• by Joe Mandese  @mp_joemandese, March 26, 2010

Even as the buzz builds toward the April 3rd ship date of the iPad, Apple is preparing to announce its "next big thing" -- a new personalized, mobile advertising system that could well be called the "iAd" -- Online Media Daily has learned. The new ad platform, which will be officially unveiled to Madison Avenue on April 7th, has been described as "revolutionary" and "our next big thing" by Apple chief Steve Jobs, according to executives familiar with the plan.

Precise details of the system and its features could not be discerned at presstime (and calls to Apple had not been returned), but it is believed to have been built on top of Quattro, the mobile advertising developer Apple acquired in January for nearly $300 million, and it is expected to be the first real battle of a Silicon Valley Holy War between Apple and arch frenemy Google that is shifting its front line to Madison Avenue.

The war has been mounting ever since Google introduced its Android mobile operating system to compete with Apple's iPhone, and agreed to acquire mobile ad firm AdMob for $750 million, but it is expected to reach ballistic proportions following Apple's April 7th announcement, which insiders say will be every bit as important as other recent marketplace introductions, including the iPod, iTunes, iPhone and iPad launches.

Aside from the super egos involved -- Jobs vs. Google chief and former Apple board member Eric Schmidt -- the battle is key to the business imperatives of both companies, which have been racing to develop new revenue streams and models to expand beyond their core: in Apple's case, consumer gadgets; in Google's case, search advertising.

Apple appears to have been more successful in its revenue diversification, developing substantial software and service businesses, including iTunes downloads, iPhone wireless subscriptions, and App Store downloads. And while advertising has always loomed as a huge possibility for Apple, it had essentially been unexploited as a business model until Apple acquired Quattro.

Google, on the other hand, has made numerous investments to develop new advertising revenue models beyond its core search business, most of which have failed to yield much if any share of Madison Avenue's conventional media or online display advertising marketplace.

But the gold rush is on for mobile, which many see as Madison Avenue's next big frontier, even if it still is relatively miniscule compared to established media. According to the last mobile forecast from Interpublic's Magna unit, mobile ad spending is only expected to reach $331 million this year and $409 million in 2011. One of the obstacles to mobile's growth as an ad medium is the fact that there hasn't been any single organizing principle for agencies and advertisers to rally around. The Magna mobile advertising report describes it as "a highly fragmented group of divergent advertising models collectively organized around portable (and primarily cellular network-based) media, a wide variety of trends" that are converging to create an advertising marketplace.

But Apple has already captivated Madison Avenue's attention with the advertising possibilities of its App Store, and more recently, with the impending introduction of the iPad, and big agencies and advertisers have been lining up for opportunities to be the first -- and in some cases, exclusive -- sponsors of some of the earliest "tablet" editions of magazines and newspapers designed for the iPad.

While Apple clearly is accumulating gravitas in the ad community, agencies are generally still in the dark about the new mobile advertising system, though there already is plenty of speculation within the tech community.

One of popular scenarios is that Apple will offer a hypertargeting capability that would enable advertisers to target ads to consumers based on their geographic proximity, paving the way for a new generation of location-based advertising. But some observers believe that could be trouble for Apple, because Google recently won the patent for systems that serve ads dynamically based on a user's location, and given the current relationship between the two digital behemoths, such a move by Apple would likely invite litigation from Google.

Another potentially telling patent move is one that Apple registered for in 2008 that potentially could control ads served on virtually any screen connected to an operating system that would turn the content or application off if the user isn't paying attention to the ads.

Meanwhile, Madison Avenue will be waiting with bated breath to see what Apple actually unveils.

"Everyone will be following this very closely," says Josh Lovison, the mobile lead at Interpublic's Emerging Media Lab, adding: "Given the way that Apple is able to package things up, with very slick presentations, it will be interesting to see what they do with advertising."