Apple is no stranger to public scrutiny. Most recently,
Apple has been in a very public legal dispute with the FBI over iPhone
encryption, and the company’s unwillingness to provide the government with a
backdoor into Apple devices. Many consumers view Apple’s stance as a win for
privacy, but national security aside, has Apple’s anti-consumer-data policy
hurt them with advertisers?
The ecosystem Apple has created is frequently referred to as
a “walled-garden,” and like all products and services from the company, there
is an expectation and acceptance without question. Consumers freely choose the
Apple ecosystem for its functionality, ease-of-use, and apparent privacy
controls, but Apple’s agnostic attitude toward the success of its innovations
have led to several high profile failures. In early 2016 Apple has announced
the discontinuation of its iAd platform, after a poor reception, a lack of
support, and low engagement. The platform will remain in a self-service
capacity, but the lack of a dedicated sales-force also signals that Apple may
discontinue service totally in the future.
The creation of iAd took place in 2010, and was Apple’s
answer to the dominance of Google and Facebook in the online advertising space.
At the time of inception, Steve Jobs claimed
iAd would see up to 50% adoption in the mobile market, but in practice, the
platform never eclipsed 6%. Apple released new tools just a few weeks ago, but
as many marketers have commented, there is an all-around lack of enthusiasm and
support from Apple, making it difficult to get excited for the platform.
In many ways, the Apple business model is the antithesis of
the models found at advertisers. Launched with much fanfare, the issues with
the platform became apparent soon after launch that Apple would not provide the
tools advertisers were able to utilize on additional platforms. Further
concerns were raised when Apple allowed ad-blocking software into the App Store.
This move disgruntled many in ad-land, and was seen as an affront to many
parties who relied on advertising revenue to remain in business. This move came
at a time when Apple launched their dedicated news reading app, which would
also take advantage of the iAd platform.
There are a variety of fundamental issues with Apple’s foray
into the advertising space. While Google and somewhat Facebook have recognized
the need to embrace an integrate-or-die mentality, Apple chose to rest of their
laurels and wait for the users of their platform to elevate it to new heights.
This never happened because Apple, unlike Google and Facebook, chose to shirk
the responsibilities associated with being a media-owner. Now, Apple is a lot
of things, but a media-owner is not likely the first, or even tenth, descriptor
that comes to mind when considering their core business.
Consider, however, that Google is a service provider that
provides you with a free service in exchange for your information that it then
uses or resells for advertising purposes. Long TOS agreements aside, there is an
implicit relationship between Google and their users. The opposite exists for
Apple users. In Q1 2016, Apple announced there were over 1 billion Apple
devices in use worldwide. Each of these users has an iTunes account and a
plethora of other data that they are consistently feeding Apple. As a business
decision, Apple has chosen not to utilize this data which is a clear business
and PR decision. In order to be positioned as the nemesis of Google, Apple has
chosen to operate their business as the opposite of Google.
Many reports suggest that the writing was on the wall for
Apple to shutter their salesforce for iAd, but it is unlikely that the business
did not recognize that their direct lack of support was not to be blamed for
the platform’s lack of success. Advertising is high-technology business that
relies on consumer data and flexibility in distribution, and iAd offered
neither. So where did Apple go wrong with iAd, and why was it never the success
Jobs imagined during its 2010 unveiling.
Consumer data is key. As mentioned above, Apple is sitting
on over 1 billion devices in market, constantly collecting data that can be
useful in advertising and purchasing decisions. It is clear that not utilizing
this data is a business decision, but in an effort to appease their massive
customer base, Apple effectively alienated their advertiser base. For Apple to
be successful in advertising, there needs to be an increased value proposition
for advertisers to create specialized assets in a controlled ecosystem At this
time, that does not exist, and with Apple’s recent spar with the FBI, it does
not appear that Apple will soon release any customer information.
The ecosystem is arguable Apple’s greatest strength, but the
stringent guidelines have also provided another unnecessary obstacle for those
looking to advertise on the platform. Advertisers were not given the tools and
freedom to create increasingly complex and technical advertisements, which
further decreased the interest of advertisers to utilize the proprietary
service. The service also required specialized assets that needed to be created
in addition to current assets, adding yet another unnecessary barrier to
adoption. The platform also lacked features like cross-channel retargeting, and
advanced analytics tools frequently found on alternative services.
1 billion devices is lot, and there is no argument that
Apple is a cash-rich company that makes extremely healthy margins on their
devices. However, all those devices represent less than 12% of the global market,
where Android is the clear leader at 60%. Yes, Apple represents luxury and an
excellent user experience, but adoption has been slow in developing countries,
and those who chose to adopt the iAd platform were essentially disregarding
nearly 90% of the total market. Apple already sells a ton of devices, but to
many, they are too expensive, leading to lower adoption rates. Instead of
looking to simply increase adoption, Apple needed to consider a more open
platform that leveraged their size, cash, and market status to develop a
comprehensive platform that saw wider use.
The story for iAd is not over, and Apple is likely
considering new ways to launch the platform that will see increased success.
There are lessons to be learned from this failure however, and Apple must
evaluate their attitude toward advertising and their support for advertisers if
they truly expect increased utilization moving forward.
iAd may not have been the first choice for many advertisers,
but the departure of the platform and the potential for the platform to be
defunct moving forward should concern all those currently advertising on the
Apple platform. Mobile will continue to grow as a viable platform for
advertisers, but recognizing that changes are to be expected and that
alternative providers may offer increased services are all key considerations
when executing a marketing program.
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