Peter Kafka

Recent Posts by Peter Kafka

Apple Announces Mobile Ad Plans Thursday, and Google Can’t Wait to Tell the FTC [UPDATED]

UPDATE: Steve Jobs is indeed dubbing his new ad platform “iAd.” The big takeaway: Developers and ad agencies create the ads for the 185,000 apps that Apple distributes; Apple sells and hosts the ads; developers keep 60 percent of the revenue.

Apple is likely to introduce its mobile ad platform Thursday at its iPhone developer event, say sources familiar with the company’s plans. Expect to hear a loud cheer from Google, Apple’s former ally and current competitor.

Why would Google applaud the entrance of a new advertising rival? Because Google is trying to convince federal regulators that it has advertising rivals so that it can proceed with its $750 million purchase of AdMob. That deal is being held up for review by the Federal Trade Commission, and there have been consistent murmurs from Washington that the purchase could be in jeopardy.

Apple’s plan to get into mobile advertising has been apparent since early January when the company purchased Quattro Wireless for $275 million. Like AdMob, Quattro specializes in ads that run within apps. That’s a tiny market now, but it’s expected to grow along with the booming app economy, pushed by the mobile platforms Apple (AAPL) and Google (GOOG) are promoting.

Sources say Apple will discuss its plans to create an ad network for its developers at its Thursday event. I assume, but don’t know, that the company also plans to make its network available to developers on rival platforms, like Google’s Android. I also assume that if Google gets its AdMob deal approved, it will open that network to Apple’s developers–even if either side wanted to make its ad play an exclusive one, shutting out rivals would be a red flag for regulators.

In the meantime, Google has been going out of its way to highlight Apple’s mobile ad moves. Two days after the Quattro news broke, Google wrote a blog post applauding the move.

Last month, when MediaPost wrote a story speculating about Apple’s mobile ad plans–the publication dubbed the platform “iAd,” but I’m not sure that Apple intends to go with that name–Google sent reporters an email link to the story. “If true, it would be more evidence of how competitive and quickly-evolving the mobile ad space is,” wrote Adam Kovacevich, a manager at the company’s public affairs group.

One problem for Google is that you can argue that the company already has a dominant position in the existing mobile ads business–the one that isn’t dependent on smartphone apps. That’s largely because mobile is now a default option when advertisers buy keywords on the search giant’s AdWords system. One industry observer I talked to guesstimates that those ads alone will generate $300 million for Google this year.

I followed up with Kovacevich today and asked him how Apple’s move would affect the chances of the AdMob deal. Give him credit for consistency–here’s his response:

“While we’re continuing to work with the FTC, there is overwhelming evidence that mobile advertising will remain competitive after this deal closes. Mobile app advertising is less than two years old, there are more than a dozen mobile ad networks, app developers and advertisers routinely use multiple networks, and the leading mobile app platform, Apple, is now entering the mobile ad space as well.”

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I’m a giant vat of creative juices.

— David Pogue on why he’s joining Yahoo