How Apple Will Never Beat Google
Home-court advantages sure come in handy.
Advertising is decidedly Google's (NAS: GOOG) home court, and the search giant is flexing that strength's muscles against Apple (NAS: AAPL) . This is one arena where I doubt Cupertino will ever beat Big G.
Apple's mobile advertising iAd is built from the foundations of Quattro Wireless, a wireless ad company bought two years ago after losing a bidding war with Google over AdMob. When iAd was launched, it boasted a hefty minimum cover charge of $1 million for early adopter advertisers. That entry fee has since been slashed multiple times, presumably because iAd has failed to take off as hoped.
It was cut to $500,000 last year, and reports in December suggested that Apple was willing to entertain $400,000 offers. According to Ad Age, Apple has now shaved even more dollars off that minimum and advertisers need to commit only to $100,000 -- just 10% of where it started.
That's not all that's changing, either. Apple had previously charged advertisers a fixed rate for every 1,000 ad impressions plus an extra payment per click, and it has now supposedly eliminated the per-click fee. On top of that, iAd was paying out 60% of ad revenues to app developers, and that cut has now been cranked up to 70% to motivate developers to use the platform.
The changes come shortly after Apple reportedly hired Adobe exec Todd Teresi, who was a VP in Adobe's media-solutions group, to lead iAd a month ago. IDC had estimated that Google's mobile ad market share jumped from 19% in 2010 to 24% in 2011, while Apple's fell from 19% to 15% over the same timeframe. Millennial Media, which just filed for an IPO, came in second place with a 17% share.
Apple still has Microsoft and Yahoo! beat in the mobile ad market, as their slices were estimated at 6% and 8% last year, respectively.
As hard as Apple may try in mobile ads, this is still Google's turf any day of the week.
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At the time this article was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Yahoo!, Microsoft, Google, and Apple.Motley Fool newsletter serviceshave recommended buying shares of Microsoft, Apple, Adobe Systems, Yahoo!, and Google, creating bull call spread positions in Microsoft and Apple, and creating a diagonal call position in Adobe Systems. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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