Next week, the eagerly anticipated iPhone 4 comes out, followed swiftly by Apple’s iAd mobile advertising network on 1 July.
Anyone with an updated iPhone and iPod touch device will finally be able to multitask and receive targeted ads.
After the success of the iPhone in introducing apps, will the IT giant be able to win the hearts of advertisers with its new offering?
According to Steve Jobs, CEO of Apple: “iAd offers advertisers the emotion of TV with the interactivity of the web, and offers users a new way to explore ads without being hijacked out of their favourite apps. iAds will reach millions of iPhone and iPod touch users – a highly desirable demographic for advertisers – and provide developers a new way to earn money so they can continue developing free and low cost applications.”
Advertisers seem to be lapping up these capabilities. Apple announced that the system would launch with mobile ad campaigns from leading global brands including AT&T, Best Buy, Campbell Soup Company, Chanel, Citi, DirecTV, GEICO, GE, JCPenney, Liberty Mutual Group, Nissan, Sears, State Farm, Target, Turner Broadcasting System, Unilever and The Walt Disney Studios.
Within two months of opening the system up to developers, Apple says it has iAd commitments for 2010 totalling over $60m (£41bn), which represents almost 50% of JP Morgan’s forecasted US mobile ad spending for the second half of 2010. Not bad for a service where Apple sells and serves the ads, giving developers a 60% share of iAd revenue.
Why are they interested? Lisa Caputo, executive vice president and CMO, Citigroup, says: “iAd gives us a remarkable level of creativity for creating ads to connect with our current and future customers in a more interactive style than ever before.”
Keith Weed, Unilever’s CMO, says iAd puts the brand, “at the forefront of something so innovative…We are now leading marketing into the digital age where the key will be to unlock the potential of mobile.”
While Babs Rangaiah, Unilever’s vice president for global communications planning says: “This partnership will offer us the ability to work within what we believe
will be the future of the mobile internet – Apps.”
According to GfK NOP, who recruited consumers to trial iAd, the ads prompted a favourable reaction from participants with 84% saying they were likely to recommend the service; but explicit permission to receive text messages was considered to be critical and appropriate targeting of offers to participants is important.
So, is this the kick that the industry needs?. Phones are becoming more mature as handset manufacturers look to increase market share and exploit the new generation of mobile users.
Apple’s latest iPhone features the highest resolution display ever built into a phone, a 5 megapixel camera with LED flash, and HD video recording. It has also been built to be the thinnest smartphone in the world. Its rivals are desperately trying to trump that. Adverts for handsets continue to focus on social media and apps, while sites such as Facebook and Twitter are dominated by status updates from iPhones, BlackBerry’s and the Ovi system used by Nokia.
Mobile networks are also watching with interest. Shaun Gregory, managing director of O2 Media, says: “The potential for mobile advertising is huge and there are a constantly growing number of offerings out there for consumers, so we welcome Apple into the mobile advertising market. Apple will no doubt enhance customer experience, but as well as that I believe privacy is essential. Offering customers the opportunity to opt in to receive relevant messages and offers is key to our strategy. If they don’t opt in then they simply won’t receive any ads.”
Yet they are also keen to differentiate their products. Gregory says: “I see Apple’s advertising play as being based around applications and the mobile marketplace is much richer than that. O2 Media has been built to offer the whole range of opportunities, ranging from Apps to messaging, and ultimately provide brands with the right solutions for their media plans.”
Vodafone Group, who was considering axing their mobile marketing service, has also opted to maintain a presence in this field. It wants to innovate in this market to continue the progress it reported making at this time last year, when it was made available in 18 markets in the space of 18 months.
And Orange and T-Mobile’s joint promise to develop new revenue streams in adjacent markets, such as mobile advertising and mobile commerce, through parent company Everything Everywhere will also prove interesting. It’s a curious co-incidence that all of these networks have announced that the iPhone 4 will be available on their tariffs.
But Apple’s recent decision to change the terms of its application developer agreement to prevent apps from serving users with ads via the Google-owned AdMob network could prove a step too far and lead to a major rivalry in the field.
Services such as GetJar, which recently broke the 1 billion app download barrier, will be keen not to lose out in the competitive marketplace through Apple’s bid for dominance. Indeed, the US regulator the Federal Trade Commission is investigating Apple’s revised developer agreement terms, amid fears that Apple could dominate too much and end up overcharging consumers.
Times will definitely be tough for the mobile marketing industry. Its major challenge now will be how it responds to a sector that is about to become a more competitive battlefield than anyone might have imagined at the start of the century.
- To read Joe’s previous opinion – Will iAds break new ground? Click here