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Apple’s iAd Platform Pushes Mobile Advertising Forward

Posted by Dan Vigil on April 17, 2010

While Google is entangled in lawsuits over their AdMob acquisition, Apple is developing a strategy for dominating the Mobile Ad Industry.

With the announcement and demonstration of it’s new iAd platform last week, Apple has clearly defined their ad strategy as it applies to mobile apps . The company will sell and host mobile ads for application developers who will receive 60% of the ad revenue. More importantly, for advertisers, they’ve created a platform that will accommodate rich media/interactive ads within applications without relying on Flash.

Currently, mobile display ads are limited to flat files that are problematic for advertisers and consumers as interaction with the ad (clicking on it) causes the user to leave the application and open up a mobile web browser leading to a site or landing page containing the advertisers message. In the live iAd demos conducted by Steve Jobs, interaction with the ad unit occurs within the app. Demonstrations of clicking through sample ads promoting Toy Story 3, Nike and Target all resulted in the launching of a mini interactive advertising app which takes over the iPhone screen but allows the user to return to the app by closing out of the ad. All of the examples made extensive use of video and location-based targeting.

As Jobs states, the incorporation of video and interactivity bring both “emotion and interactivity” to mobile ads which really results in the best of online display advertising (interactivity) and TV advertising (emotion). Here’s a few more nuggets from the presentation and thoughts on what this means for advertisers and publishers:

1. Search is not happening on mobile devices, the opportunity is in mobile applications.

Jobs begins his presentation by explaining that mobile users are not using Search like they do on desktops. While Search is the main thing people are doing on the desktop, they are not spending time searching on mobile devices. They are spending their time in apps on mobile devices. They are in fact using apps to get the information they need rather than searching for it. Hence the necessity for more robust advertising capabilities within apps.

As I mentioned in a previous post about “App-vertising” publishers and advertisers need to get into the application development business with the same fervor that entrepreneurs got into the web development business 15 years ago. Those companies that create best of class apps or that are first to market will attract the most eyes on mobile devices, regardless of their ranking on Google. The iAd platform also fosters a whole new field of advertising application development.

2. Though impressive, iAd  and Apple are not the only game in town:

It will be interesting to see how other devices and ad networks respond in the coming weeks. While there seems to be a notion floating around that Apple is intending to cutoff or hinder rival adnetworks (i.e. Google’s AdMob) with this move, it is still too early to tell. The company has told Wired magazine last week that they would not prevent third-party networks from embedding ads in Apples mobile devices (read the full article here).

What Apple has done with HTML5 is quite impressive however, and I would think that other ad networks and mobile operating systems would start working together to do the same. It’s only a matter of time before we see similar ad capabilities on competing mobile devices like the Droid and Blackberry. Which brings us to our next nugget:

3. HTML5 poses a serious threat to Flash:

It’s pretty clear that HTML5 can provide the functionality that Adobe’s Flash offers and while Flash still rules on the web, it’s not gaining much ground on mobile devices. If you can use HTML5 to create rich media on mobile devices, it should be even easier to use on the web. Advertisers and agencies will only tolerate multiple development platforms for so long. Third party development tools are also starting to address the HTML5/Flash issue in anticipation of the transition.

As reported by TechCrunch yesterday, Sprout.com has released a development tool that allows users to simultaneously build rich ads in both HTML5 and FLASH. Tools like this will make it easier for advertisers to run common campaigns across mobile devices and desktops. And make it easier to transition away from Flash.

4.Remember that display advertising is not the only opportunity. Especially for local advertisers:

With all the discussion about ad networks and mobile display ads, we need to remember that display is just one area of opportunity for mobile  advertisers. Lead generation and relationship management are perhaps the fastest growing and most lucrative opportunities  for local advertisers. Mobile device are quickly becoming the preferred device for social networking and transacting business.  Those advertisers that focus on building their virtual relationships to drive in store foot  traffic and sales will realize a great ROI than advertisers that focus on display only.

Gathering and collecting data about application and mobile ad  visitors will become more important. This is where Apple will have an upper hand as they have final approval of the apps and associated features that can be used to collect user data. It will eventually come down to the interpretation of policies as indicated the Apple developers contract and Apples enforcement of them to protect their customers.

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