How Apple plans to take on Google in mobile advertising

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Apple chief executive Steve Jobs has placed himself head-to-head with rival Google in the budding mobile advertising market, by announcing a new iAd advertising platform to be rolled out this summer.

The announcement follows Apple's purchase in January of mobile advertising network Quattro Wireless for $300m (£196m), demonstrating that Mr Jobs is happy to put his money where his mouth is.

Yet the mobile advertising market remains tiny, and the acquisition price paid for Quattro is small change for a company currently valued at over $217bn.

However, analysts say that the potential for mobile advertising is huge and it could transform mobile commerce. Investment firm Piper Jaffrey is predicting a total in-application market for advertising of $700m by 2013, of which iAd could capture $380m.

Nascent industry

"Mobile advertising currently is at a very nascent stage, and the sector's revenues are totally eclipsed by other forms of advertising," says Ben Wood, analyst at technology consultants CCS Insight.

"However, there is no doubt that these companies view advertising as the business model of the 21st century."

Mr Jobs's thinking is that mobile advertising can be tailored to the individual users needs and interests, in much the same way that Google has been able to use data from users of its search engine and gmail accounts to target advertising.

"The mobile is a very personal device," adds Mr Wood. "You can almost say that it gives you a market segment of one."

Apple could use the mobile phone user's physical location as a hook for advertisers - for example Mr Jobs cited a Nike advert incorporating a nearest store locator. But information about a user's interests can also be gleaned from the applications they choose to purchase.

The Apple head says that he wants to help developers make money with higher quality advertising so that they can keep their free applications free. "What some of them [developers] are starting to do is put mobile ads in their apps…" says Mr Jobs. "And most of this advertising sucks."

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