Apple announced their new iAd advertising platform to much fanfare earlier this month. This completely new advertising platform will be a part of the 4.0 mobile operating system update.  Given the numbers of iPhone and iPad users within the total population of mobile users, the new platform will help to standardize the process of creating mobile ads. Thanks to the multitasking features of 4.0. iAd should also provide richer more engaging options to advertisers.

Most mobile advertising today consists of a shrunken banner ad. As Steve Jobs puts it ”most mobile advertising sucks” – clicking on a mobile ad triggers a new web page, which takes the user away from what they were looking at, making it impossible to return to the exact place they were before triggering the ad.  Intrusive, irritating advertising.

By embedding ads in applications, users will experience ads as part of a cohesive experience. Jobs says Apple will be serving 1 billion impressions per day im by the end of 2010.  Whilst these impressions are served, applications will continue to run in the background. Tasks will continue to execute. And so the logic goes, applications will remain cheap or free, since they will be part financed by advertising.

iAd exemplifies Apple´s drive to keep users of their hardware locked into a walled garden of iPhone and iPad applications. Its a bet on the future of the mobile web being experienced through applications, rather than through web browsers.

As with their earlier mobile operating systems, Flash (used on 85% of the top 100 websites. and 75% of web videos) will not be a part of 4.0, which will instead be based on the new HTML5 standard. Advertisers will therefore need to rework their Flash based ad inventories to access the iAd universe.

This reworking involves transcoding Adobe Flash content and translating it into a format compatible with the iPhone and iPad.  The most promising solutions so far are server-based, where websites transcode content and then push it to the mobile client which is installed on the mobile handset.  With Apple´s blocking of Flash applications, a large market opportunity is opening up for companies prepared to get in the middle of Apple´s fight with Adobe. Early leaders include mobile browser applications such as Skyfire (www.skyfire.com) and Opera Mini (www.opera.com) and transcoding specialists Ripcode (www.ripcode).

As stated, Apple has placed a bet on HTML5 over Flash as the future of (their) web content. HTML5 has proven itself as an attractive platform for ”web productivity” tools such as Google Apps, online CRM systems such as Salesforce.com and even the new online version of Microsoft Office. Many apps will leverage the strengths of both Flash and HTML5. And many HTML5 applications will leverage the strengths of Flash Player.

Yet the ”pure” HTML5 applications that Apple have mandated have not really made much progress in the area of Rich Media Applications such as games, online video and rich media advertising where Flash still clearly predominates, and will do so for many years.

Only a company with Apple´s consumer reach, market power and singular vision for technology can motivate the adoption of pure HTML5 by publishers and developers. Its a safe bet they´ll succeed sooner than expected.