Things are heating up in the mobile-ad world. As Research In Motion searches for an acquisition in the emerging space, Apple is putting the kibosh on the mobile-ad company it purchased earlier this year.
Apple purchased Quattro Wireless in January for $275 million. That buy came on the heels of Google's announced plan to scoop up AdMob for $750 million last November. Fast forward nearly a year, and not much has changed in the mobile-ad space from a practical standpoint.
But Apple appears closer to making a big move. The iPhone maker has decided to shutter Quattro as of Sept. 30 and focus on its own advertising platform, known as iAd. It seems Apple acquired Quattro more for the intellectual property than to keep it up and running.
Now that Apple has extracted the technology and processes it needs from Quattro for its iAd platform, Apple is forging ahead with iAd, which debuted this summer.
"We believe iAd is the best mobile-ad network in the world, and starting next month we're going to focus all of our resources on the iAd advertising platform," iAd Vice President Andy Miller, who was Quattro's CEO, wrote in a letter to Quattro clients.
Greg Sterling, principal analyst at Sterling Market Intelligence, was not surprised by Apple's decision. From the outset, it was expected that Apple would use Quattro for its own purposes rather than maintain the broader ad network for third parties not part of the Apple ecosystem, he said.
"There have been mixed reviews of iAd, with some complaining that it's another 'black box.' But there have also been very positive reviews from some developers and publishers," Sterling said. "I wonder what the key Quattro employees will do now: Hang out for the requisite two years and then leave?"
When Apple introduced iAd, it said the new mobile-advertising platform combines the emotion of TV ads with the interactivity of web ads. When users click on mobile ads now, they are almost always taken out of an app to a web browser, which loads the advertiser's web page. Users must then navigate back to their app, and it can be difficult to return to exactly where they left.
Apple said iAd solves this problem by displaying full-screen video and interactive ad content without leaving the app, and users can return to the app anytime they choose. iAd works with iPhone iOS 4.0, which lets developers embed mobile advertising within their apps. The ads are dynamically and wirelessly delivered to the device. Apple will sell and serve the ads, and developers will receive 60 percent of iAd revenue.
Developers who join the iAd network can incorporate a variety of advertising formats into their apps.
Apple is reportedly asking for $1 million commitments to run iAd campaigns. As of June, Apple had iAd commitments for 2010 of more than $60 million. That represents almost 50 percent of the total forecast U.S. mobile-ad spending for the second half of 2010, according to J.P. Morgan.