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Mobile Predictions (and Shameless Self Promotion)

By: 6 January 2010

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Later this week, we’ll publish reports across BIA/Kelsey’s coverage areas that predict market trends and events of the coming year. Part of that involved looking back on past predictions to calibrate our handicapping abilities.

There was one nugget I remembered after yesterday’s announcement that Apple will buy mobile ad network Quattro Wireless for $275 million. From the July 2008 report “The iPhone Era: Mobile Local Search Gets its Due”:

As a matter of speculation, Apple sits in an interesting spot here. Though the company has created an open system for mobile application development and access (when compared with the traditional mobile environment), it remains somewhat of a closed system (versus the Web). In other words, applications still require Apple’s approval for inclusion in the App Store.

Does this put Apple in a position of leverage with respect to its terms of agreement and its potential to be a central repository for ad buying and placement throughout its universe of applications? This would be a significant departure from its traditional model and its mission to be a consumer-driven product company. One can’t help but wonder, given this positioning, if it will opportunistically bolt an ad network onto its business model.

Of course, the acquisition was done for more reasons than those we speculated. Most notably, Quattro’s relationships with publishers and advertisers gives Apple a greater ability to monetize growing sources of in-app ad inventory … but also to appeal to more app publishers to do the same.

In this way, it could be building a publisher network akin to AdSense for Mobile, but within the walled garden of the App Store. Rumors indicate it tried to do something similar with the failed attempt to acquire Quattro competitor AdMob last quarter.

Quattro’s relationships with publishers outside the app world likewise represent a growing opportunity for Apple. This could have many other dimensions, including ad inventory/opportunities that arise from the rumored (but inevitable) Apple  tablet.



One Comment

One Comment »

  • ScottD said:

    You were right that Apple’s inevitable entry into mobile ads would happen. In-App advertising was one of the few monetization methods where Apple was unable to get a piece of the action, and it enables a powerful publisher model (free Apps that are ad supported). Now publishers have four options with Apps – free, free w/ads, free w/upgraded content, and paid Apps.

    The real game going on here is that Google and Apple both know that App-driven search is the most likely next business model to erode Google’s Web-based search dominance. Smart mobile devices will dwarf PC’s over the next 6-10 years (just think that Apple will ship 100m+ iPhone/iPod touches in the first three years, probably hitting that benchmark by summer, 2010). This is the game of the century.

    The Apple tablet is rumored to be announced on 1/27, and will be available by March. I doubt the Quattro acquistion excites existing magazine/newspaper publishers – remnant inventory does not boost their businesses much, and the ad content (hello, Viagra!) is distracting.

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