Apple iAd: Apple enters the advertising fray with iPhone OS 4Posted: April 11, 2010
I know I’m (relatively) late to the party, but I’ve just sat down and watched Apple’s iPhone OS 4 keynote. There were some really nice features mentioned, such as multitasking, increased security functionality, and their new game platform. One thing that didn’t so much surprise me, but shock me, was Jobs’ message that Apple is entering the advertising world with the latest iteration of their iPhone OS, with iAd.
In case you haven’t seen the keynote, Apple iAd will allow ads on the iPhone to essentially be ‘better’. Steve Jobs argues about these new Apple iAds being an excellent mix of interactivity and emotion. It sounds like Jobs wants to daub all the ads on the handset with his renowned Apple magic. During the keynote, he demonstrated three such ‘iAds’, which people from Apple had mocked up themselves. As expected, they were each very swish, very nice, and very ‘Apple’-looking. The first was a Toy Story 3 ad, which Jobs says is apparently a great movie. The ad, when accessed from within another app, launches itself in a page that pops up. The ad offers various noise-making gimmicks, also offering the latest trailers and videos related with the film. It also allows you to see nearby cinemas where you can catch the film, through a nice Google Maps crossover. In addition to this, lets you buy a Toy Story app directly out of the ad, without visiting the App Store, which is one of the features the new OS provides. The second ad shown, a Nike ad, similarly let you view videos, and also provides access to Nike iD, where I believe it’ll allow you to purchase branded clothing right out of the ad, again. The last ad was for Target, and made specifically for their back-to-school sale, letting you create your own ‘dorm room’, and again, purchase homewares directly from the ad itself.
It’s a nice idea, and the demoed ads did look very nice, and hey, they looked fun, but iAd raised some major questions. Firstly, Jobs revealed that Apple will sell and host all of these ads, and when they are deployed, will keep 40% of profits made from them, and give 60% of the revenues generated back to the app developer. This seems as if it will turn Apple into something of an ad agency itself, which is troublesome. What do Apple (themselves) know about advertising, and what implications will this have for ad agencies? Sure, it will may create more business for them, crafting this new breed of immersive iAds. However, since Apple will be entirely in charge of distribution, will they be able to ensure that relevant ads get sent to the right consumers, or indeed that iAds will be placed in the correct apps? This is not always clear-cut (will they know to place diaper ads in beer-related apps?), and takes a level of market research that I don’t think Apple will be able to carry out.
Jobs doesn’t discuss how the iAd system will work, but I assume that when a developer chooses to include iAds in their app, Apple simply displays ads from their ad database inside the app in question. However, what implications does this have for existing, developer-made ads in apps? Sure, some current ads are shameless punts for a little extra money, but some developers rely on their own ads to advertise their other products on the App Store. Will Apple still allow these home-made ads to exist, or coexist alongside iAds, or will they simply assert themselves as the only advertising option as far as the iPhone is concerned?
The scale of the iAds shown is also troublesome. Jobs wants to create immersive, engaging, and emotional ads. The scale of the ads showcased at the keynote is mindblowing, however. Jobs states that currently, the average iPhone user spends 30 minutes ‘inside’ apps. I think with the time taken to explore these new iAds, that figure might (if we’re being optimistic) skyrocket, as every app with ads paves the way to a new iAd experience. Will people actually bother to spend time in these new iAd worlds, though? The iAds showcased were almost like apps in themselves, and I think Apple needs to be very careful about this. Time is always of the essence, and would people bother to spend their ‘app-time’ looking at ads, instead of actually doing what they initially set out to achieve? The current click-through rates of ads must currently be abysmal; Jobs says so himself that current iPhone apps are terrible. Suffice to say, getting people to look at iAds will be hard, especially without the necessary insight for proper placement.
I think Apple also need to consider the expectations created by the medium. People don’t really expect to be inundated with sprawling ads from their smartphone, and might not explore them, as a result. It seems that Apple want to change the world, again, and who knows? They might. If they can get enough unique ad content, then this could really take off. Then again, there’s always the chance that people might shun them, and refuse to accept that their phone, which is generally something very personal, is suddenly a broadcast medium for advertising.
In his keynote, Jobs says that he wants iAds to be interactive, yet capture the ’emotion’ of a TV ad. Jobs seems to be overlooking the fact that an iPhone is not a TV. Apple need to be very careful of how they propagate iAds, if they plan on invading personal space, especially so with messages that may be irrelevant.
I’m not sure if Apple can pull this off, but I certainly think we need to wait and see how this pans out.