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iAd versus AdMob | Apple versus Google

Steve Jobs made two significant announcements yesterday.

First, he announced the arrival of OS 4.0 for the iPhone. The first beta for 4.0 was released today. While multi-tasking is the newest feature promised with OS 4.0, we'd be hard-pressed to call it true multi-tasking. More on that later...

Second, he announced iAd. iAd will be Apple's platform through which advertisers can place ads and publishers can publish ads. This will directly compete with AdMob, recently acquired by Google (although it is stuck somewhere in federal regulatory approval).

The good news for publishers is that they will get to keep 60% of the ad fee, while Apple gets to keep 40%. The good news for advertisers is that they have a new platform that will compete directly with AdMob. The good news for Apple is that they have a whole new revenue-stream coming up. Estimates range from negligible to $2.5 billion annually.

The bad news is all for Google / AdMob. With 185,000 apps and growing, Apple has a significant advantage in market-share. iAd will certainly make an impact when it is released, and it will most certainly be at the expense of AdMob. Imagine that you are Coke and you have a $5 million budget to run mobile ads. Currently, most of this budget goes to AdMob. In the future, Coke will take probably split it between AdMob and iAd. AdMob will also feel the competitive pressure to keep pricing in line.

There are a few questions that need answering. The first and foremost is about the Apple approval process (there have been tons of questions about this already). What if Apple decides to REJECT apps because they run AdMob ads? Can they do that? Why not? With their history of app rejections, anything is possible...

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