Commentary

Mobile Ad Projection Swings Again

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According to a new estimate by IDC via Bloomberg Businessweek, Google is now by far the dominant player in mobile advertising, poised to end 2010 with a 59% share of the $877 million U.S. market. IAd-maker Apple is a distant second with an 8.4% share, followed by Millennial Media with 6.8%.

That's a a huge shift from the last time IDC rolled out a mobile ad estimate in September, showing Apple and Google tied, each with a category-leading 21% share of the market. The surge in Google's favor comes following the company's disclosure, during its third-quarter conference call, that its mobile business would total more than $1 billion on an annualized basis.

But Google didn't specify how that amount breaks down by search, display, in-app ad sales or other types of mobile revenue. Presumably it's a worldwide total, but Google also didn't indicate U.S. versus global mobile revenue.

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IDC estimates that only about $150 million came from mobile apps and another portion from licensing fees, while mobile ads accounted for the majority of sales. Before Google provided the $1 billion figure, RBC Capital Markets had figured mobile ad dollars of about $650 million, with $500 million from search and the balance from display.

In the Google conference call, Jonathan Rosenberg, the company's head of product management, had also emphasized the growth of mobile search, with query volume increasing five-fold in the last two years. That's thanks in no small part to the rapid expansion of its Android platform. But the point is that if search accounts for the bulk , or at least a meaningful portion, of Google mobile ad revenue, then comparing it to revenue from mobile display ad networks is comparing apples and oranges.

With its iAd platform, Apple is limiting itself for now to in-app advertising on iOS devices -- a much smaller part of the mobile ad pie Google is going after. So comparing them side by side, as IDC does, doesn't make a lot of sense. Both companies have pushed aggressively into mobile media and advertising but are focused on different parts of the business.

One problem with trying to calculate mobile ad share is that the space is still so fluid and dollars so small, its hard to get a fix on where companies stand in relation to one another. Apple's estimated share shot up after its Quattro Wireless acquisition and subsequent launch of iAd -- only to shrink back down the next quarter, with Google tossing out its $1 billion mobile number.

A bigger hurdle is that companies just aren't saying much about their mobile ad business at all, leaving a lot of room for guesswork. It's not as straightforward as tracking quarterly smartphone shipments or market share by mobile platform.

IDC's estimate of mobile ad market share has generated attention because it's one of the only prominent tech research firms to attempt a ranking. But the firm should do a better job of explaining how it derives its mobile ad figures and what types of mobile advertising they reflect. As it is, the IDC estimate doesn't add much insight into competition in the segment.

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