Is the iPhone the Next Ad Frontier?

Om, The closed iphone platform makes this a perfect incubation for geo-targeted ads. Admob has a well recognized headstart in a market with huge growth in its future.

The ads AdMob is serving engage the user in a much different way than traditional mobile or internet ads. The trick will be whether users actually take advantage of these new features. Part of that will be to guarantee that the ads’ fucntionality does not overshadow or interfere with the user experience of the app hosting them. It is also a bit of a “chicken and egg” issue, as it will only be successful if advertsiers develop interesting ads that take advantage of the iPhone’s capabilities, but in order to entice them, the audience has to demonstrate they are willing to utilize the added functionality…..

full disclosure – We have chosen AdMob for the iPhone version of our app to be released. The deciding factor for us was that they were the only ad platform specifically catering to the iPhone and their ads looked the best on our app.

I’m interested to see how revenues compare between free aps with embedded ads vs. commercial aps… personally, I’d rather pay a couple bucks to not be bombarded with more ads!

There a few other things to consider before getting too effusive about this market broadly and AdMob specifically. Separate the mobile web ads from those embedded in applications, and ask about current CPMs. When you do that you are likely to find that ads embedded in applications still make up a small portion of the total and the CPMs are not much better than run of site ad networks. That does not mean that this is not an important market. I, for one, buy into the idea that the personal computer of the future will be the one you carry in your pocket and that the market that develops around that personal computer will be huge. It is, however, very early in the development of this market and it is not at all clear that AdMob or any current player in the current mobile advertising market has any assets that are differentiated or defensible enough to suggest that they will be around much less dominant in five years when the structure of this market has settled down and it has grown to the point that the scale is meaningful to advertisers.

Pandora is launching their iPhone ad platform later this month and Best Buy bought out all the launch for the launch (http://www.clickz.com/showPage.html?page=3630767)

I think you are on to something Om.

I dunno, I really dont see what all the fuss is about. I went to an Apple store fiddled with the IPhone and am just not ready to give up my BlackBerry curve just yet!

JIff http://www.anonymize.us.tc

Great idea. We need more advertising. Please, kill yourselves.

Everyone bashes Ads but someone has to spend time to make these wonderful apps and if it helps keep it free then I’m all for it.

Cycorder the free iPhone Video Recorder is a great example of a free alternative ad based app http://www.iphone-hacks.com/2008/09/06/free-iphone-video-recorder-cycorder-now-includes-audio/

If I downloaded an application that had advertising I would immediately delete it because of the advertising even if I paid for it. If I had paid for it I would ask for a refund. The last thing I want in my life is more advertising

What do you expect? While I love free software, the developers have to get paid somehow on free versions. Most people will not buy premium versions of computer software, yet alone iphone software. And if ads are the only way of generating revenue, even if the ctr is low, well.. that’s what they have to do.

Dan, Graduation Sashes

Then I think a pretty valid question at this point would be…

…does apple get a cut?

I can answer that question (being adjacent to the industry) – no. Apple doesn’t collect any of the ad revenue. Most of it goes to the app developer and some portion of it goes to AdMob. Unless Apple has a deal with AT&T to collect some of the money paid for the data plans on iPhones, their cut ends at the purchase counter.

As for ads in apps – I say if the cost of free software is having those apps contain small commercials, I’m ok with that and I’m surprised at the negative feedback. We already tolerate it on the web and in most other media. This is really no different.

No one is forcing to download free apps.

Um, Whrrl sucks and the company is dying: http://blog.seattlepi.nwsource.com/venture/archives/146784.asp

I’m impressed with the high CTR that Admob is claiming. It would be interesting if they subjected themselves to an advertising audit from PwC, D&T or any the other accredited systems and process companies. Getting some third party to attest to their claims would be extremely helpful.

There are a lot of nice apps. Some are very helpful and some of them are totally crap. So choose carefully.

I’ve read that Vodafone is planing to open up an own App-Store in the next future.