Apple’s acquisition of Quattro Wireless and Google’s purchase of AdMob are fundamentally a statement about the importance of advertising as a crucial future revenue stream for mobile application developers. The value of a personal, close at hand and always on platform to communicate with customers has the potential for never before seen value to marketers. Placing marketing and advertising within mobile applications is a natural location. For those that are skeptical, we have a rather compelling precedent. Google’s greatest business model innovation was providing software (search) free to the user and drive revenues via selling the right to place a small, unobtrusive text ad next to the results of the search.
For those of us who pay attention to the internet, mobile and digital media industries, the paragraph above is rather common knowledge. What isn’t known however, because it’s happening as we speak, is the details of how advertising and applications combine in a way that is acceptable for all the stakeholders. These include consumers, marketers, application developers, wireless carriers, handset manufacturers, operating system providers, marketing agencies …. What does seem reasonable, however, is that those that have a close and valuable relationship with application developers stand a good shot at garnering a meaningful portion of the economic value as the economic pie gets distributed.
Who falls into that “close” category? First, certainly any vendor who is effectively distributing/selling the application for the developer. Apple’s App Store is the flag bearer in this category today but there are an increasing number of distribution options for mobile application developers, although only so many will be effective. Second, how about those that have the ability to “turn on” the advertising revenue stream for the developer? Well, mobile advertising networks such as AdMob, Quattro Wireless, 4INFO and Millennial Media are the poster children here. We’ve already seen many acquisitions in this sector and will certainly see more. Third are the providers of the tools and operating system (OS) platforms used by developers to actually build the applications. Think Google via Android, Apple, Symbian, Nokia and Intel’s recently announced MeeGo, Blackberry, Microsoft Windows Mobile 7, Palm webOS, Linux and stretching a bit, even Adobe via Flash Mobile. If the key elements enabling effective marketing and advertising were “built in natively” within the application, that may give certain tools and OS vendors a valid claim to sharing some of the economic pie. Interestingly, the real answer may be that all three are required as Google, Apple, Nokia and Microsoft all have some semblance of these elements.
The news that spurred this conversation was Apple tipping it’s hand a bit via a job posting which was unearthed by Mobile Entertainment yesterday. Essentially Apple is looking for an executive to manage the integration of advertising capabilities into Apple’s mobile software development toolkit (SDK). Makes perfect sense to us.
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