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Is Apple launching a local advertising network for iPhone? Probably.

Posted on | February 5, 2010 | No Comments

Apple today notified developers of iPhone applications that it is prohibited to use the iPhone’s location information for local advertising. Location data can only be used for “beneficial information” starting now.

This is significant for reasons beyond the usual “Apple is a control freak that hurts developers” discussion. Location based advertising increasingly appears to be the most effective and fastest growing form of advertising on the mobile web. BIA Kelsey, an analyst firm, studied mobile use in late 2009 and noted the following:

“…searches for local products or services now exceed out-of-market searches by a wide margin…

  • 18.5 percent searched the Internet for local products or services
  • 15.9 percent obtained information about movies or other entertainment
  • 13.3 percent obtained information about restaurants or bars
  • 11.1 percent searched the Internet for products or services outside their local area
  • 4 percent purchased a physical item that needed to be shipped (e.g., a book)
  • 3 percent used a coupon from their mobile phone”

Additionally, Apple acquired the mobile advertising company Quattro Wireless only a few weeks ago.

It is increasingly clear that Apple is not merely trying to control developers for the sake of controlling their platform. They have a specific interest in capturing the fast growing local advertising market before Google obtains the same dominance there they have on web advertising. This isn’t the only gem in the mobile web ecosystem, but it’s definitely one that is worth owning.

What next? It seems clear that we’ll see a local advertising solution from Apple in the near future. Ok, that’s a smart move through it’s frustrating to see the developer community get the short end of the stick here… again. This is almost definitely reduce the level of innovation by developers to create smart solutions to local advertising problems.

It’s also likely we will see a wave of buyouts of mobile advertising platforms by carriers and the other mobile handset OEMs this year in a last ditch attempt to preserve their position in the mobile market value chain. No carrier wants to be just a commodity data pipe. And no handset manufacturer wants to get left in the dust.

While carriers certainly don’t want to get too close to Google, they may have no choice in the matter given their alternatives could be reduced to cowing to Apple by the end of 2010. It’s going to be a dynamic year for the mobile market…

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