Apple announces iAd platform will go live on 1st July

The iAds are coming - Apple iPhone OS 4.0
Image by k-ideas via Flickr

According to its press release, Apple‘s iAd mobile advertising network will go live on July 1st on iPhone and iPod touch devices running its iOS 4 software platform.

“iAds combine the emotion of TV advertising with the interactivity of Internet advertising, giving advertisers a dynamic and powerful new way to bring motion and emotion to mobile users. iAd will kick off with mobile ad campaigns from leading global brands including AT&T, Best Buy, Campbell Soup Company, Chanel, Citi, DirecTV, GEICO, GE, JCPenney, Liberty Mutual Group, Nissan, Sears, State Farm, Target, Turner Broadcasting System, Unilever and The Walt Disney Studios. Apple has iAd commitments for 2010 totaling over $60 million, which represents almost 50 percent of the total forecasted US mobile ad spending for the second half of 2010.”

My take on all this is that iAd will be MEGA for Apple. It will become a huge money-spinner for Apple just as AdWords have for Google. Expect it to be one of the biggest earners for Apple within 3 years (IMHO). Pay attention to their statement that “Apple has iAd commitments for 2010 totaling over $60 million, which represents almost 50 percent of the total forecasted US mobile ad spending for the second half of 2010.”

Once we factor in the expected growth in mobile ad spending in the future and if Apple is aiming to capture 50% of the market from day one then they are aiming to be the market leaders in this market. According to some market pundits and research companies, mobile marketing and advertising combined will grow at an impressive 40% CAGR over the next five years.

In one report, Sterling Market Intelligence forecast mobile advertising revenues will reach $5.08 billion in North America and Western Europe by 2012. Thomson Financial predict Google’s 2009 mobile ad revenue alone will reach $21.31 billion. Gartner predict that the worldwide mobile advertising market will grow from $895 million in 2007 to $14.6 billion in 2011, while the Kelsey Group forecast that the US mobile ad market will grow from $33.2 million to $1.4 billion in 2012. Forrester are the most conservative, predicting less than $1 billion in mobile ad revenue by 2012.

In brief the results of the Wave 8 report show

  • 70% of mobile advertisers use text messaging
  • 31% of advertisers use video ads
  • 36% of mobile marketers use mobile search
  • 45% say they intend to start mobile search in the next 6 months

When you look at those figures (and they look somewhat confusing to me – Google’s predicted to make $21.31 billion in 2009 and yet the global market won’t be $14.6 billion by 2012!) we can easily see Apple’s share being in the billions (of total spend) if they attain 50% share of the global market (not a given by any means but then they had their doubters when it came to the iPod and then the iPhone). Back in April Apple reported revenue of $13.5 billion and profits of $3.07 billion. If they take a 40% share of the predicted revenue from mobile advertising (let’s go with that $14.6 billion and ignore the Google figure) , then we are looking at something in the region of $5.84 billion per annum income from mobile marketing, or around $1.46 billion a quarter. That’s a significant figure and if I had the money, I’d be investing heavily in Apple stock right now and get in early before their value rises even higher.

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