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Apple (NSDQ: AAPL) and Google (NSDQ: GOOG) may end the year in a tie as the two largest mobile advertising networks in the U.S., a startling outcome given the two drastically different paths the companies have taken over the past year. In July, Apple launched iAd after spending most of the year integrating its purchase of Quattro Wireless. In contrast, Google spent most of the year convincing regulators that if its acquisition of AdMob went through, it would not harm competition.
Ironically, new research from IDC shows that its Apple that will steal market share away from not just Google, but Microsoft (NSDQ: MSFT), too. Apple’s share of the revenues will jump to 21 percent. Meanwhile, Google’s share is expected to drop six percentage points to 21 percent. Apple and Google would be in a tie. Microsoft is expected to drop three percentage points to end the year at 7 percent. The calculations take into account Apple’s purchase of Quattro Wireless (minus their non-iPhone inventory, which they stopped supporting), and Google’s purchase of AdMob.
Apple fully expected to steal share away from others, promising to offer a richer, more engaging advertising experience on mobile phones that would attract more advertisers and provide better returns. No one really expected it to happen this fast, but no one can be for sure that it will last.
BusinessWeek first reported the numbers, but we reached out to IDC to get a little more clarity on what the numbers mean.
The big change this year is that Apple is catapulting to the top because it was able to secure $60 million in revenues as part of the iAd launch. The surge in revenues came mostly from 17 major brands that were willing to commit large upfront budgets to be part of iAd’s splashy unveiling. That’s the primary reason why Apple’s share grew so much, and why some others’ share comparatively shrank. However, Karsten Weide, IDC’s research VP of Digital Media and Entertainment, ensures us that all of their revenues are growing fast. “They are not doing bad at all,” he said.
In fact, the purchase of Quattro by Apple and AdMob by Google has raised the boats of many. Smaller players, such as Greystripe, Jumptap, are eager to say that revenues have been increasing in recent months along with the awareness of mobile advertising. Many industry players are finally admitting that the year of mobile advertising is here.
In a separate report, Weide estimated the revenues of the major ad networks in 2009, giving us a way to extrapolate what revenues in this business are really like.
In 2009, IDC estimated that Google and AdMob’s revenues combined would have totaled $59 million. In the same period, Quattro’s revenues were estimated to be $20 million. Using those figures, it’s easy to see how Apple could leapfrog ahead of the pack in 2010 after securing $60 million in additional revenues. What’s also noticeable, however, is how fast Google is growing. Even without major upfront commitments, it has kept pace with Apple and now is supposedly tied for first in terms of its share of the revenues. Once again, in Weide’s words: “They are not doing bad at all.”