Apple iAd: attacking Google’s core activity

Apple has provided a view of the latest release of iPhone OS which will be available from the summer. Among the new features there is a stand out function: the announcement of the iAd advertising house, bringing Apple onto Google’s territory of advertising revenue.

While the announcement that the system will be multi-tasking took up a majority of the iPhone OS 4.0 presentation, another element introduced into the new OS version for the iPhone and iPod Touch in the summer, and the iPad in the autumn, is Apple’s advertising strategy.

While tension between Google and Apple moved up a notch with the release of the Google Android mobile OS, giving the impression that the system would overshadow the iPhone, it may have appeared that Google was encroaching on Apple’s turf. This time though, it is Apple who has hit back, attacking the search giant’s main revenue stream: advertising.

The announcement of iAd, with its promise of a new form of mobile advertising better adapted to the mobile environment, and its financial model which promises more then 60% return to developers, has now been added to Apple’s core mobile strategy. This has been done in such a way that Apple will continue to maintain solid control of their system though.


Out to conquer new territories
On one side, they are trying to answer the problem which was presented during the Le Mobile 2.0 conference which took place in Paris in March, where developers pointed out that traditional advertising banners, already not a great solution for the web, were completely out of date when applied to the mobile world.

Participants at the conference brought up new mobile advertising methods, with Apple now addressing this problem by directly offering a system integrated into mobile applications present on the App Store, creating a balanced user experience linked to the application which may entice the user to follow the advertising to the target page.

These closed systems create an application (advertising) within the application which call on HTML5, allowing Apple to master the different elements in the chain. The Financial Times points out that 40% of all advertising delivered by advertising houses like AdMob (purchased by Google, but under investigation by the FTC, with their acquisition preference being Apple) will be broadcast over the iPhone and iPod Touch.

This is a situation which Apple could turn to their advantage, especially considering their recent purchase of Quattro Wireless at the beginning of the year, with it being possible to manage mobile advertising from end to end on the handsets.

While Apple isn’t necessarily looking to become a dominant player in the world of mobile advertising, they will nevertheless continue to build an effective economic model around the iAd system. It is possible that they will be looking towards this as a method of cutting the grass out from under Google’s feet, blocking any entrance by them into the lucrative iPhone and iPod Touch markets.


Picture Credit: Engadget