Today Steve Jobs announced what Apple has been working on since its reported $275 million acquisition of Quattro wireless in January — a mobile ad network. The new network, called iAd, promises to give advertisers what they’ve long been wanting from digital advertising — rich media experiences that engage consumers.

And thanks to Apple’s proprietary hold on iPhone apps, it may just deliver. 

Jobs didn’t mince words today at Apple’s iPhone
OS 4.0 announcement
, where he announced that mobile ads generally suck.

Why is that? Because the advertising is more distracting than engaging. Apple thinks it can change that. Said Jobs:

“We’ve got a lot of free apps — we like that,
users

like that, but these developers have to find a way to make some money,
and we’d like to help them…What some of
them are starting to do is put mobile ads in their apps… and most of
this advertising sucks. We want to help developers make money with ads
so they can keep their free apps free.”

Apple’s proposal is an ad platform built directly into iPhone OS 4 — the
company’s next generation mobile operating system that will be out this
summer. That means that publishers and advertisers will be able to add all sorts of content to their iPhone, iPad and iPod applications.

Brands working with iAd will be able to customize ads on the iPhone
in ways that current mobile ad networks cannot. Says Jobs:

“Because
iAd is in the OS itself, we’ve figured out
how to do interactive and video content without ever taking you out of
your app!”

Jobs also supplied some examples of what Apple will be able to provide, like this Toy Story 3 banner ad that expands with interactive options — sound clips, video, aand even games that can be played within the ad:

From the press release:

“Today, when users click on mobile ads they are almost always taken out
of their app to a web browser, which loads the advertiser’s webpage.
Users must then navigate back to their app, and it is often difficult or
impossible to return to exactly where they left. iAd solves this
problem by displaying full-screen video and interactive ad content
without ever leaving the app, and letting users return to their app
anytime they choose.”
 Jobs thinks its new network will help keep apps free by helping them monetize impressions. 

“The
average user
spends over 30 minutes using apps on their phone. If we said we wanted
to put an ad up every 3 minutes, that’d be 10 ads per device per day —
about the same as a TV show. We’re going to soon have 100 million devices.
That’s a billion ad opportunities per day!”

Apple plans to host and deliver the ads and let developers keep 60% of the
sales. But the real promise of iAd lies in engagement. If Apple really doesn’t plan to make these ads roadblock other activity
on its mobile devices, that means advertisers will have to create truly interesting content.

Right now, many consumers see roll over and roadblock ads to be more of a nuisance than anything else. As Job puts it:

  ”…This is a pretty serious opportunity, and it’s an
incredible demographic. But we want to do more than that. We want to
change the quality of the advertising. We’re all familiar with
interactive ads on the web.
They’re interactive, but they’re not capable of delivering emotion.”

This is also a stab at Google. Jobs says:
“Search is not happening on phones; people are using apps. And this is
where the opportunity is to deliver advertising is.”

If consumers continue to play with the app economy in mobile instead of search, mobile display needs an ad game similar to Google AdWords. Jobs and Apple think this is it.

Images: gizmodo