iAd adds up to a lot of cash

“The average user spends over 30 minutes every day using apps on their phone. If we said we wanted to put an ad up every 3 minutes, that’s 10 ads per device per day. That would be 1b ad opportunities per day.”

This is going to take some time to sink in over at the Googleplex.  By pushing Android, Google removed themselves from this opportunity.  Jobs continues:

“We do not have any plans to become a worldwide ad agency. We tried to buy a company called AdMob, and Google came in and snatched them from us. We bought Quattro instead. They’re teaching us and we’re learning as fast as we can.”

Not to put too fine a point on it, but I did suggest iAd was coming on Dec. 30 of last year:

I think it’s a certainty that Apple will introduce an ad serving platform for the iPhone (and any tablet) in 2010. This will amount to a checkbox that developers will check when submitting their app to the store. Doing so will allow Apple to place ads on the app in return for a check in the mail to the developer for the impressions.

  • Tom Farrell

    Can you elaborate more why Google has removed themselves from this opportunity via Android?

  • Tom,

    I wrote about the tragedy that is Android in several articles:

    The gist of it is that Android was initiated in 2005 as a strategic response to Windows Mobile. Back then it was seen as a way to preserve an open service platform in light of potential Microsoft dominance in the mobile OS space. It followed that Android was announced as a low-end disruptor for Windows Mobile (replacing it in the same value chain).

    Google's failure was to recognize that the value chain for Windows Mobile was not producing competitive products relative to integrated vendors such as RIM, Apple, Palm and Nokia. The value chain they chose to disrupt was irrelevant. Nevertheless they stuck with the WinMo disruption trajectory and are now successful in that respect (taking share away from Microsoft). That is a pyrrhic victory.

    Firstly because they won a battle that was not worth winning and secondly because they ended up making an enemy of a former ally.

    The sequence of events as I see them is:
    – After a slow start Andy Rubin's team saw the need to grow volumes to remain relevant.
    – In so doing they began to push for a more integrated approach (Nexus One)
    – The half-way integrated approach overlapped partially with Apple's markets
    – Apple declared war and decided to enter mobile advertising (*)
    – Android team persuaded Google to stay the course and to acquire AdMob to keep it out of Apple's hands (overpaying in the process)
    – Apple now is fully engaged in a competitive battle with Google. One could argue that they have positioned Google as enemy number one (there is anecdotal evidence to support this).
    – In doing so Google is now actively excluded from serving ads on a 1 billion impression/day platform and have little to show for it but increased R&D on a fragmented alternative.

    (*) Some have argued that Apple's entry into ads was inevitable and Google is doing all it can to react to the shift to mobile. That may be but Google accelerated Apple's entry by attacking Apple's core.

  • As John Gruber puts it:

    iAds and Google
    Ever since the Apple-Google rivalry turned into a war, there’s been increased speculation that Apple might launch its own search engine.

    The thinking is simple. If Apple wants to go to war with Google, then they’ll be tempted to go after Google’s crown jewels — search. Search is still and may well always remain Google’s most popular service. But Google doesn’t make money from search. They make money from advertising. If you want to fuck with Google, you go after advertising revenue.3

    Now, it’s true that much — most? — of Google’s ad revenue comes from ads that are displayed alongside search results. Google search generates a tremendous amount of ad revenue. But that’s last decade’s battle. It doesn’t make much sense for Apple to take on Google in search, given Google’s tremendous lead in the space and Apple’s utter lack of expertise in the field. It takes longer for Mac OS X’s Spotlight to search my MacBook Pro’s hard disk than for Google to search its index of the entire web.

    The war for search is old. Where’s the next battlefield for advertising? Mobile devices is one guess — a guess shared by Google and Apple. And here’s a field where Apple is ahead, not behind.

    Again, just like with multitasking, the idea that Apple would build support for advertising into iPhone OS is obvious, something that I suspect they might have pursued sooner or later even if Android did not exist. There’s a tremendous amount of money at stake.

    Now that Android is considered the number one threat to the iPhone, though, mobile advertising became an immediate priority.

    Jobs’s pitch for iAds during the event yesterday wasn’t even coy about it being a fuck-you to Google. He emphasized first the idea that on mobile, unlike the desktop, search is not a good venue for advertising. The idea being that on the iPhone, people aren’t searching, they’re using apps, and therefore the prime space for ads on mobile devices is right there inside apps. I’m not arguing whether Jobs is correct about search not being good for ads on mobile — I don’t know — but clearly, when he says “search”, he means “Google search”. So that’s knock one against Google.

    Jobs then showed examples of iAds — rich, cinematic, interactive software ads. They look like native iPhone software, but they’re written in straight HTML5 (so it’s a bonus fuck-you, to Adobe). The word Jobs used repeatedly was emotion. They’re intended to be about design and feeling. It’s about a venue for advertising that can feel like good TV commercials and full-page magazine ads. That’s knock two against Google. Google ads may well be effective, but they are not emotional. Consider the Toy Story 3 iAd Jobs demoed. What kind of ad through Google could compare to that?

    There’s a solid slice of the DF audience that firmly believes that all advertising is contemptible bullshit. They’ve already skipped to the end of this article. Some advertising, no matter the medium — TV, newspaper, magazine — is junk. But some is art. Commercial art, of course, but art nonetheless. Online advertising — mobile or not — has been largely devoid of this caliber of advertising. iAds is Apple’s attempt to create high-caliber ads for mobile. Jobs seemed more enthusiastic about iAds than anything else in the show yesterday.

    So the anti-Google message with iAds was two-fold: first, search isn’t good for mobile ads; and second, Google — logical, engineering-driven Google — will never provide an ad platform for emotional advertising like design-driven Apple can. Jobs’s iAds pitch was not directed to consumers. It was directed to creatives in the ad industry — and creative developers who want something better than text ads inside their apps.