Apple-Google Mobile Advertising War Fuels Innovation

Steve Jobs wants to give mobile advertising an iTunes-worthy extreme makeover. Apple’s CEO has revolutionized a lot of industries, so why not add mobile advertising to the list? According to a source familiar with his thinking, Jobs thinks “mobile ads suck” and that “improving the situation will make Apple even harder to beat,” according to BusinessWeek.

Wanting to revolutionize mobile advertising is one thing, but can Apple really get to the core of what’s wrong with the market today, all while bucking off Google’s mobile ad dominance aspirations? Google’s charging ahead with AdMob (well, that is, if the FTC ever approves their $750M acquisition) and Apple’s off and running with their $275M mobile ad acquisition Quattro Wireless. If anything can give the mobile advertising industry a well-needed kick in its pants, it’s a heated innovation battle between two of the most innovative companies in the world.

There are a few factors on Apple’s side for the time being, but Google and their Android-based phones are catching up. For Apple’s iPhone and iTouch devices, developers have already created more than 125,000 mobile applications… seven times as many that exist on Android.

In my last post, I covered Gartner’s latest report that highlights the potential lucrative mobile app industry, where 25% of app revenues will come from mobile advertising by 2013. These days, that’s hard to see, as mobile app makers are becoming increasingly disenchanted with make-it-rich prospects in developing even the most popular mobile apps. Free apps have become the norm, and very few sell for more than 99 cents. Some developers have made pocket change by embedding ads in their apps, but the ads are less effective versions of their Web banner forms.

There’s certainly a lot of room for improvement, and if anyone knows how to make a decent technology and revolutionize it, that’s Jobs. Apple has a lot of information about their users which will help the company make ads more relevant. However, with Google catching up it’s hard to guess what Jobs has up his sleeves that will be vastly different from Google’s offerings.
Some analysts believe the fight Google-Apple fight is about to get ugly, with Apple dumping Google off iPhone for Microsoft’s Bing.

“This rivalry is going to accelerate innovation,” Andreas Bechtolsheim, a co-founder of Sun Microsystems and an early investor in Google, told BusinessWeek. “Apple goes pretty fast, but having someone chasing you always makes you go faster. This is going to be good for consumers.’”