How Does Apple iAd Differ From Google AdWords?

With the announcement from Apple during its event today that it is launching a mobile ad platform named iAd, one common question that has come up is how it differs from Google's AdWords for mobile program.

With the iPad now having sold over 450,000 units and counting, Apple is solidifying its lead as the mobile hardware / software play to beat. Before the iAds announcement those advertisers that wanted to launch an ad campaign on Apple mobile devices really only had two main choices. They could go the traditional route of using Google's AdWords program which would put text, image or video units on mobile pages that would be triggered by keywords just as Google's traditional desktop search ads work.

The other option was to use one of the mobile ad specialists that would place ads inside of specific applications. The largest of these was Admob which was purchased by Google after a short bidding war and stand off with Apple last year. Another was Quattro Wireless which Apple purchased only a few months ago.

Mobile advertising is big business ... and is expected to get much bigger. While fiscal year 2009 was a $ 400 million + year, by 2013 that is expected to nearly quadruple. Within 5 years in fact, estimates are that over 50% of all web advertising advertising will occur on mobile devices. By then the total ad market will be in the multiple billions. It's not hard to see why Apple wants a piece of this pie.

Steve Jobs today was very adamant in his belief that ads in search do not work well on mobile devices. This is due with limited screen real estate, people tend to use mobile devices for specific applications such as reading a book, playing a game or making a Skype call. They are not used as much for general browsing as one might do on a large screen such as a desktop or laptop. He believes that before that the real opportunity in advertising on mobile devices is for in application advertising that is done with a certain minimum emotional / entertainment value. Think videos and cool interactive games popping up in between levels of a game or before or after a call or use of an application.

What Steve apparently does not want is to have boring text ads such as you see all over the web that Google and yahoo put out that will simply clog up the small screen of a mobile device and simply annoy users.

Apple therefore is setting up its own system that will serve several purposes. First of all it will compete directly with Google via it's Admob purchase and other mobile specific ad platforms to sell ad units to advertisers. It will also work with developers to help design appropriate optimized ad space for their applications to help them earn revenue from ads and keep the price of their applications down while still making money.

Finally, it is unclear how much creative input Apple will have with the actual ads themselves. One would expect them to have some kind of quality control such as they do now on applications that are or are not accepted into the app store.

So what about Google?

Google will still be selling its ad units via traditional search. So in a way this is not a direct head to head battle with Google's bread and butter search ads. But since web advertising is headed into a more mobile direction over the next several years anyway, it would seem that it is in a direct battle for both the dollars ... and the form that advertising will take as things go forward.

What has not been mentioned yet is if the iAds platform will extend outside of Apple's ecosystem. For instance will you be able to use iAds on android or Windows mobile devices? Is this platform only for Apple devices? Only Steve Jobs knows for sure and the deciding factor will probably be what is best for Apple in the long run.