When Steve Jobs recently announced iPhone OS 4 (due later this summer), he mentioned that Apple is now getting in to the mobile advertising game with “iAd,” an in-house platform for developers to create ads on mobile devices like the iPhone, iPod Touch, and iPad. Ads on Apple mobile devices are old news, but a huge technology company jumping headfirst into the booming mobile advertising space is a significant development indeed. With over 50 million iPhones and about half a million iPads sold to date, Apple already has a captive audience and a significant user base. Now, it looks like they are about to bring their trademark efficiency and innovation to the ad space as well.
I think that one of the most significant things to note about this development is who Apple is trying to crowd out of this space – Google. It’s a pretty big deal when a company as big as Apple decides to go head-to-head with the undisputed king of web advertising in a new space. Google has already made headway into advertising on Apple’s devices. AdWords users have been able to target iPhones for quite some time now, and Google just announced iPad targeting this month as well. Plus, Google beat Apple to the purchase of AdMob last October, giving them a huge inside track to in-app advertising. Clearly, Apple has not been too happy about these developments, and is likely going to take steps to push Google’s ads off of its platform. This could get interesting.
The big question is this: can Apple develop a winning ad platform in a space already dominated by experienced, well-funded competitors? Despite Apple’s consistent popularity, they don’t always win at everything they do (Remember Apple TV? Or the hockey puck mouse?). They’re a hardware company about to embark on a significant software venture. Sure, they’ve had tremendous success with the iTunes store and the app store, but those are both consumer-side ventures. Will they be able to repeat their success with an enterprise software service?
Granted, Apple is offering a generous 60/40 ad revenue cut in favor of developers, so that should sweeten the deal to get a large ad network in place fairly quickly. Add in the stories going around about basement software developers making millions from ads on a simple app or game they coded in their spare time, and I’m sure there will be plenty of places for mobile PPC ads to show on Apple’s new network. But, will this offer a good ROI for advertisers? Mobile advertising isn’t for everyone, and I’m still not entirely sold on getting conversion actions out of mobile users yet. Ever try to fill out a lead or purchase form on a smartphone? An ad network is only as good as the ROI it generates, and Apple is making a big bet that mobile ad ROI is going to be good enough for a lot of advertisers to come on board. At least Google and Microsoft have profitable search networks to fall back on while they experiment with mobile advertising. Apple has no such safety net, unless you count the billions of dollars they’re raking in on hardware and media sales.
One last word of advice to Steve Jobs: make sure your reporting and analytics on the ad network are amazing. This is what makes Google great for advertisers, and this is what any fledgling ad network needs to have to stay competitive. Advertisers don’t like it when they can’t get info on where their money is going, and how much money it is bringing in. I know Apple loves to be tight-lipped about information and really stingy with the openness of their platform. This attitude is a recipe for failure in the advertising space.
It’s too early to tell if Apple’s ad platform will revolutionize the industry. But, I think their presence will be big enough and disruptive enough to change the game for everyone. It should be an interesting summer for mobile advertisers.