NEW YORK (AdAge.com) -- What a difference an "i" makes. When Steve Jobs introduced Apple's very own mobile ad unit, the iAd, on a stage in Cupertino, Calif., the mobile ad industry arguably got its highest-profile endorsement to date.
"It's awesome -- Steve just did a big commercial for mobile advertising," Jason Spero, VP-general manager of Google's AdMob, told Ad Age at the time of the announcement.
Mr. Jobs brought a much-needed dose of sexy to a media previously ruled by tiny banner ads. Even though high-end creative -- basically mobile ads that looked more like apps than banners -- was available in mobile before the introduction of the iAd, the press-conference treatment and Mr. Jobs as pitchman got advertisers to pay attention. Months after the industry was introduced to iAd, demand for rich media in mobile is up, and mobile budgets are on the rise. Apple's announcement caused a few clients who previously weren't looking at mobile to pick up the phone, said David Bear, executive director of mobile and social media for BBDO Atmosphere Proximity. But "certain clients that were less receptive to mobile knee-jerk wanted to know what iAd was and wanted a point of view," he said.
Clients, at least in BBDO's case, weren't immediately throwing money in mobile rich media. But it got mobile on the radar and started talks on budgets and strategies far beyond mobile ad buys.
Though it's not all mobile media all the time. "When we discuss mobile with our clients, we have a much wider conversation," said Jean-Philippe Maheu, worldwide CEO for Publicis Modem, which built Citi's iAd. "Ninety percent of the discussion is about other things in mobile advertising, like commerce and apps."
While mobile rich media pre-dated the iAd, Apple's pricing strategy was one of a kind. With iAd, advertisers would have to pony up payment twice, paying cost-per-click on top of a cost-per-thousand fee. What's more, Apple demanded budgets north of $1 million, an usually large sum for mobile ad buys. Those higher asking prices meant iAd couldn't be funded out of existing and comparatively measly mobile budgets. IAd opened mobile up to the larger pool altogether.
"The budget commitments Apple asked for actually broadened the conversation beyond the usual mobile marketing purview," said Mr. Bear. "That was Apple's intention: to get some of that TV budget and to get some of those CMOs to look at mobile as a potential channel."
Mr. Jobs announced Apple had secured $60 million from advertisers for iAd, a whopping 36% of eMarketer's projected $166 million in mobile display spending for 2010. Those projections were determined before iAd hit the market, and Noah Elkin, eMarketer's mobile analyst, says that money was likely new to mobile. "These are big ad spenders across any medium," said Mr. Elkin of iAd launch advertisers like Nissan, Citi, Dove and AT&T. "I'm assuming that they didn't balk at spending additional money in the wake of iAd. That suggests a good portion of money being spent on iAd is net new."
But Apple might have stumbled onto some impeccable timing as well. Shortly before Apple bought Quattro Wireless, the mobile ad network that helped launch iAd, another Silicon Valley titan, Google, staked a claim on its own network, AdMob. According to the biggest independent mobile ad network, Millennial Media, the big jump in mobile ad spending started a year before Apple announced iAd, well before it even had an eye on Quattro.
"I think the hockey stick for mobile advertising started in second-quarter 2009," said Marcus Startzel, senior-VP sales for Millennial Media. "That's when we really started to see a rapid increase in advertiser investment."
Apple, largely focusing on its rich-media unit, seems less concerned with participating in the growth of the industry beyond the iAd. Mr. Startzel reports huge demand for Android mobile-ad inventory, which accounts for six-figure portions of some advertisers' budgets. Android continues to gain market share, while leader BlackBerry slips, along with Apple, according to ComScore. In August, Apple announced it'd be closing Quattro to focus on iAd, sacrificing any inventory it might have been selling on other platforms, such as Android or BlackBerry. That means Apple isn't directly competing with other mobile-ad nets such as Google's AdMob, Millennial and JumpTap for non-iPhone mobile-ad inventory.
It also underscores that iAd isn't the only force bringing the spotlight to mobile marketing. Smartphone penetration continues to rise, location-based services have shaped up to be the digital marketing darling du jour, and Google's figuring out ways to build AdMob into its massive ad infrastructure
While likely unintentional, Apple even had a hand in Google's role in mobile advertising, too. It wasn't until after Apple introduced iAd that the Federal Trade Commission finally OK'd Google's $750 million acquisition of AdMob. Google announced the deal in late 2009, which prompted an investigation to weigh if the move could mean a monopoly in digital advertising. Then, after more than six months of scrutiny, the FTC greenlit the transaction in May, one month after Mr. Jobs took the stage to introduce iAd. "As a result of Apple's entry [into the market], AdMob's success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob's competitive significance going forward," the agency said in a statement.
While ad networks like AdMob offer rich media creative -- Google has broadened its mobile creative palette to also include expandable maps and interactive video in the months since iAd launched -- Apple's laser focus on iAd brings it closer to rich media providers like Medialets.
But that's not necessarily a bad thing for the competition. Medialets Chairman-CEO Eric Litman says he's seen a significant uptick in business since iAd. Mr. Litman sees Apple's influence as providing more attention for rich media in mobile. "I see a faster shift toward rich media as a dominant display format," he said. "Twenty percent of total spend in online display goes to rich media, and it took ten-plus years to get there. In mobile, it's approaching that level now."
All the attention could definitely mean a higher creative standard for mobile advertising. Apple did it before with iPhone and its apps. Some ad agency execs report difficulty in convincing clients to test mobile before Apple's phone, since advertisers just couldn't imagine their brands in mobile before the iPhone and its slick user interface.
"By having Apple stake its claim in that realm of the display market, it's planted a flag and said: 'This is the bar and how we plan to raise it,'" said eMarketer's Mr. Elkin. "If you want to compete, you'll have to do the same."