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Media owners wince as Google, Apple prepare for mobile advertising battle

business Updated: Aug 09, 2010 21:25 IST
The Guardian
The Guardian
Hindustan Times
Mobile users

Mobile users are confronted with an epic showdown beteen Apple and Google. iAds, Apple's bid to run advertisements inside apps, is expected to make its UK debut in September.

Google has adopted what its chief executive, Eric Schmidt, calls a "mobile first" approach, prioritising investment in a medium that has become "fundamental to everything we do".

With the iPhone moving into mass market territory and the iPad selling 200,000 units a week, Apple's decision to start selling mobile ads seems likely to concentrate a few media minds.

In early June, Steve Jobs demonstrated iAds in front of Apple developers in San Francisco. The ad he showed off was a work-in-progress by Nissan. It was slick. iAds, Jobs promised, would bring in the revenue that would allow developers to continue producing "free and low-cost apps to delight users".

For media owners, though, there are two major problems with Apple's ad model. First, Apple's approach threatens to reduce media owners to the status of "developers" alongside tens of thousands of competitors. The second is that Apple's business model, like Google's, reduces media owners' involvement in advertising markets to a minimum.

Google, too, is forging ahead, but in a different way. On the mobile web, it continues to emphasise lead generation rather than branding.

Ian Carrington, director of mobile ad sales for Google Europe, West Asia and Africa, sketches out a scenario in which a mobile user is reading a book review on a handset in a cafe. "The accompanying ad will understand its context," he says. "It will know what book is being discussed in that review. He adds: "You've also got GPS in most smartphones now, so your handset can tell you that this book is £5.99 in a shop 100 yards away, and £4.99 in a shop a mile away."

Despite different approaches to advertising, one thing unites Apple and Google. Both want to hold on to a relatively large proportion of the ad revenue they generate. Apple proposes to pass on to developers 60 per cent of the revenue generated by iAds. Google suggests it passes on to publishers "at least 50 per cent" of the revenue generated by ads. High, if you recall the 15 per cent that used to go to media agencies for bringing in advertising for publishers.

Not a bad deal.

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