Apple Debuts Both Ad Platform and Ad Network: iAd

Apple 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, 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 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.

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