The Great Mobile Ad Wars: Apple vs. Google

There is no doubt in my mind (or anyone else's for that matter) that the war between Apple and Google is heading towards the mobile ads front. While it may seem that Google has a competitive advantage, demonstrating its repertoire of search based ad solutions and PPC advertisements, there are many variables that must be accounted for. 

First, let's discuss the legal implications behind this emerging industry. On November 9 of this year, Google acquired AdMob for an astounding $750M, this may be chump change or just stock options to Google, but it's a big deal for the owners of AdMob. In any case, in this acquisition, Google was hopeful to take the market, by offering mobile based advertisements on both mobile web optimized searches and through 3rd party applications. I'm sure you've all seen the advertisements that take up a share of your iPhone or Android screen, yeah, that's AdMob. In any case, with this acquisition, it seemed like Google would almost certainly control the market. Well, this is what the FTC thought too, prompting them to prevent completion of the acquisition pending further "investigation." However, while Google was busy tackling the legal issues behind monopolies, Apple, who had been denied the opportunity of acquiring AdMob, placed a bid on Quattro Wireless for $275M, still a lot. In this acquisition made earlier this year in January, Apple's hopes for entering the mobile advertising field were brightened. But what does this mean for Google?

While the legal side to this battle is interesting and all, the good part comes next. Within the same month of Apple announcing the launch of the iPad, Steve Jobs decides to make a bold move and announce the creation of Apple iAd, which is slated to launch sometime this summer, that's right, it's very own mobile advertising brand. Who didn't expect that? According to Applem iAd will "combine the emotion of TV with the interactivity of the web", which means that it will be more interactive with the users and utilize HTML5 to popup. Well with the launch of iAd, Apple made a couple major tweaks to their product line up. First off, in introducing iAd, Apple would be hosting all mobile application ads, giving 60% back to the developers and essentially making the integration of ads in 3rd party applications almost seamless. Well, with the introduction of the iPhone OS 4.0, mobile ads make more sense for Apple, with the key component being iPhone multitasking. By adding this function, Apple has made it possible to click and load ads while still in an application, effectively pausing their work. Cool right? So, in introducing this product, Apple will be aiming to garner stronger relationships with developers and advertisers, while still remaining the sole publishers of these mobile ads. While the focus would be on implementing these mobile ads would be in applications (specifically unpaid/free applications), the prevalence of these 1/8 screen size ads might even be present in paid applications (bad move if you ask me). 

For Google, while iAd poses a legitimate threat to its bread and butter (advertisement), Apple could never take away Google's internet advertising market share. Google claims the internet advertisement spectrum and accordingly has the best relationships with advertisers, publishers and developers. However, the announcement of iAd isn't only a bad thing for Google, it tends to help their situation. While the acquisition of AdMob sits in limbo, this recent iAd development makes it harder for the FTC to make a case, the transaction HAS to go through, lest it give Apple the opportunity to monopolize mobile advertisements. By the time AdMob is secured, I think Google will have the upper hand, here's why:

1. Google has strong relationships with advertisers and obviously has a stronger pull to developers because of the promise of "open source"

2. Google's Android has multitasking functionality bred in its early iterations of Android, Apple does not

3. Google has a naturally better phone, with better hardware and open source development, which will find errors faster

4. Apple made the move to ban Flash, which is a poor move considering all the developers that use Flash for their applications. I guess HTML5 will just have to do. I know Adobe hasn't been the greatest about meeting Flash release deadlines, but Apple is really doing this to keep more of the money that will be made on Adobe's separate development platform. This doesn't bode well for Apple's tight control over application development, but also makes it harder for developers to enter into Apple's terms.

Ok, I might be biased in the last claim, but the first two are very strong arguments. To provide some counter arguments:

1. Apple has the stronger iPhone user base and more developers making iPhone applications (where most mobile ads will run). WELL, Google is expanding mobile advertisements to search and mobile web advertisements, in fact, AdSense has been mobile for years.

2. Apple has the new OS. But this doesn't extend multitasking functionality to ANY unit before the iPhone 3GS and 3rd gen iPod Touch. Yeah, you heard that right. So while Apple claims to have the largest share of the market using iPhones, which will make implementation easier, it doesn't extend to the millions of smartphone users that don't have the latest technology.

3. Apple's iPhone is pretty. Yeah, it's pretty, and yes it's a great phone, but Android is catching up...FAST.

4. Apple' advantage in mobile has given it greater access and more experience with mobile advertising.

Well what have we learned? We learned that Apple is making a strong attempt to chip away at Google advertising market share in their new mobile advertising division. Google has the mobile functionality to implement mobile ads faster and on more of its sold units. Apple still does pose a legitimate threat to Google because of its head start in mobile development, but Google has far more relationships with companies in advertising.

Overall, I think Google's platform is much more conducive to attracting developers and has the technology to expand to both web-based advertisement and application-based advertisement. And with greater mobile technology development under Android, now at Eclair 2.1, I think it will soon catch up to the likes and meet milestones that the iPhone has made in its longer years of production. What will be interesting is to see what will happen with Symbian (Nokia, etc.), Blackberry, and Palm (if not sold) OSes. However, I think the bottom line is, Google's product line up and development team have made it hard for real competition to be seen, but Apple sure does have the ability to make the strongest push against this ad king.

Posted via email from boochikan's posterous