iAd: Is Apple taking mobile ads in a new direction?
April 7th, 2010
Daniel Eran Dilger
Steve Jobs apparently thinks “mobile ads suck,” so what is he doing about it? The story so far is that his Apple bought Quattro Wireless, turned it into iAd, and will be bundling it into its iPhone OS Software Development Kit so that App Store publishers can monetize their apps. But that’s nothing new, and doesn’t really change anything.
AdMob and a gang of other competitors are already trying to monetize mobile apps for the iPhone (and other platforms) using the same old strategy as the web: by putting up somewhat relevant ad banners that click through to marketing offers. But that sucks, and it doesn’t make much money, even on the web. Google doesn’t make its money from placing AdSense banners, it makes its phenomenal revenues from paid search.
Come to think of it, Apple doesn’t seem to have such a high regard for slapping somebody else’s name anywhere near its own properties. It didn’t really like the idea of mixing the iTunes brand with Motorola’s ROKR before the iPhone, and it doesn’t market the iPhone now as being “With Google.” It doesn’t put Intel Inside stickers on its Macs. And none of Apple’s software, not even iWorks.com, has any ad banners trying to support it.
So how is it that Apple is now going to be launching another Google AdSense type network that puts tacky ads into iPhone apps? This seems so very un-Apple.
Apple sells its own products. And these days, Apple has a lot of products to sell. Not just categories of hardware and software, but loads of other people’s media: music, movies, TV, audiobooks, iBooks, and of course, mobile software.
Of course, it is possible that Apple might just duplicate the same thing we’ve already seen elsewhere, but it seems more likely that the company’s ad network will improve upon mobile ads in a way that’s both classy and directs attention to Apple’s own products.
It would make sense for Apple to take its iTunes affiliate program, currently run by Linksynergy, in house. It’s already fairly easy for site operators to sign up and begin creating links to items in iTunes, then post the links and Apple-supplied artwork to their website. But what if the company made it even easier for App Store developers to add iTunes affiliate links to their apps, create banners for actual products rather than supposedly “relevant” links, and paid out commissions rather than charging for impressions and clicks?
This would tend to advertise iTunes content to the very people most likely to buy it, and constantly remind the people who use iTunes for their iPhone, iPod touch, or iPad that there’s lots of other content they might not yet have seen in the iTunes Store. Apple could even float paid promotions through its iAd network.
Essentially, rather than posting up ads, there’d just be iTunes Store recommendations. It’s far more likely that such ads would create revenue compared to impression banners trying to get somebody to visit a website; there just isn’t much value there. But when 1% of click throughs end up as actual purchases, there’s significant money to pay out to support content and development.
I know I’ve consistently earned more as an Amazon affiliate than I have running Google AdSense, and nobody notices the affiliate links (partly because I don’t do them much any more, but Google’s ads are always right there in your face. Imagine taking a mobile app and trying to put as many ads on the screen as there are in most websites. It’d be far more classy to just link to a few favorite movies or books in iTunes toward the end of your content.
Apple has a separate but similar affiliate program for its Apple Store merchandize, and another for MobileMe subscriptions. It could bundle all those things together and make it easy for users to sign up and begin recommending apps, Apple gear, or iTunes content online, in their mobile apps, or anywhere they post HTML, and earn a small commission on each sale. That’s a great deal for Apple because it’s high quality, low cost advertising. It only pays a slice on actual sales.
No Apple vs Google
Such a move would differentiate Apple’s iAd from Google’s bid to buy AdMob, the search giant’s mobile ads doppelgänger. That might prompt the FTC to keep Google and AdMob separate. Meanwhile, iPhone apps would be monetized by iAd’s slick iTunes suggestions, while Android would have the same old “relevant” ads that dump you off in a website link any time you inadvertently click one.
Apple could beat Google at its own game, and revolutionize how content and apps are monetized. All without actually engaging Google in a directly competitive way. And that, it would seem, would be more along the lines of what a company like Apple would do in online and app advertising.