Thursday, April 8, 2010

Apple unveils its mobile advertising platform, iAd during iPhone OS event; Apple will sell and host the advertising

Most developer events go under the radar screen. But today's Apple preview of its iPhone OS 4 may be more important than many publishers can imagine.
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Today Steve Jobs unveiled seven major changes to Apple's operating system that is used on the iPhone and iPad. The seventh, iAd, introduces Apple into the competitive world of ad sales. Like Google's AdSense (and to a certain degree, AdWords), Apple entre into advertising will be a boon for developers and media companies with mobile applications, as well as the entry of a powerful competitor.

For developers of iPhone and iPad apps, iAd will bring a new, highly interactive mobile advertising platform to their apps. Jobs demonstrated ads for Disney's Toy Story, Nike and Target during today's presentation. Unlike standard ads, these ads do not take you outside the app when you click on them, but launch an app-within-an-app -- basically a pop-up window -- that keeps mobile users within the original app, but introduces a more interactive ad.

The first thought that hit me, however, was will ad agencies develop these ads? Media companies have been slow to get into developing, now will interactive ad agencies embrace this HTLM5 based platform (still no Flash) and develop complex ads for their clients?

More importantly, Apple will now enter the media sale market, representing the iPhone and iPad platform to clients and their agencies. Apple said, during the Q&A, that they do not want to become a worldwide ad agency, but they apparently want to become a worldwide media sales giant.

"The average user spends over 30 minutes every day using apps on their phone. If we said we wanted to put an ad up every 3 minutes, that's 10 ads per device per day. That would be 1b ad opportunities per day," Engadget quoted Jobs as stating. "This is a pretty serious opportunity, and it's an incredible demographic. But we want to do more than that. We want to change the quality of the ads, too."
iPhone OS 4.0 changes:
1. Multitasking
2. Folders
3. Enhanced E-Mail
4. iBooks for iPhone
5. Enterprise Changes
6. Game Center
7. iAd

But Apple will get quite a chunk of this new revenue stream, splitting the ad revenue 60/40 with developers. And who is a developer? For many media companies this would be the third party vendor that created their app. Conceivably, a media company would split the 60 percent with them, as well. But for developers who now have to depend on either AdSense and AdMob ads, or no ads at all, this would be a new way to monetize their free apps.

Last year Apple was in negotiations to buy AdMob. Eventually Google picked up the leading mobile advertising company -- snatched it away, according to Apple -- and Apple eventually acquired Quattro Wireless. Now, the FTC may decide to block Google's acquisition on competitive grounds. This move by Apple may make it easier for the Federal agency to approve Google's acquisition.

The most widely anticipated change to the iPhone OS was the first introduced by Steve Jobs today: multitasking. Apple has apparently found an elegant way to achieve mulitasking, though the feature will only be able to used on the latest editions of the iPhone and iPod touch -- owners of older models are out-of-luck.

Other upgrades to the OS include the introduction of folders, allowing iPhone users to have up to 2,000 apps on their phone), enhanced e-mail (universal in-box, and the ability to have more than one Exchange account), iBooks for iPhone, enterprise upgrades and Game Center, a social gaming network much like XBox offers.

The new iPhone OS will be available to iPhone owners this summer, while the iPad version will be available for download in the Fall. The OS is free for all iPhone and iPad users, while the iPod touch users are required to pay $10 for the upgrade.