sort of review process, although Jobs indicated that it wouldn’t be quite as strict as the app review process itself.
How will Google respond? It could offer something similar within Android applications, although it would be a bit of a departure from Google’s desire to offer an open software platform and promote the idea of Web ads and applications as superior to desktop ones.
The problem for Google is that the mobile world is much farther behind the desktop world when it comes to exchanging native apps for Web apps. The iPhone itself is evidence of that: software developers practically demanded native access to the iPhone after Jobs initially tried to convince them to build mobile Safari applications, and those applications have proven to be the most compelling way of interacting with the Internet for iPhone users.
And Google’s essential strength–search technology–is not the primary way of discovering new products and services on the mobile device. App stores are that bridge at the moment: AdMob CEO Omar Hamoui recently compared the mobile world to the early days of Yahoo, when its directory-style approach was an effective way of organizing the Internet.
Someday that will likely change, and mobile search is already a significant part of the mobile experience. But until then, iAd will deny Google the ability to provide its huge group of ad partners the most compelling advertising experience on the one of the premier mobile devices on the planet. Even if the AdMob deal goes through and Google is able to sell Web-based ads in iPhone applications, Apple will control the premium experience, and give developers 60 percent of the revenue from iAds.
Apple has stewed for years as it has watched Google encroach on its territory with products like Android, Chrome, and eventually Chrome OS. Thursday, it struck back, and Google’s response should be interesting.
Google is often thought of as the king of advertising, but the truth is that advertising on mobile platforms is a miniscule market segment. While smart devices are only now becoming common, it’s really hard to develop effective marketing because of small screens. If one adds tablets to the mobile category, that may change in the next year or so.
For all their hoopla, Apple’s priority has never been about dominating huge markets. They seem to always prefer owning a closed vertical market over being a major player in a huge one. They have great products, but they don’t integrate deeply into existing infrastructure. Even their most open endeavor, their App store, is subject to Apple’s dictates–after all, of all those apps, how many are phone apps? Apple’s control issues will get writ large as the app store starts catering to iPads.
If Apple manages to open things up, the iPad and successor products could dominate the mobile market. If they don’t, I suspect other products will dominate the overall market–and Google or other players will set the tempo. Apple will own its market; the major question will be how big its share of the overall market will be.
GOGGLED ANSWER SAYS “MAYBE”
Apple may well dominate advertising in the iPhone/iPad/iPod space, but that’s to be expected. The thing that makes Google’s advertising strategy the power house that it is, is because the ads are unobtrusive and out of the way. Advertisers know and respect this, and in turn don’t pay much for ads. What Apple have done effectively is punish their own users with an ad delivery system that is masquerading as a feature. I’ve spoken to several Apple fanboys who saw the announcement of iAds and were pretty miffed at the whole idea.
Great post Ali. Very good answers all around IMO.
Jobs intends to change advertising. Jobs will change advertising. The people will rejoice. Let’s consider the possibility that advertising is not an intrusion that interrupts your head-space. If advertising exists in an app and that app you understand costs you nothing because it is sponsored by an advertiser, then you the viewer have agreed to the terms of use.
Now consider that the advertising delivers a message about something that’s really compelling and relevant to your immediate circumstance. Let’s say you downloaded a free app to track marathon runners in NYC in July. It’s hot, you’re thirsty, there’s Gatoraide in the bodego half a block from your location. The ad in the app anticipates your preference for Gatoraide and lets you know where to get some just when you want it most. That’s not intrusive, that’s helpful. Unlike any banner ad I’ve ever encountered online.
I can’t tell you what Apple’s plans are and I especially couldn’t tell you if I actually knew them. What I can tell you is that if Steve says advertising needs an overhaul, history tells us that advertising is going to get one.
Apple’s plans to enter media aren’t new IMO. As I see it, this was Apple’s plan long ago with the iMac and the iPod. Apple will not dominate the hardware market, they don’t need to. They make one handset that outclasses every other smart phone and they dominate the mobile web and apps where the real money is.
What Apple will dominate is media in all it’s forms. For the first time in it’s brief history, Google is going to be tested. If you think mobile is a small percentage of advertising, just remember where online was vs. offline before e-commerce. Now consider that all mobile media advertising will be tracked directly to mobile wallet transactions the way online affiliate is tracked to a shopping cart. Google and Apple are actually in the media advertising business, soon to be indistinguishable from the banking business.