Apple Closes Quattro to Focus on IAd Platform

Stays Out of Direct Competition With Google's AdMob

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NEW YORK (AdAge.com) -- Apple will shutter Quattro Wireless, the mobile ad network it acquired in January, to devote resources to its proprietary iAd mobile ad platform for its own devices.

The move takes Apple out of direct competition with Google, which acquired mobile ad network AdMob last year, and allows it to carve out its own niche -- premium ads on its mobile devices, the iPhone, iPod Touch and iPad, for which it charges many times the going rate for standard mobile banners.

"We believe iAd is the best mobile ad network in the world, and starting next month we're going to focus all of our resources on the iAd advertising platform," Andy Miller, Apple's VP-iAd and former Quattro CEO, wrote in a memo to customers obtained by Business Insider.

"We are no longer accepting new campaigns for the Quattro Wireless Network, and we will soon begin winding down existing campaigns. As of Sept. 30, we will support ads exclusively for the iAd Network."

Apple acquired Quattro Wireless for $250 million earlier this year, and tasked it to both help launch the iAd network and to create the first ads for marketers such as Citibank, Nissan and Unilever's Dove.

But Apple CEO Steve Jobs disdain for mobile banner ads is well known, and the iAd platform is Apple's attempt to re-invent the genre for its devices. But focusing exclusively on iAds greatly reduces Apple's reach. There are more than 100 million mobile devices in circulation but only a few million -- the latest iPods and iPhones with Apple's latest operating system -- that can accept the ads. (IPads will become iAd-enabled this fall.)

Before the acquisition, Quattro served ads on a number of other mobile platforms such as Android, which is Google's operating system, or BlackBerry phones. If Quattro is anything like other leading mobile ad networks, it means Apple is giving up more than 50% of its reach with the move.

Millennial Media, the No. 2 mobile ad network by revenue in 2009, according to research firm IDC, has 65% of its impressions on non-Apple devices. JumpTap, a network closer in market share to Quattro, reports 60% of its inventory is on non-Apple phones. Apple did not immediately return calls for comment.

This update doesn't come as much of a surprise to mobile ad execs. Apple has always maintained a laser-focus on its platforms, so why would that change for advertising?

Though that focus on rich media might just mean Apple is less interested in competing for scale with the likes of Google and is content to be a niche player. Google is now No. 1 in mobile ad market share after it acquired Admob, according to IDC 2009 numbers.

Turning off Quattro also means Apple is turning its back on advertisers unwilling to cough up million-dollar mobile budgets. Instead, Apple is focusing on the big brand deals, said Paran Johar, chief marketing officer of JumpTap. At a press conference, Mr. Jobs reported Apple has raked in more than $60 million in iAd commitments from blue-chip advertisers such as AT&T, Best Buy, Citi, Target and Disney. Those deals have come in north of $1 million apiece, at double-dip cost structures previously unheard of in mobile advertising.

"They're no longer going to support the typical banners and buttons and probably will focus on the brand campaigns -- that's certainly what the iAd lends itself to from pricing perspective," Mr. Johar said.

That leaves a good chuck of its non-iPhone, non-rich media inventory, as well as advertisers unwilling spend millions in mobile, up for grabs.

"A lot of advertisers can't afford the pricing of iAd," Mr. Johar added. "If Apple is going to abandon the Quattro platform, that's going to be great for us."

"Apple is walking away from performance advertisers," said Anne Frisbie, VP-managing director North America of inMobi, a global mobile ad network. "There's a big opportunity for us in serving those needs in the U.S."

"There's one less competitor and, more importantly, one less option for advertisers and publishers," she added.

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