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What you should know about iAd

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Several months ago, Apple made an interesting move by purchasing Quattro Wireless, a mobile ad network, for a rumored $275 million. Many, including myself, wondered what Steve Jobs had up his sleeve. After months of rumors and chatter, questions were answered with the introduction of Apple iAd network earlier this month.
Since its launch, the blogosphere has been full of what this new mobile ad network means to the ad industry and ultimately mobile phone advertising. Some wonder if this is the first glimpse of the future of mobile marketing, or merely an attempt by Apple to control and profit from ads featured in iPhone, iPod Touch and iPad applications. I imagine it’s a little of both, but only time will tell if the network will be able to deliver on its promise to deliver better, more engaging, ads for its mobile device users.
Although iAd will not launch until the iPhone OS 4.0 is released in June, this hasn’t stopped advertisers from calling up their agencies to figure out how they can get their brand into the iAd network. But before we spend a dime of a client’s budget on Apple’s iAd, lets take a brief look at how it works and its advantages over existing mobile advertising.
How does it work? Well, like most Apple products and services, its very easy. Apple is controlling most of the process, as it will sell the space, host and deliver the ad messages. In fact, Apple has mentioned that it will help develop ads for advertisers temporarily to ensure all ads on the network are of the highest quality. So from an advertiser’s perspective, getting and developing an Ad seems pretty straightforward. However, agencies should beef up their skills in HTML5 and begin honing their craft in iAd production. For now, Apple seems to be going after the big-name marketers for the launch, but plans to create kits for agencies to make iAd development easier.
It should be no surprise that leveraging a brand like Apple on a new type of service has certainly had an impact on price. Recent estimates predict that Apple could charge up to $2 per click for ads on its mobile devices with most campaigns landing in the $1 million range. According to the Wall Street Journal, insiders predict that it will take $10 million to be one of the marketers included in the iAd network by the launch date.
The business structure for iAd is split 60/40 with the majority of the ad dollars going to the application in which the ad is featured while the remaining 40 percent will find a place in Steve Job’s wallet.
According to Apple, the selling points for iAd are simple:

  • Access to all 85 million iPhone and iPod touch users worldwide who spend 30 minutes per day with their noses buried in any one of the 180,000 applications on the App Store.
  • Marketers will be able to target ads with extreme precision based on an individual’s download preferences from iTunes. Imagine a Genius playlist, but instead of music recommendations, its ad recommendations. By doing so, Apple will be able to deliver content of interest to users, which should add to the performance of iAds.
  • Similar to other mobile networks, iAds can also be segmented based on geography, allowing marketers to reach users in a specific city, zip code or even at a specific location like a city park.

So what does all this mean for ad agencies? To put it simply, it means, “Wait!” As a former Apple employee myself, I have learned that the best strategy for adopting Apple products and services is to wait. As a new type of service, it is certain to have kinks. Moreover, many of the details surrounding iAd are still unknown and will remain so until the day of its launch later this June. So unless you have a major brand on your client roster, it is best to wait before launching into iAd. Take this time to research and learn from the best and worst and see if Apple is truly able to deliver measurable results for its first group of advertisers.
Finally, remain aware of the contraints of this new tool. iAd is only open to iPhone, iPod Touch and iPad devices. So before you allow your clients to drop a cool $1 million on a campaign, be sure to match the brand’s target market with the users of Apple mobile devices.
True to form, I believe Apple has once again delivered a new tool for agencies to use to help clients reach constituents. But it’s not for everyone. So unless you have a major marketer on your hands, take this time to learn and prepare. Being the first to do something doesn’t always lead to success, but adequate preparation and knowledge does. So, be ready for iAd, but resist pulling the trigger until you know it will work both for the agency and the client.

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Ed Sharp

Ed brings 15 years of traditional and digital media sales experience to the agency, giving us a perspective most agencies don’t have. When he’s not working or seeking new knowledge, Ed hangs out with his wife, two kids, two dogs, one cat, and a hamster. And yes, the cat and hamster are best friends.

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