Bob Walczak is CEO of New York-based mobile ad platform company Ringleader Digital.
Shortly after Google acquired AdMob in November speculation around the industry was that Apple was also in pursuit of the company in the hopes that is could acquire its mobile advertising assets. Well, less than two months later, Apple joined the mobile advertising world with its purchase of Quattro Wireless for $275 million. Now that the deal is done and Apple’s mission is accomplished, the real question is why make the move? And does Apple’s acquisition of Quattro Wireless really make sense?
Clearly the acquisition is very beneficial for Quattro Wireless. The purchase price of $275 million is almost ten-times the return on invested capital. But why is Apple all of the sudden so interested in advertising that it would first bid on AdMob and then end up purchasing Quattro Wireless? If you take a look at the industries that Apple is involved in you will be hard pressed to find advertising close to the top of its expertise. One possibility I see for the acquisition is that the iSlate tablet team at Apple sponsored the acquisition in order to attempt the creation of an ad-supported device.
I also see this move as the beginning of a battle between Apple and Google over mobile app developers. Whichever platform can control the ad revenue via advertising through the universal software development kit (SDK) will control the developers. With Quattro’s direct ties to agencies through its sales force it will be able to promote the SDK and make it the market standard. One issue in mobile is that it has become fragmented with different SDK’s from Millennial, AdMob, Quattro and other ad networks. Because of the acquisition, Apple can leverage its developer relationships and Quattro’s agency relationships to incentivize developers and advertisers alike to use Quattro’s SDK for mobile advertising. Apple has the opportunity to create a common standard and ultimately hold the keys to advertising revenue across all mobile platforms – including Android.
While the move represents a new opportunity for Apple, I can’t help but look at the company’s track record in uncharted territories and believe that they will not only prosper from the move, but also help advance the mobile advertising industry. Several years ago most were very skeptical when Apple entered the music industry. But since their entrance into that arena they have revolutionized the way we listen to and purchase music. The same can be said when Apple turned its attention to mobile with the release of the iPhone. Before that, the industry had never experienced a device with the advanced browsing capabilities, applications, streaming video and other functions that made the iPhone so unique.
However, one thing to keep in mind is that throughout Apple’s history they have launched game changing products over and over again, but those are products… not media. Apple is now involved with a very foreign industry. It should be very interesting to see the direction Apple takes with its latest investment.