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Why Apple's iAd platform will make mobile ads sexy

By Allison Mooney

By now you have heard about iAd, Apple?s new in-application advertising platform announced last week by CEO Steve Jobs when he introduced iPhone OS 4.

Just as the iPhone revolutionized mobile development, this could change the game for mobile advertising. Not only will it bring much-needed standardization to the industry, but also the talent and energy of designers that could make ads as compelling as applications.

To date, the mobile ad medium has been a dull one. Ads have been running in applications for a while but, as Mr. Jobs put it, "most of this advertising sucks." They are generally static banner-style ads that open the mobile Web when clicked on, taking the user out of the application.

These new iAd ads will run in an application, making users much more likely to click on them. They can also take advantage of features such as location, the accelerometer, hi-res video and in-application purchases ? this is truly an OS-level integration.

"We want to change the quality of the advertising," Mr. Jobs said. "We?re all familiar with interactive ads on the Web. They?re interactive, but they?re not capable of delivering emotion.?

Mr. Jobs is hoping iAds can provide this elusive "emotion plus interactivity." 

Getting the job done
Regardless of what Mr. Jobs thinks, the potential of the iAd platform will really depend on creative agencies.

Much of the innovation has currently been centered on branded applications because, well, applications are sexy.

Sure, some brands have applications that are useful and engaging, but oftentimes they are little more than glorified advertisements.

While many of these applications were impressively designed, they were better served as a side dish, not the main attraction.

The problem is that mobile ads are so boring to design. They are essentially shrunken banner ads ? not the preferred medium of top creatives.

Hopefully, the iAd platform make mobile ads sexy, like applications and like the iPhone. It will let designers flex their creative muscles by giving them the tools to make more engaging, interactive ads for iPhones.

Chad Stoller, executive vice president of digital strategy at BBDO, an Omnicom advertising agency, said that the excitement in the New York office was palpable last Thursday.

"It's an incredible incentive to keep innovation flowing," Mr. Stoller said.

If agencies are more keen to make ads, that is good for developers as well. They will have an easier time making money, which will keep the entire ecosystem growing.

"Developers will continue to articulate their ideas in the form of apps, and if the ideas are well received, revenue may follow," Mr. Stoller said.

App trap
Danny Newman, a Denver-based developer and founder of id345, believes iAd is going to have a huge effect on the mobile ad space.

"No one else has the kind of power and influence to get every advertiser in the world to now create a new type of ad unit," Mr. Newman said.

That ad unit represents a happy medium between the two dominant formats out there: AdMob-style click-driven "units" and integrated "custom" ads. "

?Anyone who has been developing ad-based applications for a while has realized you make the big bucks one of two ways ? volume or high-quality, relevant advertising," Mr. Newman said.

If an application has a lot of users, it will make money from pay-per-click ads even if the ads are not at all relevant.

On the other hand, well-integrated advertising that includes some sort of relevant, interactive "app within an app" ad also does very well.

"At first glance at least, iAd seems to kind of be a combination of this, where you are still getting traditional banners but then expand to be more interactive," Mr. Newman said.

"If the app-to-ad matching is done well, then this will be huge,? he said. ?Being able to click through a banner and never leave the app is great for us as developers."

Along with this new ad format, we are also hopefully seeing standardized reporting and analytics, though Apple didn't say much about this. Data may not be sexy, but it is the driving force behind advertising today.

Quattro Wireless, the mobile ad platform that Apple acquired, had a very robust dashboard and Apple would be smart to build upon it. Here Apple also has the opportunity to introduce an industry-wide standard where one is severely lacking.

The more effective Apple can be at setting down a common set of measures to help establish ROI for iAds, the more successful this platform ? and mobile advertising as a whole ? will be.

Allison Mooney is vice president of emerging trends at MobileBehavior, Omnicom Group's mobile marketing and advertising consultancy in New York. Reach her at .