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Apple Surging Ahead of Google in Mobile Ads

Anindya is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Mobile ad network Adfonic said that Apple (NASDAQ: AAPL) accounted for 37% of all mobile ad impressions on its network in the third quarter, with Samsung the second-most popular at 24%, and the rest trailing some ways behind. Number three on Adfonics’ list, Nokia (NYSE: NOK), had only an 8% share of impressions, and was on a decline, although not as much as Research In Motion (NASDAQ: BBRY), which declined by four percentage points to slip into fourth position.

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It is interesting and informative to see what happened in the fourth quarter. In its AdMetrics report, Adfonic notes that Apple increased its lead over Samsung by three percentage points without much impact from the iPhone 5, which only hit the market at the end of the third quarter. So one way of measuring the popularity of iPhone 5 is to see what kind of an impact it had on Apple’s ranking in the fourth quarter.

Actually, it was quite impressive for Apple in the fourth quarter. With Apple's iOS enjoying both higher click-through rates and eCPMs than Android, Apple has won the overall mobile OS popularity contest amongst both advertisers and users in the fourth quarter, at least according to mobile ad platform MoPub.

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Maps Making Difference in Generating Ad Revenue

Apple removed Google (NASDAQ: GOOG) Maps from the iPhone 5. Maps are particularly crucial on mobile devices, where location-based services and ads have emerged as the pathway to making money. Location-based services are very important for Google in terms of generating ad revenues, and search is very tied to that.

Even though Android phones far outnumber iPhones -- 60% of smartphones run Android, versus 34% for iPhones, reports research firm Canalys -- iPhone users account for almost half of mobile traffic to Google Maps. For Google, iPhones without its Maps service would result in a huge revenue loss from mobile ads.

The late Steve Jobs once said that Google’s search-based advertisements were not the future for mobile devices because users tended to spend their time inside “Apps” rather than browsing the web. “On a mobile device search is not where it’s at on the desktop,” he said. “They’re using Apps to get to data on the internet, not generalized search.”

“If you own a mobile ecology, as Google does, the other mobile ecology owners are not going to allow you to own tons of data in their world,” said Scott Rafer, chief executive of Lumatic, which makes City Map Apps. And now that Apple has removed Google Maps as iOS’s default navigation application, users are forced to use Apple Maps. Of course one can get Google Maps for iOS from the App Store, but it’s not possible to set it as the default navigation application for iPhone 5, which means users will have to deal with Apple Maps on a regular basis. This means Apple’s revenue from mobile ads will rise, while that of Google will fall.

Apple’s Ads are Expensive

Ads that run on Apple’s iPhone command significantly higher prices than those on Android, and way higher prices than any other mobile platform, according to a report from mobile browser maker Opera Software, which also operates a mobile ad network.

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The iPhone leads the smartphone OS pack with an average eCPM of $2.85, though it is closely followed by Android devices (at $2.10). The rest of the mobile phone field is significantly behind these two. The iPad in particular gets the highest effective cost per 1,000 impressions (eCPM) of all devices -- $3.96 to the iPhone’s $2.85 and Android’s $2.10. Elain Szu, Director of Product Marketing for mobile ad platform MoPub, explains why the ad industry is warming up to the iPad. “Advertisers see the tablet and its larger screen size as nearly the same as the desktop.” Essentially, advertisers can easily translate their strategies to tablets. They don’t have to completely rethink their creative designs because the space they have isn’t all that different than on a laptop. Smaller smartphone screens are much different and require a whole new game plan.

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MoPub’s data shows how iPad has become the darling of advertisers. First and foremost, iPad ads sees the highest CTR (click through rates). Over the holidays, the iPad saw a 1.7% CTR growth for December, and a 2.2% CTR growth from Jan. 1-7, this year. Meanwhile, the iPhone had 1.2% CTR growth at the beginning of the period, which moved up to 1.5% at the start of the new year, and Android smartphones saw just 1.0% and 1.1% growth in CTRs in those time periods.

Apple has really taken out a significant chunk of Google’s market. It will affect the Google ecosystem, putting it back in the same game of their apps lagging behind Apple, and that’s not a good position for them to be in.

Anindya7 has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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