On Thursday, Apple published an “App Store Tip” for developers that it will reject apps which “use location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user’s location.”  We have received dozens of questions from developers about what this means for applications and application business models.

It’s important to note the catalytic role Apple’s iPhone played in the mobile ecosystem. The integration of hardware, software, development environment, retail environment and commerce provided, at last, the platform for which users and developers had been waiting.  For the first time, app developers were able to create fun, innovative, useful experiences and get them in the hands of consumers.  User adoption fueled the app economy and the app economy in turn fueled user adoption.

From the beginning, Apple established tight control over their platform – every app sold in the iPhone App Store must have Apple approval – to ensure the development of stable development environment.  There are both pluses and minuses to this approach and they have been widely discussed.  The success of the App Store itself, however, is beyond dispute.

The explosive growth in iPhone adoption and usage has also driven a vibrant mobile advertising environment over the last two years.  A range of companies – AdMob included – enabled developers to offer free applications with media business models.  Apple has made it clear that they consider advertising on the iPhone, iPod Touch and iPad a company priority.

Thursday’s “App Store Tip” sparked speculation that Apple would use its tight control over the iPhone platform to include mobile advertising. Randall Rothenberg, President of the IAB, wrote last week about the risks around “controlled” or “closed” ecosystems and the challenges they present for the developer community. His post captures the concerns iPhone developers are feeling right now. To speak in generalities, advertising on any given media requires some form of openness and standardization to thrive.

We share the community’s concern that the removal of location-based information could inhibit the business model for developers of free applications.  We hope this is not indicative of a new approach by Apple and that many different companies will continue to have the ability to contribute to the rapid innovation in mobile advertising on the iPhone.

The iPhone represents an important segment of AdMob’s business and we are excited to continue our work with the developer community. We believe that the strong competition amongst mobile ad networks has directly benefited application developers thus far and the entire iPhone ecosystem will benefit from continued competition as mobile advertising enters its next phase.

Jason Spero

The next Mobile Monday Silicon Valley will be held next Monday, Feb 8th at the Parc 55 Hotel in San Francisco.  The event focuses on discovery and customer acquisition in the App Store.  Flixster, Booyah, and TripIt are among the developers who will be sharing best practices on topics such as cross promotion, social marketing, and advertising.  Visit the Mobile Monday blog for the full description.

The event is completely free and open to the public, but registration via Eventbrite is required to attend.  Hope to see you there!

TowerMadness Zero is an award-winning 3D Tower Defense Strategy Game developed by Limbic Software in which users defend their flock of sheep from attacking aliens. Once the #1 ranked app in the highly competitive Strategy Games category, the game began to drop in rankings after a period of time. To boost the app’s ranking up again, Limbic Software ran CPC text ads across the 3,000+ apps in AdMob’s network in a 3-day burst campaign aimed at driving the maximum number of downloads possible in a short period of time. AdMob targeted ads separately to iPhone and iPod touch users in order to compare the performance of these two distinctly different user groups and to optimize the campaign accordingly.

Campaign results:

• Boosted ranking in the Strategy Games category from #38 to #9 (achieving the goal of reaching the Top 10)

• Entered the Top 100 in the Games category and reached a peak rank of #73

• Campaign drove >14,600 app downloads

• iPod touch targeted campaign Cost-Per-Download (CPD) of $0.87

• AdMob optimized the campaign to target primarily iPod touch devices in favor of the low CPD

App promotion campaigns can help apps get ranked initially, and the TowerMadness Zero example shows that similar campaigns are effective at boosting ranking even after a period of ranking decline in the app store.

Download the complete case study here.

Read the Mobile Marketer article on this case study here.

Johanna W.

Marketing

After seeing mobile Web usage skyrocket in 2009, we are confident that 2010 will be an even bigger year in mobile. Wednesday, Advertising Age published my list of the top five things media buyers need to know about mobile media to be successful in 2010.

Take a look below to see what made my top five list:

1) Ask for data. Ask for help.

2) Learn about (don’t worry about) different platforms.

3) Talk to publishers and ad networks.

4) Set your expectations for what mobile can and can’t do.

5) Drive traffic, track user interactions, repeat.

To read the entire article, visit Advertising Age.

Jason S.

GM, North America

It is easy to forget that it wasn’t just the launch of the iPhone that brought upon Apple’s success in mobile.  Over the last two years, they made major strides which have fueled their success, including the development of the App Store, new hardware with the 3G and 3GS, evolution of the operating system, and their worldwide expansion.  In the same time frame the iPod touch rapidly transitioned from a music player to an Internet and application device.

Accordingly, the iPhone and iPod touch have fueled much of AdMob’s growth as a mobile advertising network over the past two years.   While traffic expanded over the first several months of 2008, it wasn’t until the launch of the App Store and the development of mobile specific Web sites that our growth rapidly accelerated.  Below is an annotated chart that shows the growth of traffic in the AdMob network as it compares to major milestones in the development of the Apple ecosystem.

In December 2009, 36% of worldwide ad requests came from the iPhone and iPod touch, with the majority of them coming from apps.  For more information on the Apple trends we see throughout our network, visit previous posts on our Metrics blog including operating system share by region, the impact of holiday sales on the iPod touch, international expansion throughout 2009, and our consumer survey on app download behavior.

While tomorrow’s rumored announcement of a new product/device from Apple is exciting, we think it’s going to be interesting to watch the development of a new ecosystem over the next several years.  We are excited to be along for the ride.