Apple's Rumored Ad Network: 5 Questions

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Apple is reportedly gearing up to introduce a new mobile advertising program on Thursday as part of the company's iPhone OS 4.0 event. Ever since January, when Apple purchased Quattro Wireless, a mobile advertising platform, there has been speculation about how Apple would integrate its services. On Thursday, we may get our answer, according to Media Memo's Peter Kafka.  

But it's unclear whether Apple's ad platform would be similar to Google's AdSense program and use simple text and visual ads, or be an entirely new strategy. So if the rumors are true, and Apple's iAds (or whatever the ad network will be called) are on their way, what will the new ad platform look like? And what does this mean for users?

Here are five questions that are at the top of my mind.

What does this mean for privacy?

If you have an iPhone, then Apple has a lot of information about your buying habits. Even if you've never paid money for anything from the iTunes Store, and exclusively download free iPhone applications, Apple still knows what your preferences are. With me, for example, they know I like to play games like Air Hockey and Chess, I follow Major League Baseball, and have a hardcore addiction to political news. That's all juicy information for targeted advertising, and with Apple running its own advertising network, that's information they can use to maximize profits. That's not necessarily a bad thing, but any time my buying habits are being used to for targeted advertising I want to know exactly how my information is being handled. Hopefully, Apple will come out with a clear privacy policy if the rumored ad network becomes reality on Thursday.

Will the ad network be Apple only?

Will Apple's mobile advertising network reach across device platforms, or will this network be for Apple devices only? Kafka is guessing the new platform will reach across other mobile platforms, but I have to wonder about that. It would certainly make sense to want an advertising network to reach as many people as possible, but Apple thrives on the exclusivity of its products. So why not extend that philosophy to its ad network? If Apple ads have a level of interactivity or some other unique feature, you can bet Cupertino will try to leverage its network as an exclusive means to reach iPhone, iPod Touch, and iPad users.

Will other ads be allowed?

The other question is whether or not Apple will allow competing advertising networks to continue on existing iPhone applications, or if developers will have to switch over to Apple's network. Google already has a beta program called Google AdSense for Mobile Applications that is used by iPhone app development companies like Flipside 5. Smaller ad networks like The Deck also have popped up to fill the iPhone app advertising void. It's unlikely that Apple would get away with limiting advertising platforms on the iPhone, since that would, as Kafka points out, be "a red flag for regulators." But we won't know for sure until Apple makes its rumored announcement on Thursday.

What about those patents?

Patently Apple has uncovered two interesting patents that may shed some light on how advertising will work on Apple devices. In October, the blog uncovered a patent that would force users to watch advertising by having them interact with the ads as a test to make sure they were paying attention to the commercial. The tests could include functions like pressing a button on the screen; that's similar to what some iPhone ads already do by requiring you to press a "continue" button. If you don't respond appropriately to the ad, your device would be shut down or impaired until you complied with the ad's interactive element. It should be pointed out that this scheme is for subsidized devices only, and would not include devices for which you paid full price.

A similar patent again uncovered by Patently Apple in early March shows a scheme that would require you to watch a commercial or several commercials as part of a television episode, film, or other video. As you watch the commercials, the next segment of the video would be unlocked. This plan would make it impossible to skip ads, since you couldn't watch the next video segment until you've seen the commercials.

Do these patents reflect what Apple's rumored ad network will look like? Force feeding commercials while I watch a video isn't so uncommon, and is somewhat similar to Hulu, which also stops you from skipping ads when you watch a TV show online. But I'm not too thrilled about the idea of being forced to interact with regularly scheduled ads on an iPad or iPhone; I'd rather pay full price.

Will "iAds" change the mobile device business?

If--and this is a big if--Apple's advertising platform is similar to the first patent uncovered by Patently Apple, this could mark a significant change in the mobile device business. The idea that you could get a dirt cheap iPhone, iPad, Mac Mini, or even MacBook in return for interacting with a few ads might be very attractive to some people. It would certainly be annoying to have to listen to an ad every time you wanted to make a phone call, but maybe that's an annoyance some people could live with.

Before Google launched the Nexus One, there were also rumors about the search giant releasing an ad-supported device. That didn't happen, and I'm not sure that Apple would be willing to go this route. But if Apple did try selling ad-supported devices as part of its mobile strategy that would certainly put its handsets in the hands of more people. And if it works for Apple, it wouldn't take long for competitors to follow Cupertino's lead.

What do you think? Would you sign up for a free or almost free Apple device if it meant interacting with ads?

Connect with Ian on Twitter (@ianpaul).

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