• by Mark Walsh  @markfwal, December 23, 2010

After Google and Apple each acquired mobile ad networks in late 2009 and early 2010, the stage was set for the two tech giants to battle for dominance of the emerging mobile advertising landscape. An instant duopoly was born.

When Apple launched its iAd platform in April, taking in a reported $60 million in upfront payments, it appeared ascendant in its duel with Google. But then came its stumble: actually working with agencies and advertisers on iAd executions, with some brands like Chanel dropping out because of the difficulty of working with Apple.

At the same time, Android was rapidly gaining ground on Apple's iOS as the Google mobile operating system spread across multiple manufacturers and carriers, with the Motorola Droid its breakout hit. Android-based phones in the second quarter outsold iPhones for the first time in the first quarter and ended the third quarter closing in on the iPhone's U.S. market share, 21.4% to 24.3%, according to comScore.

Should current trends continue, Android is on track to become the leading smartphone platform in the U.S., and by 2014 IDC expects Android to be second only to Symbian as the top mobile operating system worldwide. The expansion of ad inventory via Android, along with the AdMob deal, has helped accelerate Google's move into mobile advertising. During its third quarter conference call, the company grabbed attention when it said its mobile business had hit $1 billion on an annualized basis.

Earlier this month, IDC released a revamped mobile ad estimate showing Google surging ahead of Apple in market share, with a commanding 59% share to its rival's measly 8.4%. While the estimate may not have been an apple-to-apples comparison of mobile ad dollars, it highlighted the underlying truth that Google is an ad-driven business and Apple isn't.

Sure, Apple made a splash with the iAd, (and it should be easier for agencies to work with, through the launch this week of iAd Producer), but it's a format tailored to mobile apps. Apple's main goal with iAd is to help its developers monetize their creations and keep on cranking out popular apps, which in turn supports its chief business of selling iPhones, iPads and other gear. That's why it cast aside Quattro Wireless' ad network business after acquiring the company--it's not interested in serving ads across the mobile Web.

Google, by contrast, really wants to dominate all aspects of mobile advertising--in search, applications, display, local and whatever else it can think of. For Apple, mobile advertising is a means to an end--helping to selling more stuff. For Google, developing a big new revenue stream via mobile ads is an end in itself.

The difference in the company's aims should be more clear next year as Google continues to pull away in mobile ad revenue. At least until Microsoft or Research in Motion gobbles up Jumptap or Millennial Media to try to even out the playing field again.