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.