iAd - Apple misses the trick and plays catch-up
I’ve just been reading a couple of articles from last weeks PPA conference:
PPA Conference 2010: Publishers warned ‘Apple expect to make money off our backs’
PPA Conference 2010: Publishers struggling to generate revenue from apps
This seems to be about two things, and they’re getting mixed up:
- iAd - Apples soon to be released ad platform.
- In-app purchasing
A lot of what is being discussed here is speculation (or maybe dawning realisation) about iAd. The problem is, as I understand it, publishers are worried that they are moving from a print medium with an advertising market where you earn 100% revenue to this new world where iAd will take 40% (which I think is the same cut as Google’s AdMob).
But what you have to remember with Adsense, AdMob and iAd is that you don’t need to actively do the selling like in the print market. These companies simply serve ads hopefully relevant to the content you’re publishing. It makes monitising your app/publication easy, you just have to bend over a little ;)
There is however, absolutely no way Apple will turnaround and ban all other advertising platforms (biggies like AdMob, or home grown), on future apps or devices. If they did it’ll bring down an anti-competitive shit-storm that would make Microsoft’s troubles look like a playground squabble.
This means publishers, if you have an army of sales staff that can generate ad placements for your print publications and you have enough niche companies wanting to buy your ad space, then there is no reason to use iAd/Admob et al. Keep the money yourselves, or just like anything else if you want an all-singing tool to help track and manage your ad sales (like Doubleclick DFP) expect to pay out either upfront or ongoing.
In summary I see it like this
- Apple make pretty computers people love, but are too expensive/niche and it almost kills them
- Apple notices music is going digital, makes a device (not the first of its kind I might add) then over time a multi-billion dollar industry out of thin air
- Apple then sees a complacent cellular industry not innovating and take them to the effing cleaners with the iPhone v1
- Apple notices that millions of developers are begging to build mini apps on their device (largely helped by a lack of Flash) and as if by magic, they make another multi-billion dollar industry out of thin air
- Apple then misses the fact that all those app developers want to make money beyond the initial sale and start using AdMob, home grown Ads and the like to generate revenue
- Apple creates iAd for iPhone OS4, deeply embeds it into the development kit reducing the app developer barrier to entry as low as possible, hoping to create yet another multi-billion dollar industry
The second thing being mentioned in those PPC articles is in-app purchasing, this to me is something that should be less important to publishers.
In-App purchasing, again in my mind, is essentially a way of getting your punters to part with more cash for the same thing. Think of it like The Sims being able to sell pack after pack of the same stuff that requires very little development effort. Now Apple of course got their knickers in a twist over this as it could mean they lose out if somebody basically gives away their app only to rake in bucks selling tractors or immigrant workers in their Farmville-style game. I can totally see why Apple would ban this type of activity this unless they get some skin.
For publishers though, what does in-app purchases actually mean? All I can think is Time-Life specials, “William and Kate Middleton’s Wedding Special”. Well in these instances isn’t it more likely in this new digital world you’re going to actually sell this content separately anyway? Maybe I’m missing the point I don’t know.
So I think to summarise you just have to think of Apple as this revenue generating machine that mostly gets it right but sometimes wrong (or late). Yes their definitely without doubt the first out of the starting block Usane Bolt style with this stuff. But the others will catch up quickly and most likely overtake them through simple openness, honesty and innovation just like the second generation browser war (MS IE vs. Firefox).
The smartphone market is much bigger that one shiny Apple device and with HP buying Palm, Google with its Android and Chrome OS it won’t take long for there to be a lot of awesome touch-screen technology opportunities which won’t have an Apple Tax.
