Over a year after its introduction, Apple’s iPhone ad network has failed to gain traction. As the hardware giant looks to expand its iPhone, iPad and iCloud services, has it ceded the mobile ad crown to Google’s Admob? Mark Brill, Chair of DMA’s Mobile Marketing Council and CEO of txt4ever, takes a closer look…
In April 2010, Steve Jobs announced Apple’s new advertising network, iAd. It was launched with the promise of a rich, interactive and seamless experience which would change the face of mobile advertising.
At the launch, he said: ”We think most of the mobile advertising really sucks…We thought we might be able to make some contributions.”
Yet, a little over a year later, at this year’s Apple Developers’ Conference there was no mention of iAd. Instead, while referring to the new iCloud service, he said: ”We build products that we want for ourselves, too, and we just don’t want ads.” What does the future hold for Apple’s advertising network?
Along with other channels, the last few years has seen a growth in mobile advertising: Google’s Admob are serving over two billion ads daily and Juniper Research estimates that global advertising will be worth US$5.7bn by 2014. That’s hardly surprising when you consider the rapid adoption of smartphones and with it, mobile web, apps and advertising within them.
As a result, independent advertising networks such as Millenial and InMobi have seen significant growth. The advertising channel has also been spurred on by Google’s purchase of AdMob and Apple’s acquisition of the mobile advertiser, Quattro.
While Google’s consolidation of its mobile offering made sense, Apple’s entry into the market was more surprising. However, Apple has a history of creating or defining new markets, such as app stores and tablet devices, so maybe Steve Jobs was on to something with iAd.
The core principle of the network makes a lot of sense: rather than taking the user away from an app, the channel kept the content within the environment and made it rich and interactive.
Early ads for Toy Story 3, Nike and Nissan really showed how brands could create some exciting engagement. Reports in late 2010 also suggested that iAd was capturing a good chunk of the market, just a little way behind Google/AdMob and Millenial. The other driver for iAd was the app developers who would receive 60% of revenues from ads shown in their apps.
However, in the last few months the excitement from Apple, advertisers and developers seems to have waned. There are many problems. Even from day one, opinion from media buyers was divided: GroupM hailed it as the most exciting channel since TV but Publicis described it as niche.
But the greatest problem was the minimum spend. Initially, the minimum for iAd was US$1m per campaign. It was set as a way to attract only the most serious of brands, and to keep out low quality offerings.
The trouble is that US$1m was something of an arbitrary number. It had no basis on the real brand spending in mobile advertising. While that kind of sum may be regularly spent on TV, it is way over any real budget for mobile.
So Apple reduced the minimum spend to US$500,000. In the UK, they offered it at £250,000. That’s still too high for most brands, who would prefer to commit just a few thousand pounds to these types of campaigns.
It’s not just about the money though. With the iPhone representing just 10% of UK handsets, iAd is niche. Some argue that iPhone users represent an important group of brand opinion formers, some studies suggest that those users are less likely to click on mobile ads than other handsets.
What’s more, it doesn’t offer the kind of platform that digital media buyers would expect to be able to plan and refine their campaigns. I asked iAd if they had location targeting as part of iAd. “We can target by city”, was the answer. In mobile advertising, location targeting is the key to success. The expectation from most developers or advertisers is that it would be targeted within a few metres.
In the end though, iAd could do well to learn from their own success with the App Store. Before the iPhone, most apps were typically delivered via mobile operator stores. The portals charged brands thousands of pounds to be listed for a week or two. App users usually had to pay by pricey premium SMS subscriptions. Getting a return on these apps was difficult.
Apple changed that with a direct-to-consumer model and by using existing iTunes registered credit cards they removed the “pain of payment”. They also opened up the stores to any developer with the programming skills and US$70 to register. And they managed to maintain quality (with the exception of the numerous farting apps) with a strict submissions policy.
When you look at iAd it’s much closer to the old-style apps model; a high-cost to entry with no guarantee of return. While UK brands such as Absolute Radio and Guinness have used the channel, the low entry cost of Google Ads/AdMob has attracted a wider range of customers.
What iAd has done is shown how advertising can be rich media and interactive. Outside of Apple’s network, adverts for the US Airforce, True Blood and Tuborg Beer have shown that mobile can offer a rich, interactive and entertaining experience.
At the start of September Google’s AdMob announced support for HTML5 adverts. HTML5 is essentially the code that creates the rich mobile experience and with Google, there is a small daily spend for campaigns. So, whilst the future of iAd seems doubtful, the future of rich content on mobile is much more promising.
By Mark Brill
Mobile Marketing Council
Formation / txt4ever
This article first featured in the September 2011 issue of Mobile Messaging, the DMA Mobile Marketing Council’s free e-newsletter. If you would like to receive Mobile Messaging and have articles like this delivered to your inbox, update your preferences here.