News: Will The Mobile Ad Battle Prove Futile?

Both Apple and Google have recently entered the mobile advertising industry in full force with the hopes of carving out their own niches in this developing market.

Though mobile advertising has yet to prove itself as a viable market, both companies seem to believe that by building upon their personal strengths, they can turn mobile advertising into the “Next Big Thing.”

The two companies are starting to butt heads as they explore the potentials of the market, since mobile intersects their two areas of dominance: Apple in innovative electronics and Google in using search to facilitate advertising.

What’s the real issue here? While many are focusing on the battle of who will “win” mobile advertising, the real question is whether mobile can be lucrative at all.

When Steve Jobs, Apple’s chief executive, first debuted the iPhone, Google promptly followed with plans to develop Android for mobile phones.

Though neither company’s sole focus was on phones, the rise of app usage made advertising the next logical step. Television shows in particular saw the potential of phone apps to improve their viewers’ experience, with interactive apps for shows like “Glee” and “Dancing with the Stars” helping users feel like they were part of an audience experience.

With hundreds of thousands of users for any given show app, the potential for advertising revenue is enormous. All it takes is for one company to develop the right technology to capitalize on the smartphone market — and Google and Apple both believe they have the resources and data that will make mobile advertising truly lucrative.

At the moment, mobile advertising could use the innovative talents of these two companies. Mobile advertising only netted $2 billion last year, small potatoes when compared to $60 billion for the web in its entirety.

The Wave of the Future… or Not?

Many experts in the marketing and advertising industries are questioning whether mobile is really the wave of the future, as it has often been touted in recent articles describing smartphone applications and the potential of using GPS location technology to target ads to consumers based on where they are. The former CEO of online advertising company DoubleClick has actually stated that he believes that mobile advertising is going to turn out to be a dud market.

Some of the disadvantages to mobile advertising include the medium (the screen is small and space to make a splash or a point is limited) and user dislike of advertisements interfering with their use of the phone.

Jobs may not have these problems with products like his company’s new iPad, but when it comes to the phone, some innovation is required to make the experience worthwhile for the user. When the user is intrigued and enjoys the ad experience, mobile ads are far more likely to become lucrative for advertisers.

Users, Design and Rivalries… Oh My!

Apple is approaching the problem of making mobile advertising lucrative by studying the design, hardly a surprise, considering that much of the company’s success is based on innovative design developments that enhance user experience.

Apple first attempted to buy AdMob, the leader in mobile advertising, as a platform for their new ad experience. However, in a much-publicized coup, Google bought AdMob for a stunning $750 million, outbidding Apple and forcing the company to consider other options. Apple ultimately acquired Quattro, their second choice, leaving behind some bad blood with its formerly-friendly rival.

Apple may have a slight edge with its vault of user data; the company has detailed customer information that allows it to combine advertising and e-commerce in ways that appeal to the way consumers like to use their phones. Apple is hoping to be able to tell advertisers exactly how often, and under what set of circumstances, users click on their ads.

And as for Google… In the Google camp, the Android phone isn’t performing in the advertising market nearly as well as the search giant might have hoped. Google is not as forthcoming with its plans for developing a different kind of mobile ad experience, but it has clearly focused on mobile advertising as a market it hopes to corner.

Mobile advertising holds its greatest potential in personalizing an ad experience while also targeting a customer based on his or her location — two areas in which Google holds some of the most respected technology available with Google search and Google Maps.

Is mobile advertising the Next Big Thing? It’s hard to say. Experts predict an uptick in mobile phone usage and searches using mobile phones, to the extent that as many as 25% of all searches may be via mobile phones by 2016.

Smartphones are also seeing an increase in use globally and mobile industry analysts cite the specific example of Russia where incomes and the mobile advertising market are growing (and predicted to continue growing) at a rapid pace.

The question both Apple and Google are striving to answer isn’t whether smartphones and searching will be more popular in the future, though — it’s whether the two companies (and others looking to “get in on” this developing sector) can translate that increasing usage into real advertising revenue.

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View more articles by Peter Koeppel at Adotas