Analyst Angle: Google and Apple in mobile advertising: Can they realize the potential?

Editor’s Note: This article is an excerpt from RCR Wireless News’ March Special Edition, “The Perfect Storm – A Focus on Mobile Messaging, Marketing, Content and Apps.” The 80-page special edition is available here.
Mobile advertising has been discussed a potential revenue source for many years. Like most things in the wireless and mobile industry, mobile advertising was hyped to death in the early years, only to grow relatively slowly. iGR believes that advertizing revenues will become a significant part of the overall revenue pie for the industry, but that the market will take time to mature.
Two recent events could accelerate the development of mobile advertising: Google’s announced purchase of Admob and Apple’s agreement to purchase Quattro Wireless. Each deal was notable simply because of who was doing the buying – Apple and Google are currently two of the most innovative and dynamic companies in the wireless industry. The general though is: if anyone can grow the mobile advertizing pie, Apple and Google can.
With this thought in mind, iGR looked at each company with regard to which one is likely to make the most of the opportunity. Rather than simply look at the benefits of each company, iGR has scored Apple and Google against their ability to address the major issues with mobile advertizing.
Before we go any further, I should disclose that I am an avid Apple fan – both my household and business run on Apple products. We have multiple MacBooks, iMacs, Minis, iPhones, iPods and various Apple software. As an analyst, I have been impressed with Apple’s mobile approach and we have generally been positive about the company (although there have been bumps along the way – Apple TV, anyone?).
We also use a lot of Google product – aside from the usual Internet search, we have gmail accounts and use GoogleDocs for collaboration in the company. And yes, we have a couple of Android devices.
Mobile advertising issues
iGR believes that major issues with mobile advertising are:
–Consumer protection and privacy: One of the main issues consumers have with mobile advertising is the potential for invasion of privacy, especially in proximity advertising. This became an issue in 2009 with the Palm Pre – some users have complained since the smartphone collects user data on application use and location and passes this information back to Palm without user knowledge. While not used for advertising specifically, the sensitivity with personal data shows the extent of the potential problem.
Consumer opt-in: Many mobile advertising campaigns allow the users to “opt-in,” or choose to receive advertising in advance. The more invasive the advertising, the more important it becomes to allow users to choose to receive advertising.
End user control: Consumers want to have ultimate control of when and how they receive advertising on their mobile devices.
Profiling: Data supplied by the consumer for marketing purposes should be used to customize the advertising to the particular interests of the consumer. Obviously this makes the advertizing more effective as well.
Reward: The consumer must believe they are getting something of perceived value in return for receiving the mobile ads.
Ad volume: The marketer must effectively manage and limit mobile messaging programs to a reasonable number of advertisements per user. If the consumer perceives the advertizing as spam, then the industry has failed.
Advertiser control: The mobile operators have traditionally executed control over what their users view on the handsets. But large brands now desire a more direct relationship with the carriers’ customers. As mobile advertising becomes more and more complex with additional parties all wanting a piece of the marketing pie, numerous companies from all areas of the spectrum will have to work together to create a mutually beneficial environment in order to foster success. In the past, the mobile industry has fought over who ‘owns’ the customer – if this happens with mobile advertising, we could be headed for trouble.
Apple vs. Google
With these issues in mind, we can now score each company in their ability to overcome the obstacles. To make things simple, we have awarded 2 points if the company can materially address an issue, 1 point for making some improvements and zero points if we believe Apple or Google are unable to address an issue.
Of course, this is all subjective and completely down to our own opinion. Here goes …
Consumer protection and privacy: Apple 1: Google 0 – This is potentially a problem for Google given its many issues with data protection over the years. Google loves data and, in its self-appointed role as the world’s librarian, has sometimes preferred quality data to the privacy of its users. For mobile advertising, there is obviously a huge amount of information that Google could collect – the question is whether it will stop to ask if it should? For this reason, iGR does not believe that Google will materially improve consumer protection and privacy for mobile advertising.
Apple may be a different situation and could in fact err on protecting too much information. Just as it has carefully checked each iTunes App Store app and removed content they consider too risqu