Telecom Circle

Adsense is one of the most successful platforms from Google and it is said that it contributes to 30% of revenues of Google from websites that do not belong to Google. Wow, how does Adsense do it? By putting advertisement on the third party web pages and getting a commission from the advertisers. In a way Google provides traffic to the websites and also provides a way to monetize the traffic it provides though advertisements. Now, Google has announced the beta version of Adsense platform for mobile applications. AdSense for Mobile Applications would allow developers to earn revenue by displaying text and image ads. Any mobile application developer that has more than 100,000 page views a day can participate in the beta launch. However, the beta phase is applicable for applications on iphone and Android only. This puts Google in direct competition with Admob and Greystripe.

At first, it might look intriguing that Google has selected iPhone and Android over Symbian platform but if you look at the Admob metrics report for April-09, it is clear that though iPhone has just 8% share of smart phones, 44% of mobile advertisements are served on it. Similarly, Android with just 1% share of smart phones gets 3% share of mobile advertisements. Android and iphone are the only two phones where the share of advertisements is higher than their share in the smart phone segment. This indicates the potential of iPhone and Android. Besides Android platform is owned by Google.

Increased advertising within mobile applications would mean more applications can be offered for free leading to higher consumer adoption. Also, the quality of applications would improve as the developers would get an additional revenue stream. The increasing popularity of blogs in the last couple of years has been due to possibility of monetizing the blogs. I have no doubt that the applications would also go the blog way.

Why is Google interested in mobile advertising? If the popularity of Apple Application Store is any indicator, the mobile applications are here to stay. No wonder, many applications have been announced in the last few months. The smart phone segment is the only segment within the mobile phones that is growing in otherwise a declining mobile phones market. The mobile space is the new upcoming arena for advertisements and Admob claims to have served 90 billion advertisement impressions globally. Mobile advertising is seen growing at an annual average of 45 percent to reach $28.8 billion within 5 years from a current $3.1 billion, according to Ineum Consulting. Microsoft expects mobile phone advertising to account for 5-10 percent of global media ad spending within five years.

Google has been taking interest in the mobile space for a long time as it feels that the future of internet is on mobile and the advertising revenues on mobile will eventually exceed that on online PC space. Google has interest in the Open Handset Alliance and Android platform. It hopes to replicate its success in the online space in the mobile space also. It remains to be seen that how much control the carriers are likely to cede in future. The carriers unlike the ISPs (Internet Service Providers) have disproportionate control over the value chain and would not like Google to get larger leading to their own marginalization. I doubt the sustainability of the Open Handset Alliance given that this arrangement will soon start to hurt the carriers. Google in the meantime is trying to build up other platforms apart from Android to capture different entities in the value chain. It is getting clear that the next war would be fought over platform and Google is trying to ensure that it is not left behind.

Also Read: The Economics of Mobile Application Stores

AdSense for Mobile Applications Testimonial: Urbanspoon

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