By Dan Butcher - April 7, 2010
Apple is piggybacking on the hype surrounding the iPad and the new iPhone operating system to launch the iAd mobile ad network. But will this rumored launch move the needle for mobile advertising? ?
Leading up to Apple's official announcement of iAd today, speculation was running rampant throughout the mobile industry as to the details of the mobile ad network. Analysts weighed in on the potential impact of the news on brands, agencies, marketers, developers and rivals.
"With the introduction of both iTunes and the App Store, Apple has repeatedly shown that they want to control the consumer experience of their brand, so I think this latest announcement is just the latest incarnation of that strategy," said David Gill, Austin, TX-based senior director mobile media at the Nielsen Co.
"Given the hype surrounding the iPad launch, this news should be good for mobile advertising, as it forces advertisers to think about mobile advertising as more than just a 'mobile phone' strategy," he said. "It's really about connected devices."
While competitors might beg to differ, analysts agree that this announcement will be good for the industry as a whole.
"I think it's safe to say that it will draw attention to the ecosystem and probably stoke interest in mobile advertising, particularly if Apple is able to deliver some compelling new ad formats, which is part of the idea here," said Andrew Frank, New York-based research vice president at Gartner.
"One of the problems that mobile advertising has suffered from is that the mobile marketing standards that define things like mobile banners have been pretty stagnant and not very exciting, but Apple has the opportunity to light a fire under that," he said.
While it is too early to gauge the full extent of iAd's potential impact, it is clear that certain players in the industry such as application developers stand to benefit.
"This is highly speculative, of course, because Apple has yet to announce anything…but, that being said, it potentially could change the landscape, especially if the ads are really more effective than what we've seen so far," said Neil Strother, Kirkland, WA-based practice director at ABI Research.
"Pretty clearly, though, this will help developers who offer free apps to make some money," he said.
Riding the wave
The seeds were planted for this announcement when Google signed a game-changing agreement to acquire mobile ad network AdMob for $750 million (see story).
Then Apple returned serve with the acquisition of Quattro Wireless for $275 million (see story).
These moves, coming back-to-back as they did, validated mobile advertising as an effective marketing medium and contributed to the continued momentum in the space.
Now, Apple is riding the momentum from the iPad, with 700,000 units sold in the first weekend, to up the ante further with iAd.
"The timing of the announcement seems to shine the spotlight on the iPad as a legitimate, if not superior, digital advertising medium," Mr. Gill said.
When a company is getting lots of attention from the press and is the subject of water cooler chatter, it may be a good time to introduce other products and services.
"Apple is in the news, and this is one more way to keep the brand and the buzz top of mind, plus it fits the past development cycle that Apple has shown, with a new device coming presumably in early summer," Mr. Strother said.
Google's Android operating system is competing with Apple on the smartphone and, soon, the tablet fronts, and mobile advertising will be the next area the rivals will do battle.
"The question is 'Will take Apple into an even more competitive posture versus Google?' especially since Google has invested in patents related to mobile advertising, in particular location-based advertising," Mr. Frank said. "Apple also has related patents in the area of integrating advertising with an operating system.
"As people have been saying for some time, mobile advertising is next real battleground for Google, and it looks like Apple will be their main competitor," he said. "The iPad is riding a substantial wave of hype right now, and Apple figured it would take advantage of that attention, not just to announce iAd but also the new iPhone OS.
"Apple is reveling in the fact they're currently in the limelight," he said.
A rose by any other name?
While Quattro Wireless is a known quantity, Apple's iAd was shrouded in mystery leading up to today's announcement.
IAd could take the assets and network gained from the Quattro acquisition to create an environment where application developers can both build and monetize their applications.
"Previously, they had to separately and independently join a mobile ad network, so it's a one-stop-shop play that should make it easier on developers and result in more ad inventory in the market," said Michael Boland, San Francisco-based senior analyst and program director at BIA/Kelsey.
"For Apple, this could not only bring mobile advertising under its umbrella, via Quattro, but bigger and better ad units via iPad," he said.
Will iAd, like Quattro, focus on the mobile Web and all smartphone platforms, or will it focus on the iPad, the iPhone and the iPod touch?
Is this simply a rebranding of Quattro Wireless, or will there be significant differences?
"I would expect a fairly large mobile Web play by Apple, given the mobile Web's reach of close to 70 million people in the U.S.," Mr. Gill said. "In-app advertising is interesting and effective, but the story is really just getting started for rich-media ad units and how consumers interact with the Web, applications, games and multimedia content from mobile devices."
Analysts were banking on the fact that iAd will be something new.
"I would be very surprised if there weren't significant changes from Quattro, although iAd will take advantage of the technology Apple acquired with Quattro wireless," Mr. Frank said. "I don't think Apple simply announcing a rebranding would live up to the hype that would be expected from this announcement.
"I would expect that Apple devices would be a principal focus, but whether that's the full extent of the innovation remains to be seen," he said. "I don't expect this to be a platform that treats all devices equally."
Apple, as it also has, will most likely focus on its own considerable assets.
"Probably not just a re-branding, though you'd have to expect that since the acquisition of Quattro there hasn't been a lot of time to do something huge, but we'll have to wait and see," Mr. Strother said. "As far as non-Apple platforms, I wouldn't expect much, at least at the start.
"Apple does Apple well," he said.
Good for mobile advertising
The iPad announcement is expected to help raise mobile advertising's profile among brands and agencies and help it to gain a bigger share of their marketing spend.
"I think this announcement does raise mobile advertising's profile, but marketing spend is all relative," Mr. Gill said. "We as an industry need to show that these impressions are actually driving value back to the brand, whether that's lift or transactions.
"That more than anything will allocate more dollars toward these platforms," he said. "There is no doubt that Apple is good at creating the buzz we need to catch advertisers' attention, but we need to deliver results in terms of ROI beyond the impression."
When Apple speaks, brands and agencies listen. That is what Steve Jobs is hoping, anyway.
"Apple has the attention of many people in the ad world, and so a well-executed mobile advertising offering would raise awareness and presumably help drive more spending on mobile," Mr. Strother said.
Other analysts gave a more tempered outlook in advance of the announcement.
"In the short term, it's likely to generate some enthusiasm and some corresponding opportunistic media spending from brands that want to be the first out there and do major branding to take advantage of this buzz," Mr. Frank said.
"However, brands are still concerned about reach and frequency control, and if this focuses exclusively on Apple devices, it's hard to see how this could move the needle in a significant way in terms of overall ad spending," he said. "Even if Apple succeeds in selling several million iPads, it's still relatively small number when you think of it in advertising media terms.
"There will be new campaigns and it's a new way for developers to monetize their efforts."
The MMA's take
Mobile Marketer's Dan Butcher interviewed Michael Becker, San Francisco-based managing director of North America at the Mobile Marketing Association, about his take on the news.
Here is what he had to say:
What impact will Apple launching the iAd mobile ad network have on the mobile marketing and advertising ecosystem? What are the implications for competitors?
Apple is an innovative force in the industry and they will draw a significant amount of valuable, and well-deserved, attention and interest in mobile marketing and advertising industry.
The iAd launch, along with the rumored reports of a full-multi-tasking OS for the iPhone and iPad, may provide new and innovative rich media, an interactive exercise for Apple's products that were otherwise not available.
The iAd launch may also stimulate activity within their development community, depending on the flexibility, openness and business models surrounding their developer tools and services.
It is too early to tell what affect this announcement will have on the competitive landscape of the industry, since the full-scope and capability of the offers are not yet fully clear.
However, for the industry as a whole, it is a pleasure to see continued investment and innovation being made in the area of mobile advertising, which as been proven to be highly effective in developing brand awareness, consumer purchase intent and overall consumer engagement.
The iPad represents a new media platform, a new channel for reaching and engaging consumer in what many are referring to as the "extra large format."
Clearly, the larger screen of the iPad provides more real-estate for a potential advertiser to work with, so this device and devices of similar form factors certainly have an opportunity to develop new and engaging rich-media consumer experiences that differ from those currently available with other mobile device formats.
Apple is in a position to provide a tremendous amount of value to the industry, and Quattro and similar mobile players like Millennial Media, Jumptap and AdMob have been leading ground-breakers in the industry.
We certainly look forward to seeing continued innovation that helps both their business and the overall market grow.
Will this help raise mobile advertising's profile among brands and agencies and help it to gain a bigger share of their marketing spend?
Without a doubt, Apple's announcements will create new and stimulate conversations surrounding the increasing opportunities for brand, retailers and publishers to generate value and an ROI from mobile marketing, mobile advertising and mobile commerce practices.
Our economy is building on entrepreneurism and innovation. These announcements certainly fall into these categories.
http://www.mobilemarketer.com/cms/news/ad-networks/5899.html
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