Two platforms are emerging the mobile operating system platform and nested within it is the mobile app and ad platform. For over a decade Google played for keeps in its platform (search connects searchers and advertisers), so why shouldn’t Apple do the same? By barring AdMob from the iOS they:
- Limits Google’s Ability to Achieve Mobile Ad Dominance: The mobile ad business is a two-sided network. Apple is ripping away one side of that marketplace (or at least a very large chunk of it — 100M eyeballs). This will limit AdMob’s (i.e. Google) ability to achieve critical mass in the mobile ad space during these formative growth years.
- iAd Accelerator: With AdMob out of the picture advertisers will move their mobile ad budgets to other ad networks and clearly the iAd network will grab some of these dollars accelerating its growth as it attempts to reach critical mass. Remember, in any market with strong network effects the strong get stronger and the weak get weaker. Apple is positioning iAd to get stronger.
- Keeps Ad Innovation Alive (some): A key hallmark of an open system is the increased rate of innovation. By opening iPhone to select mobile ad networks the iOS platform will still benefit from the ad innovation these providers generate.
- Switching Costs for Developers are Still Low: In a mature market developers could incur significant switching costs i.e. if AdMob had 10x better ad relevancy algorithms combined with an advertiser base 20x the combined competition it would be challenging for the others players to match the revenues developers were generating. But in such a nascent marketplace nobody has these kinds of advantages.
- Other mobile ad networks (Apple iAd, Millennial, Greystripe, and Mojiva) will quickly pick up the slack and provide comparable monetization rates.
- The cost of switching to another ad mobile provider is not significant – a new billing relationship, a couple of lines of code, and new analytic tools to monitor your performance.
- The vast majority of mobile developers making real money (now) are not doing so with AdMob display ads — they are doing it with paid apps.
Finally, do you really believe that app developers would give up access to 100M mobile users who have a credit card on file.