Apple Reportedly Looking to Revolutionize Mobile Advertising

As part of its cover story this week on the Apple-Google rivalry, BusinessWeek reports that Apple is seriously looking at ways to revolutionize mobile advertising, leveraging its recent acquisition of Quattro Wireless to go head-to-head to with the Google/AdMob conglomeration.

According to a source familiar with his thinking, Jobs has recognized that "mobile ads suck" and that improving that situation will make Apple even harder to beat.

Not one to shy away from a challenge, particularly when it offends his aesthetic sensibilities, Jobs and his lieutenants have discussed ways to overhaul mobile advertising in the same way they had revolutionized music players and phones, say two sources close to the company. The sources did not reveal specific plans at Apple but say there are several possible ad approaches.

As examples, the report points to the possibility of Apple using geo-location and user data to enhance the relevancy of mobile ads, as well as the creative use of features built into the iPhone to engage users, concepts the company has explored in several patent applications.

Also noted is Apple's vast quantities of user data generated by its closed ecosystem, which could offer Apple a distinct leg up on other competitors as it looks to take on Google.

Apple has a vault of valuable data that can help drive an ad business. It knows precisely which apps, podcasts, videos, and songs people download from iTunes; in many cases it has detailed customer information such as credit-card numbers and home addresses. That gives Apple a chance to blend advertising and e-commerce in new ways, particularly after the acquisition of Quattro. The startup already works with advertisers, including Ford (F), Netflix (NFLX), and Procter & Gamble (PG), to help them figure out when and where to place ads on the sites of publishers, such as Sports Illustrated and CBS News. By tying Quattro's ad-serving technology into its own, Apple would be able to tell advertisers how often and under what circumstances a person clicked on particular ads. "Apple is one of the few brands that could actually go head to head with Google," says Kevin Lee, chief executive of search marketing firm Didit.

One other item of interest included in the cover story is speculation may look to dump Google as the default search engine provider for the iPhone in the future, perhaps striking a deal with historical competitor Microsoft for Bing or developing its own search engine. The move would serve to cut Google off from a significant chunk of Apple's iPhone user data as the rivalry between the two companies continues to grow, limiting Google's ability to use Apple's data to improve its own offerings.