Peter Burrows on December 09
In a Web world in which so many companies peg their futures on advertising revenue, Apple has always showed incredible discipline in not degrading its products by selling space on iTunes or on the desktops of Macs, iPods or iPhones to the highest bidders. Nor do I expect it to. The company makes great margins as it is, and understands that the main reason is that it provides a user experience that its customers love. And most of us don’t love ads.
But the iPhone is fast developing into a breakthrough product for mobile advertising—the first portable device that combines a stellar display, a tremendous Web-surfing user base, and GPS-enabled apps so as to reach people where they physically are. As more people use the device for more things, there are far more ads they might want to see—sales on fishing gear to folks that download the iFish game, or a 10% off coupon to UrbanSpoon fans from the burger joint they’re walking past.
It’s early days, but such advertising is on a fast upswing. Here’s a video from AdMob, which served up more than 100 million ads on iPhones in September, that gives a sense of the many ways this is occuring: So far, Apple doesn’t get a cut from advertisers, as it does on the software people buy at the App Store. But with the help of new technologies that will further enhance the iPhone for advertising purposes (here’s a post by Rob Hof, about Google’s new program to automatically convert Web ads for various smart phones), this will add up to real money some day. At some point—and it won’t be soon—I wouldn’t be surprised to see Apple demand a small, appropriate piece of the action. As its markets mature in the years ahead, it’s one more way for the company to cash in on the value it has created.
