Will iAds Change The Mobile Marketing Arena?

Today was the first day of Apple's WWDC 2010 and as usual all the hype was around Steve Jobs' keynote... even though most of the world knew he was going to showcase the new iPhone 4.  Personally I'm not blown away by the new iPhone, most of the features were already expected;  however, there was a feature that has interesting implications and not many people are talking about it yet.  Apple will be integrating an ad platform called iAd to the iPhone OS 4.0 (iOS) which will run on iPhones 3G, 3GS, 4, iPod Touch and iPads. 

Apple's success over the last decade with the iPod, iTunes/App store, iPhones could be attributed to the fact that their products are vertically integrated.  They provide users with an extremely user-friendly ecosystem that facilitates the purchase and consumption of media and software.  Now they are adding advertisement to their ecosystem.  There are not much details about how it will work, but Jobs has said the following:

• Developers keep 60% of ad revenues;
• Apple will host, deliver the ads;
• There are a number of companies already signed up to spend $60 million dollars on the platform for the second half of this year;
• Ads will display from within the apps; ads will be highly interactive allowing users to watch videos and even buy products without leaving the ad or app.

 So why do I think Apple might change the mobile marketing arena?  Well lets just look at some numbers.  Apple is #2 in the U.S. mobile market share covering 28% of the market (Nielsen).  Furthermore, Apple claims that it will be selling the 100 millionth iOS device.  Now let's be conservative and assume that about 50% of those devices can actually upgrade to iOS 4.0 we are still talking of roughly 50 million devices.  That means that Apple has a portfolio of 50 million users to give to advertisers.

In addition to the install base Apple has a benefit no other mobile ad company has: it knows the product inside out.  Apple knows exactly what can and can't be done with the iPhone and therefore they know exactly what kind of ads can be built.  This will push the limits of what kind of ads can be done and possibly yield innovative ads.

Another reason why Apple might change the mobile marketing arena is the leveraging power they have.  They've already secured $60 million worth of advertising for a service that is not out or has been proven yet (proof of their leverage).  Apple will most certainly negotiate good deals that will benefit them and will allow them to provide developers with a "perfect" single solution.  Developers need not worry about looking for other mobile ad solutions if Apple has a broad, solid portfolio that pays good and requires almost no management.

iAds seems to be another solid addition to what seems like a perfect ecosystem.  If Apple has made iAds as friendly as their other solutions we might be looking at the next step in the mobile marketing evolution.