Blog Post

Apple Debuts Both Ad Platform and Ad Network: iAd

Apple (s AAPL) today previewed its big push into mobile advertising, including plans to sell and host all ads on a new iAd platform coming with the launch of iPhone OS 4 this summer. Apple will sell and host ads directly, giving developers a 60 percent split of revenue.

Apple CEO Steve Jobs kicked off his rationale for a new ad platform and experience at an event for press and developers at Apple HQ by knocking the competition. “For lack of a more elegant way to say it, we think most of this mobile advertising really sucks,” he said. Jobs also took a direct dig at Google (s goog), noting that behavior in a mobile experience is more oriented to apps than search, so mobile advertising should center around apps and not search.

Jobs did admit that Apple has little experience in advertising. “Listen, we don’t know much about this advertising stuff. We’re learning,” he said. “We tried to buy this company called AdMob and Google (s GOOG) came in and snatched them from us. We bought this other much smaller company called Quattro and they’re teaching us. But we’re babes in the woods.”

iPhone users spend 30 minutes a day using their 4 billion downloads of the 185,000 apps now in Apple App Store, according to Apple’s latest stats. With a potential ad load of one ad every three minutes, about the same as a TV show, and now close to 100 million devices in the market, “This is a pretty serious opportunity,” said Jobs.

One major advantage Apple can offer is to connect ads more seamlessly to apps with its soon-to-be-added multitasking feature (available only for iPhone 3GS and the latest-generation of iPod touch in the summer, and the iPad in the fall). Today, when users click on an ad within an app, “You click on a banner ad it yanks you out of an app, throws you in a browser,” said Jobs. “You may never get back to your ad and never to where you left out. So what’s the result? People don’t click on ads.”

By contrast, “Because the iAd is in the OS itself, we have figured out a way to do interactive and video content without ever taking you out of the app with the iAd experience,” said Jobs. iAd holds a user’s place in an app and opens the ad up in an app-like environment that connects to the rest of the services on the iPhone, so users could look directly on a map for nearby stores, watch videos, make a picture their phone’s wallpaper or buy a promoted app directly. The interactive and video experiences are built with HTML 5. It’s not yet clear whether other mobile advertising companies will be allowed to mimic this user experience.

Jobs noted that developers should be able to parlay their experience building apps to build iAds for ad agencies.

Related content from GigaOM Pro (sub req’d):

Why 2010 Still Won’t Be the Year of Mobile Advertising

23 Responses to “Apple Debuts Both Ad Platform and Ad Network: iAd”

  1. The day I get ads in purchased software will be the last time anything from that developer gets on my computer, or ipod and if the developer is Apple,the equipment that I writing this on will be the last Apple product I will own

  2. Shonda

    I see the issues being more about:
    1) more data, which means slower for everyone,and
    2) heavier multi-task burden, slowing the UI.

    As AT&T is now, I’m not sure how they will get around this when every time a new device is added, their whole system bogs down. I know they are investing in upgrades now, but they won’t be in place by the summer roll-out.

  3. I’ve just downloaded the presentation as a podcast and will certainly finish its watching later on but your article has sort of already summarized for me the iAd part. Btw, as I saw the name iAd I thought what if Apple needs to give a name for its own artificial intelligence system if they ever come up with the one – iAI, it doesn’t sound good :-)

    Anyway I had a little hope that Steve will announce the company’s plans for its own Search Engine for Apps Store, but…anyway we’ve been playing with our own solution for searching apps on iTunes Store – as Apple still figuring out a sufficient way to search its store.

    • We don’t need more ads. We could certainly use better ads.

      I would suspect most paid apps would still be ad-free. What this might cause, however, is a lot more free apps (with better ads).

  4. Sholom – nothing Apple is proposing precludes other people from running their own ad delivery systems and networks. Apple’s will, simply, be better and easier for developers. That’s not anticompetitive. It’s being innovative.

    Other companies got into trouble when they introduced something and prevented similar solutions from running at the same time.

    Where I do think Apple needs to be spanked revolves around browsers, sms solutions and telephony apps, in general. Why might they allow Kindle’s reader app to run but not Opera’s browser? There are similar cases like that – like Google Voice.

  5. Sholom Brody

    “One major advantage Apple can offer is to connects ads more seamlessly to apps with its soon-to-be-added multitasking feature (available only for iPhone 3GS and the latest generation of iPod Touch in the summer, and the iPad in the fall).”

    I see this as a huge stumble for Apple with regard to Anti-trust issues. Will Admob be able to offer the same immersiive experience as Apple will on it’s own platform, I think not. As I see it, Apple just shut down every ad company targeting the iPhone OS.

    Where is the mob yelling about the anti-competitiveness of Apple as they were with Microsoft? DOes Apple get a free pass just because they are Apple?

    • Apple said in the Q&A that developers could use other ad networks instead,

      Regardless, your comment reveals your cluelessness about this topic. Apple doesn’t come close having a monopoly over cellphones or smartphones.