Apple Stealing More Mobile Ad Revenue from Google

While Google is currently basking in an Android smartphone sales spike, even beating iPhone sales for the first time last quarter, the advertising giant is losing ground to Apple on a critical front: mobile advertising, reports IDC.

IDC told BusinessWeek that Apple is on pace to end the year with 21 percent of the mobile advertising market. It’s an amazing feat, considering that Apple didn’t sell mobile ads last year. Apple’s iAd advertising platform for the iPhone and iPod Touch debuted only a couple of months ago.

[ Is iAd the equivalent of the Death Star in Apple’s march to become a mobile empire? ]

Google’s mobile ad market share slipped from 27 percent last year to 21 percent this year, according to IDC. These figures include revenue from AdMob, the ad network Google bought in May to the chagrin of Apple, which was reportedly interested in AdMob. Meanwhile, Microsoft’s market share will drop to 7 percent from 10 percent last year, IDC estimates.

Smaller competitors are trying to make a splash with their own ad networks. Jumptap’s market share is on the rise, from 10 percent last year to 13 percent this year, reports IDC. Millennial Media’s share may climb a couple points to 11 percent this year.

At stake is a virtual pot of gold. IDC says that the market for mobile advertising in the United States may more than double to almost $500 million in 2010. And it’s only the beginning for a market in its relative infancy, which is why the landscape for mobile ad networks (as well as acquisitions of ad networks) has resembled a kind of boom town.

As the market heats up, Google and Apple are working on new features for their advertising platforms. For instance, Apple has been hyping the future of a richly interactive ad experience complete with videos and games.

But is Apple’s 21 percent market share in mobile advertising a win? After all, Apple CEO Steve Jobs predicted at the World Wide Developers Conference in June that iAd will take half of the mobile advertising market this year.

To be fair, a case can be made that iAd has taken half the mobile advertising spend since its launch in July. More importantly, the year isn’t over yet. iAd will make its debut on the hot-selling iPad in November.

Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline. Email Tom at tkaneshige@cio.com.