Apple iAd and the Future of the Mobile Advertising Industry

Apple’s iAd

Apple’s entry into Mobile Advertising is great news for many reasons. One of the key things is that it represents the validation of the idea mobile advertising, the industry and the growth that everybody has been talking about for years. Of course, the Google-Admob deal is another one.

Anyways, In this blog, let us review the impact of Apple iAd on Advertisers and ad networks like ZestADZ. Here are some of my thoughts:

Apple’s iAd: The App is the Ad

Apple brings an exciting (but not necessarily new) idea to mobile advertising. The Ad is basically a rich HTML 5 app that pops up with full interactions available from within the Application itself, without redirecting the user to completely new advertiser page. The interactions are rich, not seen in mobile advertising earlier, and really represents the next step in mobile advertising.

Will Attract Big Brands and Agencies

Apple will bring bigger brands and agencies into mobile advertising and increase the overall size of this industry.  Advertisers will be attracted to a more powerful medium and experience to engage consumers. They will also gravitate thanks to Apple’s strong foothold in the mobile industry with iPhone / iPod and now the iPad.

Higher Pricing

Apple has already raised the stakes (and prices, I am not confirming this, but only quoting from other blogs) .   This may not be such good news for advertisers as many of them are used to paying lower and paying higher for better experience may be worth it but the results are yet to show.

This is however will be good news for other networks. This is because the pricing of mobile ads has been lower primarily because the demand has outstripped supply. This has led to lower eCPMs and lower fill rates for publisher. With more choices, advertisers will increase budgets for mobile advertising and this will reflect across the ecosystem.

iAds Cost

The cost of setting up initial iAds campaigns is very high(reported as $1m on some sites vs $10m per campaign as reported on various sites). Also the CPC / CPM rates compared to other networks are going to be very high.  This is an entry barrier for most existing mobile advertisers, especially those who have been the earliest to adopt mobile as the key medium advertising. I am referring to mobile VAS and premium services companies selling ringtones, games etc who do not have access to an army of Ad execs and hundreds of millions in budget each year to make their campaigns successful, despite the high cost.

Apple iPhone / iPad only platform

Apple did not (and probably will not) announce any support for other devices and even though iPhone does represent a large segment of the available devices, it does not represent ALL the mobile devices in US. This problem is bigger in Countries other than the US where iPhone is not necessarily the biggest device.  For example: In India, iPhone was a massive failure despite the backing of the top Carriers with its disastrous pricing, faulty networks and also the launch of a 3G model at a much more higher price point in a non 3G market.

Authoring of Ads

Reportedly, iAd advertisers will get some initial hand holding to create the Rich Media Ads on HTML 5. As some Googler pointed out (source: Adage.com), there is no tool for Authoring HTML 5 right now while Adobe, Apple’s current rival has just announced a few days back that they will build the best authoring tools for HTML 5.

So, where is the industry heading?

No doubt, the current industry biggies are busy preparing plans and strategies to counter Apple’s new iAd. The liveblogs, livetweets and endless praise by the Apple worshipping community did indeed a lot to raise the profile of a product that is not yet launched into the next big magical thing by Apple.

Apple has also made some important moves by blocking access to the data from within iPhone apps. That is of course being subject to scrutiny and time will tell whether such a move is valid.

I hear some noise about rich mobile media advertising by other players but whether iAd itself can be pushed for wide adoption (given the fragmentation of devices) is still a big question.

The market will further fragment due to more and more android devices that have been growing fast, iPhone market remaining static, HP’s acquisition of Palm and of course Microsoft’s Kin and Windows Phone 7 devices that look very exciting.

This is probably the number one reason why Apple’s iAd will never be the #1 in the market in a few years from now. The Google-Admob deal is around the horizon and if it goes through, Apple will see a lot of competing (read: cheaper) bids by them and the ad networks like ZestADZ.

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