Is the iPhone the Next Ad Frontier?

The iPhone Apps Store is turning out to be a hit not just for Apple, but for the dozens of others who have been selling their apps on the store. Those that have been giving away their applications for free are doing even better. And now they have a way to monetize their apps. Today, a whole gaggle of free ad-supported applications are making their debut, thanks in part to AdMob, a mobile advertising startup based in San Mateo, Calif.

The company has signed up brand-name advertisers such as Herbal Essences, Fox Searchlights’ Choke, MGMs’ College, Toshiba, CBS News, Luxor Hotel and DirecTV. These advertisements are going to be embedded into popular iPhone apps such as Tap Tap Revenge by Tapulous, Sports Tap, BubbleWrap and Loopt, in addition to other apps such as Whrrl and Moblyng that already run AdMob ads. AdMob clearly believes that there’s money to be made by embedding ads into these applications — both for them, and for the app developers. [digg=]

The company claims that its new rich media ad units, which were designed for the iPhone, have hit 100 million impressions in less than a month. “The company’s new rich media ad units designed for the iPhone have been live for just over a month and now has a reach of more than 100 million impressions worldwide each month.

“Ads on the iPhone deliver strong engagement for advertisers with triple, on average, the already high click-through-rates seen on mobile,” the company claimed in a press release. If that does indeed turn out to be a sustainable metric, advertisers are likely to view as the iPhone as platform worth supporting.

I’m sure that with the availability of geo-location data, on-screen advertising can be made more relevant and thus lead to better clickthroughs. More advertising dollars on iPhone apps could encourage developers to write more apps for the platform, and that could make the platform itself more enticing to phone shoppers.

To add a dash of rationality to my own arguments, I would like to point out that my thoughts are based on data from a single month and a single company working with a handful of brand advertisers. Let’s check in a few months and see how the story unfolds.

(Disclosure, Loopt is one of the sponsors for our Mobilize 08 conference.)