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As mobile ad spending is becoming a more serious business, Apple”s combination of “high pricing and lack of transparency” appears to be a st…

Mobile Money
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As mobile ad spending is becoming a more serious business, Apple”s combination of “high pricing and lack of transparency” appears to be a stumbling block that will let Google’s Android take a greater share of the ad market, according to an analyst report (PDF) by Macquarie Equities Research. At the moment, the company notes that mobile ad spending at $3.5 billion, is still only 1 percent of the total ad market. That should be grow to $14 billion at least by 2015, when it would represent about 4 percent of the all ad spending. But unless Apple (NSDQ: AAPL) loosens up its closed ad system, it could allow Google’s more open Android system to take the lion’s share of that.

While Macquarie and most other observers credit Apple with helping drive mobile ad spending higher thanks to the tremendous success of the iPhone, which was at the head of a greater adoption of ad-friendly smartphones, especially in the U.S., the company has set itself up for stiff challenges as the mobile ad market grows.

Marketers have pay at least $1 million to be allowed into Apple’s iAd system, which is largely focused around building value for apps sold via the iTunes App Store. On top of that fee, iAds’ advertisers are charged $10 CPMs and a $2 cost per click. For the moment, iAds dominates the share of mobile ad impressions, thanks to the still-large sales of iPhone and now iPads. But as the number of devices running on Google’s Android system rises, so will its share of ad impressions. In addition, Macquarie points out that Nokia (NYSE: NOK) still has a pretty huge share of ad impressions worldwide and that the mobile ad landscape will not just be divided between Apple and Google.

The main defense Apple gives of its closed system is that it makes it easier to preserve the quality of the ads and the targeting, something that has previously hindered the space. By establishing its apps as valuable real estate for advertisers, Apple says that it has signed up half of the top 25 U.S. marketers for the system, but most of those ads haven’t appeared yet.

Apple’s system lets advertisers know exactly where their ads are placed. In terms of specifics, that’s about as far as it goes. Agencies and marketers have been fairly unsatisfied with the level of data Apple has been willing to part with, such as total number of ad impressions served via iAds, clicks, amount of page views, and average time spent in app. But Apple only provides an aggregate number, not the details specific to each advertiser. For the marketers, that’s galling, considering the premium prices they’re paying. Plus, Apple keeps all the ad coding to itself and even has a hand over the creative. The company has shown some willingness to loosen the reins a bit, but only for even higher prices.

Google’s App Inventor, in contrast, gives marketers greater freedom with which to create and manage their mobile ads on Android.

In the end, that could be a distinct advantage for Google (NSDQ: GOOG), Macquarie says, as mobile browsers are expected to gain greater share over time, as screen resolution and download times improve.

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