Apple's iAds: More to do with apps and developers than mobile ads

It looks like Apple wants to be a player in the ad game - but this latest move is all about keeping developers interested in apps for Apple's ecosystem.
Written by Sam Diaz, Inactive

Apple's entry into the mobile ad business is still very fresh - so the implications aren't necessarily obvious yet. But early impressions paint this effort as a winner. Here's why:

The ads that Steve Jobs showcased on stage at this morning's news event were more like apps themselves - a full-screen display that brings a menu of interactive things you can do within them. You can browse and shop, watch videos, read more information, find retailers near you and even play some games. These aren't 30-second spots created by some Madison Avenue ad agency. These are ads created by developers - who may suddenly find themselves getting calls from Madison Avenue job recruiters.

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That makes these ads unique - but it also gives Apple a limited role in the ad game. Apple, from the early looks of things, isn't trying to be Google in the ad game. It's looking for a way to keep developers interested in the iPhone OS by unleashing their creativity while giving them a chance to earn a few bucks through advertising. Suddenly, developers who may have been getting frustrated with Apple over the App store approval process and started thinking about the opportunities to develop for other platforms are back in the game.

For Apple, which gets 40 percent of the ad revenue, this is not a get-rich-quick-in-advertising-scheme. Despite what Jobs says about the potential opportunities, this is a limited reach effort. Ads within apps could be lucrative - but it won't directly make or break the bottom line for Apple. It keeps the app ecosystem churning - and seeing how mobile apps are gold these days, that's not a bad thing.

In terms of competition with Google - and notably the scrutiny that regulators might engage in over the deal with AdMob - the Apple entry presents some interesting points to ponder. Now that there's a new player in the mobile ad space - and mind you, Apple is no small player - Google could have a new talking point when it tries to defend itself against the regulatory scrutiny.

It's also worth noting, as well, that Apple will probably only have a very limited reach in this space because it's tied - for now - to apps on these devices. Could it be unleashed via the iPad? Possibly - but, aside from strong first-day sales of the new device, sales in the days following have been less impressive. The company said it sold 300,000 on the first day but about half that since then.

Aside from the iPod, Apple has always been more of a premium product type of company in the past, not a mainstream one. Macs only hold a small share of the market compared to Windows PCs and, when you consider the mobile space too, being the most popular doesn't equate to biggest market share. Apple has always been OK with being a niche premium player. It's done the company well.

Jobs said the company has no intention of becoming a global ad company - and I believe him. This push into mobile ads isn't so much about ad revenue as it is about developers and keeping them on the Apple bandwagon. More apps makes the iPhone, iPod Touch and iPad that much more interesting, from a user experience standpoint.

And isn't that what's most important for Apple? Build a good user experience on sexy devices and the next thing you know, you've got people lined up in the rain, anxiously hoping to be among the first to drop $500 or more on a device that no one really needs but, through the power of marketing, thousands of people feel they must have.

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