This year, it is expected to top $1.1-billion, which is why both Apple and Google have made big moves in the space. In late 2009, Google dropped $750-million for the mobile network AdMob. In an illustration of how fast things are moving, though, Apple picked up the mobile advertising company Quattro Wireless for a reported $275-million in January, 2010, then shut it down nine months later in favour of a system known as iAds.
One of the shiny new toys in the advertising industry, iAds provide a rich experience that can include video, audio, and interactive games. Movie iAds might include trailers, interviews with the stars, and the ability to buy tickets.
In theory, publishers should like iAds, since they keep readers within an app - unlike, say, an old-style banner ad which, when clicked, takes someone to another website. But Apple has been loath to share any meaningful data on the format's effectiveness.
And so far, most magazine publishers are refusing to take iAds. Condé Nast uses its iPad versions of GQ, Wired, Vanity Fair, Glamour, and The New Yorker as incentives, giving print advertisers in those magazines automatic placement in the corresponding digital versions. (They can, of course, pay extra to make the ads interactive.) Hachette does not use iAds in its Elle app, for example, and has no plans to, at least for now.
But cast forward a few years and you'll understand what the fight between Apple, Google, and the publishers is really all about. As readers migrate from print to digital subscriptions, their demographic information will move from the publishers to Apple. Publishers will no longer be able to use that information to sell ads, possibly ceding that field - and a major driver of their business - to Apple.
And Apple, which has been building up an extraordinary storehouse of data on its more than 100 million iTunes users - it knows what music, TV, and books they've bought, what online radio they listen to, and what podcasts they've downloaded - will be able to mine its data for extremely lucrative ad sales.
"The problem with all this stuff is, especially on the media side, it's so early days that to make any bold predictions you're going to end up looking foolish," Morgan Stanley's Mr. Swinburne said. "What we do know is that there's tension here, understandably, and we also know the interface that the tablet offers is a much better experience. There's going to be more money to be made, it's just how we chop that up, is where the battle is."Report Typo/Error
Follow us on Twitter:,