Back in January, we greeted the announcement of Apple’s upcoming ad network with cautious optimism and a lot of questions. Today, Apple’s iAd team headed by the now former CEO of Quattro Wireless Andy Miller visited Hill Holliday to fuel the former and answer the latter. Here is what we can share.
The experience
1. We saw the Toy Story ad — familiar from Steve Jobs’s presentation last week — in action on a 3GS phone that apparently was running OS 4.0 (we forgot to ask). While the ad behaves similarly to the expanding rich banner units you see online, the overall experience is a lot less jarring. You click on the banner, the app screen slides up, and the ad screen slides in. When you are done, you close the ad, and you are right back to what you were doing. Being all thumbs, I mis-tap on app banners a lot, and not being yanked into the browser does feel a lot more humane.
2. Each banner published on the network will carry an iAd logo to differentiate it from the ads that do click into the browser, a Good Housekeeping seal of sorts. There will be only one iAd banner per app screen, and it can sit either near the top or the bottom edge.
3. The ads look and behave a lot like apps; the early and very popular lighter app by Zippo would feel right at home here. Unlike browser-based ads, iAd ads can tap into all major OS features of the phone, from compass and accelerometer to the multitouch interface. In the beginning, all ads will be built (in HTML5) by the iAd team. In the future, Apple will release an iAd SDK.
The business
4. The team emphasized that what Apple is selling to advertisers is the iPhone and iPod-totting demographic in general, not users of any individual app. This seems like a good news for the app makers on the longer side of the tail who, too, will have a chance to make money.
Last week, Jobs said that iPhone and iPod usage is about apps and not browser-based search, and the team brought up the datapoint about users spending 30 minutes each day in apps. Apparently, browsing is bigger on the iPhone than it is on the iPad if we look at this estimate Morgan Stanley published late last year.
5. They are lining up “charter” advertisers for the June launch and they will be looking for high-quality creative, which means, I guess, no fat belly ads. Initially, the network will work on iPhone and iPod touch only, with iPad coming some time in the future.
6. One thing conspicuously (to a media buyer) absent from Jobs’s demo last week was any discussion of targeting. It seems Apple isn’t ready to make all of the details public yet, but what they showed us was very impressive in its granularity. In our January post, Adam got more than a few things right.
7. To answer the burning question — yes, we did talk about the price. Unfortunately, we can’t share much on this either. The pricing isn’t that of remnant inventory, obviously — it is what you would expect from a premier online property. The pricing scheme struck me as very straightforward and elegant.
The reactions
I asked my colleagues who plan and buy digital media to share their first impressions.
Adam Cahill, head of the digital media group:
Three things strike me as interesting:
Pricing: Apple is going to sell 100% of the ads. Apple doesn’t do cheap, they do premium. So I’d expect buyers to become trained very quickly that this is expensive inventory, and I’ll be interested to see how this might impact pricing across mobile, and even across digital channels more broadly.
Format Innovation: I love that Apple is taking the stance that mobile is a different medium that needs unique ad formats. The fact that mobile to date has largely been about tiny banners has been disappointing, especially because no one is very happy with banners as an ad format even when they’re big.
Apps vs. Browser: By giving 60% of the ad revenue back to developers, Apple is clearly trying to ensure their continued leadership position within apps. The more developers make from their efforts, the more innovation we’ll see in apps, the more people will use them, the more indispensable Apple becomes. It seems that Apple wants to make sure the future of mobile is app-based as opposed to browser-based.
Johnny Won, digital strategies:
The big thing that iAd really does is it brings new thinking into the capabilities of mobile display advertising and it wasn’t brought to you by Google. Google has been badly lagging in all aspects of mobile and Apple probably saw the lack of innovation in the mobile advertising market and decided to put their stake in the ground. Let’s also be clear here that mobile display advertising isn’t yet a billion dollar business, this isn’t about the money for Apple but reshaping the industry as they saw fit.
The bottom line for Apple is the continuing creation of new and free apps for the App Store while everything else, like being the innovator in mobile advertising, sticking it to Google, pre-emptively blocking Adobe are just bonuses.
Stephen Badgasarian, mobile group:
I bet this is going to be a defining move with advertising creative in the mobile space. Mobile needs to be unique and different. You cannot take one channel and repurpose it on another, then expect impactful results. Print won’t work as online advertising, web display won’t work for mobile ads. Mobile is an experiential and behavioral medium – iAd updates should bolster those experiences.
However, Apple once again will have massive control on the market, especially if they limit who can access the iPhone API and will approve what ads “make the cut” and what don’t.
We also have an opinion about the iPad, right here. And we are hiring.
Ilya runs the R&D group and studies the relationships people build with different traditional and emerging media. 
This is great info, the inventory has a right to be more expensive with all that added functionality.
Been thinking about this for a while, check out some of the creative possibilities. Things like the YouTube Wario promo site would be perfect with the accelerometer
http://www.mobileinc.co.uk/2010/02/the-evolution-of-mobile-advertising-banners-part-one-the-creative-possibilities-of-the-accelerometer/
Thanks! Pretty awesome stuff.
Excellent post, thank you. I also liked your post concerning your impressions of the iPad — maybe because I agree with them. In any case, your willingness to share your thoughts following the meeting with Andy Miller is much appreciated.
If the iAd platform is being rolled out in June — which is when Apple will have its iPhone OS ready to be downloaded by iPhone and iPod touch users — I suspect they will roll it out for the iPad in the Fall as Apple said this would be when the new OS would be available for iPad users.
“Unlike browser-based ads, iAd ads can tap into all major OS features of the phone, from compass and accelerometer to the multitouch interface”
For what it’s worth, Flash Player 10.1 supports accelerometer and multi-touch (http://labs.adobe.com/technologies/flashplayer10/features.html)... but I guess you won’t be seeing that on the iPhone platform anytime soon.
Peter / Adobe
@Peter: Very interesting; didn’t know about it.
No problem Ilya. Just thought I’d let you know. Advertisers won’t be able to take advantage of it in the iPhone ecosystem, but there will be opportunities on 10.1 supported devices like Android, RIM, Palm, etc to take advantage of Accelerometer, Multi-touch, and Gestures in in-browser advertising. (I’m not sure, but some of those may require full-screen mode to be enabled… I could be wrong though). And the link I posted isn’t working because of the extra “)..” in the link… remove those and you can read more about it.
I find it pretty interesting that at the same time Apple announces iAd, they’ve included a new clause in the iPhone SDK developer agreement that essentially forbids sending analytics data to 3rd party services like AdMob and other competing ad networks.
See more here: http://www.148apps.com/news/apple-create-mobile-ad-monopoly-iphone/
@Peter
Flash Lite actually supports a bunch of cool stuff like accelerometer, vibration, battery power access and loads more stuff.
It’s a shame that there isn’t enough education about it’s abilities in the ad-serving world as it’s supported on a ton of phones. No one has taken advantage of it.
If the iAd have access to all the major OS features, would that include the GPS/Compass as well? – I am of cause thinking about the possibilities of location aware iAds as in “The 7-eleven on your right has a special offer on X today”
@Lasse – I think it would. Of course, for the 7-Eleven scenario to work, you’ll need to have the right ad in front of you. Wonder if ad serving will be triggered by compass data.
what if the user doesn’t click? they don’t click on standard display banners, why mobile banners? If this banner/advertising app is expensive to build, you’re wasting 99% of your dollars because 1% actually click through…this is really not a big deal, just Apple trying to grab a piece of the pie before anyone else does by giving it an i name and acting like the creative idea is original (it’s just building an interactive banner/app)
@ Johnny If the user doesn’t click that’s down to the targeting, creative and proposition. Any advertising no matter what format still needs to have some thought behind it.
But They DO actually click on mobile banners anyway, check out the results for mobile advertising on Google compared to web. The typical CTR is over 4%.
And this isn’t just an interactive banner, it’s a whole new thing. You can shake your phone to interact with a banner, compass, GPS and more. All these new tools aren’t available on any other ad-networks means there are new ways to engage consumers and make advertising better.
Has anybody asked the users what they think? If these are in the least bit interruptive, the stink will drift all the way across the entire mobile industry.
very interesting the possiblities with iAd. I’m sure things will never be the same in the mobile marketing world.
looking for a new mobile marketing platform for your clients… check us out and let me know what you think.
http://www.junowallet.com
@Ilya If you look into the 4.0 Beta, you will find hooks for event notification based on entering a specific geographical regions. So with the new backgrounding, these kinds of ads will be possible. However backgrounded GPS appears to default to cell tower triangulation so the accuracy may not be good enough for extremely local, right in front of you, ad targeting.
@murat – sure I get it, but 4% is still bad. You’re wasting 96% of your dollars on a tiny little banner that can pretty much just show your logo.
As long as you’re comfortable paying for that 4% of people based on your targeting that’s fine, but it’s likely a huge CPM.
I don’t have an official source, but I’ve seen stats that show something like 16% of people are responsible for 80% of the clicks online. If you’re going to base your ad buy on clicking, I hope it’s those 16% your trying to reach.
I’m not saying these are useless, I’m just saying they’re not quite worth the hype based on the examples shown.
Actually in most cases I’ve seen a CTR of around 1% is more typical for AdMob ads on iPhone. If you take into account inadvertant clicks from fat fingers and cases where the user hits the home button before the link is fully displayed this will drop to the region of 0.4%.
Apple will be aiming for significantly better CTRs and should get those, at least initially. They’ll need to in order to charge per impression.
Quite a lot of the current ad content carried on iPhones is for apps at present. App developers are unlikely to be able to get value from premium ads, given the low price points for most apps, so I’d expect a broader range of advertisers to be using iAd, and it will be interesting to see how Apple manages to fill the available spaces, while maintaining a premium price.
[...] Maybe it just took a great brand marketer to fix the problem, because with the launch of the iAd platform, Apple is clearly creating a system that will appeal to marketers interested in image building. [...]