f you follow the world of mobile, iAd didn’t come as a surprise. Back in January, when Steve Jobs said “mobile ads suck” he clearly meant everyone else’s mobile ads – not his mobile ads. His intent was obvious from the minute he bought Quattro Wireless in January – after all, what else would he do with a mobile ad network? Sure it’s a radical departure from Apple’s traditional business but the monetary promise of mobile is too tempting for even a billionaire to resist. Though while profit is clearly an incentive, it’s arguable that quality was a bigger motive – that Steve is so enraged by the bad ads (and bad apps) clogging his platform that he’s decided to set his own standards. All of which is in character and would be understandable since much of the content in the app store is of dubious quality. What remains to be seen is how well this was thought through – after all, Apple is venturing into uncharted waters.
What’s not so clear is how these ads will be sold. As anyone who has submitted content to the App Store can attest, support is largely self-service and waiting for assistance and feedback can be downright painful. For Apple to provide the level of CRM that’s standard with most ad networks will be a true cultural departure for them. For the full details, we’ll have to wait the 2-3 months for the official launch – so far, all we know is:
• iAds will run inside iPhone and iPad apps
• The iAd network will generate 1b impressions a day
• The platform will support interactive and video content within the app
• Apple will both sell and host the ads, splitting the revenue 60/40 with publishers – though it hasn’t been made clear who gets the larger share (let’s hope it’s the publishers)
If iAd runs on a largely self-service platform, like iTunes Connect, it will pose challenges so grave that many marketers may avoid it altogether. But the really big question is whether or not advertisers will be able to cherry pick inventory. If Apple allows advertisers to select the exact applications that their ads run in, all the traffic will be concentrated among the handful of top apps which, of course, would drive up CPMs considerably. Given the rumored $32 CPMs this is a distinct possibility but it would make far more sense to sell ads as run of network with demographic, behavioral and geo targeting or to offer vertical ad “buckets”. This would spread the wealth around the community of independent developers, most of whom are struggling to monetize their efforts, which is clearly in Apple’s best interests. The relationship is a symbiotic one – to keep the App Store supplied with fresh content, they must offer developers real channels for driving revenue but it can’t stop there. Apple also needs to provide developers with clear and actionable info on how to create better visibility for their efforts. As it stands now, unless you crack the top 25, the odds of generating income, ad supported or otherwise, are non-existent and there are only so many Apple fan boys willing to crank out apps as a labor of love. To feed the public desire for apps, Steve Jobs & Co. need to offer a clear way to feed developers’ need for cash or risk killing the golden goose.
So what does all this mean to brands and marketers? Well, if you have an iPhone app, you’ll now have the opportunity to include highly engaging ad content that’s likely to rate a much higher CPM than you’ve ever been able to command before. Though just how many eyeballs you’ll be able to generate will be up to you – most branded apps are still getting deleted after one or two uses and rich ads are meaningless of there’s no audience to consistently engage with them. Creating sticky apps should be top-of-mind for anyone hoping to generate ad revenue. If, on the other hand, you’re an advertiser, you have a whole new vista to consider. Regardless of the sales model Apple settles on, iAds will very possibly convert better than any ads you’ve ever run before. The audience will be smaller than the average desktop campaign and the cost likely to be much higher, but the outcome may well be worth it. In true Jobs-ian fashion, Apple is leaving us in the dark for another few months but rest assured, you want to be thinking right now about how you’re going to test this.
Rachel Pasqua (@rachelpasqua) is director of mobile strategy at iCrossing.
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