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Mobile Ads: It's Apple vs. Google, So Who Wins?

Thursday, 9 Sep 2010 | 1:55 PM ET

When you think online advertising, you think Google. Practically all of the company’s $23 billion in annual revenue has come because the company knows how to bring buyers and sellers together.

Google Android
Google Android
Google Android

And it’s generally accepted that the future of online advertising is going to have a lot to do with mobile technology. There are more phones than PCs in the world, and more and more of them are connecting to the Internet.

That makes mobile ads a big market: JP Morgan estimates it’ll be $3.8 billion this year, up 30 percent over last year. Most of that is still text messaging ads, but it’s moving to display ads.

That’s exactly why Google is giving away its Android mobile OS for free – it’s got to protect its lead in online ads, and leave room to grow in the future. And that’s why CEO Eric Schmidt says Google now builds most everything it does for mobile first, PCs second.

But when it comes to mobile ads, Google’s got a problem: Apple.

Apple this spring introduced iAd, a new business that strikes at the very heart of Google’s growth strategy. It’s designed to give advertisers access to Apple’s 120 million iOS devices and their users. Steve Jobs says he’s already got $60 million in advertiser commitments for the service in the second half of 2010, which could be more than a quarter of the fledgling mobile ad market.

Google, meanwhile, owns the dominant player in mobile ads, AdMob. Earlier this year, Apple had moved to block AdMob from continuing to operate fully on Apple devices – a move that AdMob’s founder told me would have crippled the service if Apple had followed through. Today with Apple’s changes to its developer agreement, it also backed off from that threat.

So. Bottom line. Who’s positioned to win here? Advantage Google. With the threat of an Apple shutdown gone, Google has the bigger mobile ad network working across all types of mobile devices, and more experience in the advertising industry.

Questions? Comments? TechCheck@cnbc.comAnd you can follow Jon Fortt on Twitter @jonfortt

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