Will iAds break new ground?

Apple has confirmed that it will debut its iAd mobile advertising network on 1 July on updated iPhone and iPod touch devices. 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.”

I’m inclined to agree with Jobs. When I use the apps on my iPhone, I find it a major hindrance to have to exit an app to do something else. So the opportunity to engage with an ad and explore the offers without having to quit what I was doing or be taken to another page, would make a welcome change.

Advertisers seem to be singing off the same hymn sheet as me. 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 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.

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 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.

There’s no doubt that Apple has attracted mass interest through the launch of the iPhone 4 and its 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 clears the playing field for them to make iAd a success.

Yet, its new challenge is to convert all the interest into rock solid numbers. And that might not be as easy as some would expect.



    Leave a comment