How Apple Will Never Beat Google

Home-court advantages sure come in handy.

Advertising is decidedly Google's (Nasdaq: GOOG  ) home court, and the search giant is flexing that strength's muscles against Apple (Nasdaq: 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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Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Yahoo!, Microsoft, Google, and Apple. Motley Fool newsletter services have 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 services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 15, 2012, at 11:55 PM, beachbum242 wrote:

    Apple already has beaten Google and will continue for some time to come. I own Google and Apple. The guy that runs Google is as smart as they come but he is no Steve Jobs. Jobs left a five year plan that will keep Apple on Top.

  • Report this Comment On February 16, 2012, at 12:04 AM, iphonerulez wrote:

    Who said that iAd was developed to beat Google at ad clicks. It's just a friendly competition between two rival companies for the fun of making money. It would be truly amazing if Apple came in first at every project they tried. Apple doesn't have to beat Google at ad clicks. Apple is doing just fine without them.

  • Report this Comment On February 16, 2012, at 12:08 AM, applefan1 wrote:

    google knows how to make money selling ads, but guess what? to me, I don't want to see ads because they are a distraction and I couldn't care less about Ads. I look at a company that makes the best product, customer service, etc. For me, that's Apple.

    go ahead Google, spend your time selling ads.

  • Report this Comment On February 16, 2012, at 12:28 AM, Davewrite wrote:

    you know what beating is?

    15 to 24% market share isn't a real beating...

    Google's android revenues less than $1 billion a year

    (2.5 billion total mobile total search, ads, services revenues. Two thirds according to Google from Apple iOS, so the rest divided between Android, Nokia , Rim etc phones)

    Apple easy 50 billion plus a year from mobile.

    1 b vs 50 b mobile revenues..

    Now ... THAT is a beating....

    (I haven't even minused the small incidentals like Goog paying 12.5 b for Moto etc... )

  • Report this Comment On February 22, 2012, at 12:39 AM, Motleystool10 wrote:

    .

  • Report this Comment On February 22, 2012, at 12:40 AM, Motleystool10 wrote:

    That apple generates more proft than google does revenue - that's a beating.

    That aside, this is another misinformed, lazy piece of journalism. It's essentially a cut-and-paste job from all the other drivel out there on the subject.

    Apple can absolutely beat google in the mobile app ad game. Remove mobile search and it's essentially neck and neck. 6 percentage points is not a beating. Consider apple isn't even two years in the ad game and is a close second to a company whose focus is ads. Furthermore, consider that they're a close second while having a pricing structure that was overly complicated and eliminated about 90% of marketers from running with them. Apple owns the devices, the OS and has a rich data set in iTunes - all of which give them a distinct competitive advantage. With the corrections to pricing they've made, they are about to become a lot more competitive. I wouldn't be surprised to see Apple become the dominant player in this space - especially as mentioned above, Jobs left a fully formed product pipeline that may contain a connected TV. That, paired with the potential for Siri to disrupt search and the forthcoming integration of NFC and the sky is the limit for iAd.

  • Report this Comment On August 27, 2012, at 2:01 PM, oGtomasX wrote:

    WOW....!!! Your an idiot SCRUB apple fan boy you sit your Scrub ass all day talking crap about (GOOGLE)...?? i bet you use google all day long because you dont think you search with the APPLE search engine... YEA apple makes more money Because APPLE is known as a very nice looking products.....How does them making more money benefit you??? GOOGLE-ANDROID gives you more for your SO yea they make less so what.......LIKE IT OR NOT ANDROID WILL RULE SMART PHONE MARKET PERIOD..................

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