Google reacts to Apple's iAd

> Google’s strategy includes creating tools that help developers embed videos and make ads more interactive, similar to what Apple’s iAd can do. Google also wants to sell more ads tied to a user’s location and deliver coupons for nearby deals, said Steib, Google’s director of emerging platforms. That’s all well and good, but if none of Google’s ads end up on iOS devices and in App Store apps, that’s a huge chunk of the market that Google can’t touch.

Make no mistake about it; Apple is aiming right for Google’s heart with a silver dagger with iAd. And keep in mind, Apple made no move whatsoever to do this until Google turned its sights towards Apple’s bread and butter. Google started the war. But Apple has many more weapons and the better field position.

Apple can’t kill Google with this, but it sure can make life very difficult for the search giant. Google’s entire future will now depend on Android’s success. Whereas before, all Android had to do was kill off Microsoft, now it has to kill off Apple, too.

Let’s face it; Google has gotten lazy over the past few years, or at least lost its focus, when it comes to desktop ads, anyway. AdWords was a great idea once, but where has the innovation been in recent years on the user-experience side? Jobs isn’t wrong. Web ads suck. This is a huge opportunity for Apple.

Now that Apple is in the Ad business, I also see it branching iAd out way beyond just mobile phones and iPads. The one thing that has stopped the iTunes video business from taking off more is the lack of a free ad-supported model for TV shows. Imagine if Apple, after six months of successful advertising on the iOS platform, delivered an AppleTV product, based on iOS, that could play iAds within TV shows. Not just commercials, but fully interactive experiences. Imagine if it went to NBC, CBS, etc. with stats on how much more effective iAds are compared to static commercials. Just getting stats on exactly how effective the ads are, down to how long people watch, which buttons they click, etc. would be invaluable, I would think.

Maybe then more content would make its way into iTunes, and more people would start using AppleTV as an alternative to Cable TV or Satellite. Pay a modest fee for a subscription with iAds, or pay a higher price per download for individual shows with no ads. There’s massive growth potential there.

Or how about an iAd-supported mobileMe collection of web services? Keep a $99, no ad version for those of us who want to pay, but also have a free version with iAds embedded. Remember, all iAds are built on standards, so there’s no reason they couldn’t easily be ported to desktop browsers.

Is it any mystery, then, why both a new AppleTV and a free MobileMe have been rumored lately?

This is the pattern with Apple. Find a market you are not currently in, but where you feel there’s a lot of potential because the competition sucks. Make a product that’s better than anyone else’s by a long shot. Improve the product through innovation on a regular basis, keeping the competition behind you, or scrambling to keep up. Grow market share over time.

iPod, iPhone, iPad, iAd.