Mobile News for Media and Publishing Executives
For the past two years we have heard a lot about iAds, Apple’s premium advertising network. IDC reported in December that Apple’s share of the mobile ad market has been in decline, slipping from 19% in 2010 to 15% last year. Meanwhile, Google leads the field with 24% of ad revenue — followed by Millennial Media with 17%, according to IDC estimates of what the market researcher says was a $2.1 billion-dollar mobile ad market in 2011.
The biggest issue with iAds is that the rates for advertisers are quite high in comparison to other competing mobile ad buys. Apple has maintained their high prices due to the belief that their ads are significantly more interactive and engaging than other rich media ads in the mobile ecosystem. The problem is that these ad buys are relegated to iOS devices only, while other competitors like AdMob (Google) and Millennial (who recently filed for an IPO) enable advertisers to buy across platforms thus increasing there overall reach.
From Spreed’s perspective, we have integrated iAds into CleverAds, our mobile ad platform, with varying degrees of success based on the market in question. The CPM from iAds is always higher than other networks, but the fill rate in the US is much lower. That being said we are seeing a fantastic fill rate in the UK. If the US arm of iAds can start exciting advertisers again and increase the fill rate, iAds will be the obvious ad network for all premium publishers.
There is certainly hope on the horizon for change within the iAds program. Apple just hired Todd Teresi, who was formerly the VP of Adobe’s Media Solutions Group to head up the iAds program. This will be an interesting year to watch iAds and see whether it can get back some of the market share it has lost over the past couple of years. Bloomberg wrote the below article on this recent shake up and it is certainly worth a read.
Teresi, who was vice president of Adobe’s media solutions group, has already started at Apple as vice president of iAd, said two of the people, who declined to be identified because the move hasn’t been announced. Teresi is reporting to Eddy Cue, a senior vice president who also oversees Apple’s iTunes and the App Store.
About a month ago, Apple announced iAds and when it was first launched there was a lot of speculation as to whether or not it would be the right tool to help media companies monetize their mobile applications. We wrote a blog post on it here stating that it probably was not the best solution for most media companies.
Apple is enforcing a lot of rules around the iAd platform. Firstly, they are controlling all of the inventory. If you want to run a house ad or retain your existing ad sales team to sell your inventory, you are probably out of luck. This would be a major change of strategy for a number of media companies who do indeed use ad networks at times, but usually sell their own advertising and then use networks to fill remnant inventory. Secondly, Apple is taking 40% of all the profits. I cannot think of a single media company that would be willing to give up 40% of all their advertising revenue to Apple.
Today, the Wall Street Journal unearthed some more information about iAds. They found out that Apple will charge upwards of $1 million for certain ad-buys.
To be among a select group of advertisers at launch could cost $10 million or more, the WSJ suggests. Ad executives say they’re used to paying between $100,000 and $200,000 for similar mobile deals, but Apple is certainly putting a premium price on it’s so-called premium mobile advertising opportunities.
Apple is planning to charge advertisers a penny each time a consumer sees a banner ad, ad executives say. When a user taps on the banner and the ad pops up, Apple will charge $2. Under large ad buys, such as the $1 million package, costs would rack up to reach the $1 million mark with the various views and taps combined.
Our question is this, if media companies do not use iAds because it simply doesn’t provide them with the logical solution they need (inability to manage their own inventory and retain significant revenues), how is iAds a premium network? Why would big advertisers opt to spend $10M on a network buy that includes low quality financial apps or even worse fart apps?
I understand that Apple can target based on application category -i.e. Entertainment, but the only applications worth spending big advertising budgets on in that category are the ones developed by big media companies (MTV, CBS, etc). Those companies are using ad platforms that enable them to sell their own ad inventory and don’t take a massive 40% cut, leaving applications to advertise on that are by no means ‘premium’.
Maybe we are missing something, but there seems to be a disconnect in the logic here. What do you think?
Apple, who are notorious for their big media events, made their official announcement of the iPhone/iPod Touch OS 4.0 features today. There are loads of new features to go through, but I will do my best highlighting the most important ones here.
Firstly some statistics:
- 300,000 iPad sold on first day of sales. 450,000 iPads sold as of today.
- iBooks: Users downloaded 250,000 iBooks in the first 24 hours. Users have now downloaded over 600,000.
- 1 million iPad apps downloaded in the first 24 hours. As of today they’ve downloaded over 3.5 million
- Users have downloaded over 4 billion apps through iTunes
- 185,000 apps in the App Store now
- Over 3,500 iPad apps in the App Store
- iPhone has 64% mobile browser usage. Everything else combined is just half the iPhone.
- Over 50 million iPhones have been sold.
- If you add iPod touches, over 85 million iPhones and iPod touches
Now for OS 4.0
- Developers can now access calendar, photo library, still and video camera data, quick look, SMS inside their apps.
- This is great news as event modules can now add events into your actual calendar.
- Articles can now be shared via SMS within the application without needing to leave the app
- Automated testing tool that Apple uses internally to decided whether an app will be accepted or rejected is now publicly available.
- This means that the app approval process is much more open and it will speed up the overall approval process
- A few new features: Create playlists, 5x digital zoom in camera, Bluetooth keyboards, spell check, gift apps, Tap to focus video, Places in Photos, Home screen wallpaper, file & delete mail search results, web search from sugestions,Larger fonts for Mail, SMS & Alerts, Rotate photos, Sync IMAP notes, iPod out, Wake on wireless, Folders.
- Multitasking is here! Jobs likens it to cut, copy and paste. “Not the first, but the best.”
- Apps keep track of where you were and can start right back up again.
- iBookstore on iPhone as per our predictions in this blog post
- Better data protection. Encrypt all your e-mail, including attachments with PIN codes.
- Mobile device management. Letting IT managers to deploy iPhones and manage them remotely.
- Wireless app distribution. Companies can push out custom apps over the air instead of relying on an iTunes sync.
- This is great for corporate apps as they no longer have to be distributed through iTunes
There is much more, but this is all they had time to highlight
iAd’s is Apple’s new advertising network. They will be managing all the inventory and from the sounds of it they will be taking 40%. All ad units are built in HTML5 and get served up in the application without having to go to an external site. Spreed is doing something very similar, but NO development skills are necessary.
- Jobs says Apple wants to help developers make money off their creations, but says that “most of this mobile advertising really sucks, and we thought we might be able to make some contributions.”
Jobs says ads are easy on the desktop b/c of search. But people are spending all their time within apps. “This is where the opportunity to deliver advertising is,”
- Jobs: Average user is spending 30 minutes a day using apps. That’s 10 ads per device each day.
- We want to get 1 billion ad impressions per day by the end of the year.
Jobs: deliver “interaction” and “emotion” – Something that’s in the middle of where Web ads are, and ads on your TV.
- Jobs said it was annoying for people to click on an in-app ad b/c it would take them out of whatever they were doing.
- Devs can add iAd in their apps for a 60% split of the revenues. All the sales and inventory are handled by Apple.
- Ads have access to much of the same APIs as apps, like location and some level of accelerometer access
- Jobs demoed a Toy Story and Nike ad
- All the animations are interactive, and crazy smooth.
- It’s not so much about the content of the app, but the interactivity
- He’s flipping through the app: it’s offering up the history of nike ads, allowing you to flip through the years to see all the shoes throughout history
- He pulls up the app with the Nike ad. It puls up an Air Jordan 2010 clip
So the run down on iAd’s is that it is great for developers in that it will be very easy to monetize apps. However, this is not a great solution for publishers and media companies. Apple will be taking 40% of all ad revenue and they are administering the inventory (you cannot retain your ad sales teams). In addition I am skeptical as to how deep their ability to target advertising will be. They have one piece of the puzzle and that is strong creative advertising, but they do not address targeting. Because they do not parse, control or index the content and because they do not understand user behavior, it will be hard to do deep targeting which is one of the main promises of mobile advertising.
Julie Ask of Forrester Research backs up my point about iAds not being for big publishers in her blog post on OS 4.0 with these two points
- We didn’t hear a lot about targeting – making use of past purchase behavior, day-to-day use of applications, etc. We did hear about location. Knowing that I have downloaded and am using the latest Audi application or browsing automotive sites on my iPhone might indicated that I am in the market for a car – that would be valuable information to automotive OEM’s. Knowing that I buy alternative rock music or that I read mysteries adds other dimensions. Location – given the structure of how they sell ads – this will more likely be purchased by large, national companies with stores throughout the country. Location (from the consumer’s perspective) will be more interesting when it helps me find local mom and pop stores that better match my interests.
- We didn’t hear much on analytics for the advertisers. This will be interesting to watch as the more effective Apple can be in demonstrating ROI – bought movie tickets, purchased a Nike shirt, bought the movie Toy Story – the more advertisers will spend. They’ll spend on branding now, but I think they’ll spend more if they can drive sales.
What is good though is that it will super charge the agencies to begin selling ads as they can utilize their existing skills sets to build strong creatives. Jobs just did to the mobile ad industry what he did to the mobile industry in general 2 years ago.