Apple has revolutionized multiple industries with their much coveted devices and influential services - just consider the way the iPod transformed the music industry. The company is set to do the same with the online advertising world with their new iAd service. Designed for the applications that run on iPads and iPhones, the iAd system is a departure both in terms of the content displayed and how users interact with the ads.

The key element of this system is all the data that Apple collects about its users, a disturbingly deep pool of behaviour and consumer choices that will allow advertising partners to engage in new frontiers of personalized and targeted marketing. Apple might be going too far when it comes to monitoring what people do with their devices: how aware are Apple users that all of their activity is being tracked by their beloved company?

Given Google's entrenched dominance in the domain of internet advertising, almost the only way to chip away at their business is to create a new domain for advertising, which Apple has done by giving iAd exclusive access to Apple data. It's also an attempt to further capitalize on the explosion of mobile applications, because Apple is a key player in the mobile world, and wants to control all aspects of the mobile experience. The iAd system is designed to allow for the further integration of advertising, web content, and mobile device, so as to create a new experience for how people receive commercial messages.

The system (at the outset at least) is focused on iPod, iPhone, and iPad apps. The ads will not resemble traditional web-based banner ads - Apple wants iAds to be far more interactive, so they will largely focus on getting users to install more commercially-oriented applications, based on existing knowledge about each user's needs and interests.

For example, a number of the initial campaigns are going to be focused on back-to-school, encouraging students to install branded applications from companies like Best Buy that help said students buy all the tech and toys they need for school. These ads will be targeted to users based on their interests and how they've been using their device, with the idea that people will be far more receptive to well-targeted commercial messages than widely-disseminated ones. As well as being interactive, they'll have multimedia, and they will be designed for the device itself, whether the smaller screen of an iPhone, or the larger iPad.

Apple is able to track user data such as purchases on iTunes (music or movies), apps installed, apps uninstalled, and a user's positive or negative ratings on apps. This data certainly provides ample material to generate customized advertising. Apple does insist that no personally identifying information is shared with advertisers, which is not to say they don't collect that info. What's most interesting about this new advertising system is the inference that Apple indeed knows quite a bit about how the devices they sell are used and will increasingly find ways to make money from those insights.

Fortunately the US Federal Trade Commission is keeping a close eye on Apple both in terms of how they use and share personal info as well as how accessible their ad system is and whether they are running afoul of anti-trust laws in terms of using their mobile devices exclusively when it comes to the ads they receive. At this point the iAd system is only exclusive on some levels of functionality: more traditional types of ads can also work on these devices so advertisers do have choices and it's not an Apple monopoly (yet).

Apple is not alone in the domain of innovative online advertising. Google recently purchased a mobile advertising firm called AdMob that has advanced functionality similar to the iAd system. Google is the leader when it comes to web advertising and AdMob will reinforce that position. Although Apple poses a threat largely due to their success selling the hardware. Google is pushing back with their Android operating system which will be empowered by both AdMob and Google's traditional online ad system AdWords.

Another threat is Twitter, who surpassed both Microsoft's Bing and Yahoo as the second largest search engine in the world, with the fastest growth rate. They're leveraging this role as a real time search engine to introduce new advertising programs based around trending topics, popular tweets, and mobile location-based content. While Twitter's advertising programs are still in their infancy and generating nowhere near as much revenue as Apple, Google, Yahoo, or Microsoft, they are gaining momentum and users all the time.

Consumers are becoming increasingly aware of just how powerful and profitable being a micro-celebrity can be. If they go online and win friends and influence people they may be in a position to cash in by embedding sponsored content into their own activities, which they can do overtly, or more covertly using tools like sponsored tweets. Even a few months ago Twitter was being heralded as the new media that delivered transparency, and it is now getting murkier than the media that came before.

All of these sophisticated advertising technologies have definitely triggered a shift in spending from traditional media to online media. Social media, smart phones, and multimedia devices like the iPad all offer far more dynamic, interactive, and precise, even surgical, means of getting commercial messages to specific subsections of the population. These techniques are so sophisticated that it will become increasingly difficult to discern what is an ad and what isn't - how to make the distinction between original content and sponsored content.