IDC offers scathing prediction of certain death for Apple's iAd program

Posted:
in iPhone edited January 2014
Apple is reported to be reaching out to advertisers to improve its iAd program, but its third place share of the market doesn't seem to reflect the bumbling failure it is being portrayed as by IDC's marketing analysts.



A report by the Wall Street Journal describes iAd as being a disaster, saying that advertisers' "response so far has been tepid," and complaining that marketers are turned off by iAd's "high price tag" and "Apple's hard-charging sales tactics and its stringent control over the creative process."



The report, titled "Apple's Rare Compromise," stated that "Apple is now discussing ad deals with a minimum commitment of just $400,000, according to a person familiar with the matter."



In reality it was publicly reported back in July that Apple had begun offering new iAd packages for as little as $300,000 to woo new advertising clients such as Citigroup and JC Penny, as Apple continued to expand its program outside of its initial million dollar iAd launch clients.



The article also stated that while Apple makes its money from hardware, not ad sales, the "state of the [iAd] service could affect developer loyalty to its platforms over time," imagining in print that software developers "are increasingly interested in building software for Android devices and getting advertising checks from Google," a daring observation made without any supporting evidence whatsoever.



Apple working with clients to improve iAd



The report did indicate that Apple's iAd team had established a training program with media buying agency OMD, to gain new insight into the mobile marketing world.



As part of the program, Apple reportedly invited 30 senior marketing executives from companies including Clorox, PepsiCo and JC Penny to its campus to engage in sessions with the company's designers and product teams. While a first for Apple, campus meetings like these are something that has become a "standard tactic" for "ad-dependent" tech firms "like Google, Yahoo and Facebook," the report noted.



IDC, which tracks mobile advertising market share, said Apple's share of the market has dipped from 19 percent at the end of last year (when it was tied with Google), to 15 percent this year. Google has edged up to a 24 percent share this year.







However, Apple entered the mobile advertising business by purchasing Quattro Wireless at the end of 2009, back when that firm had only a 9 percent share of the market. Google then had a 27 percent share, but as IDC reported last fall, Google, Microsoft and Yahoo "swiftly lost share" after Apple's iAd debuted in July 2010.



Google has since won back a portion of its initial position, but Microsoft has fallen from 10 to 7 to 6 percent share over the past three years, while Yahoo has dropped from 12 to 9 to 8 percent share over the same period.



Unlike the ad-centric paid search results businesses of Google, Yahoo and Microsoft's Bing, Apple entered the market with iAd to incentivize App Store development, and did not expect to turn a huge profit from its new advertising business.



The idea that Apple is dramatically losing market share in terms of ad dollars collected is therefore an intriguing way to portray iAd as a failure, particularly given the poor performance of the mobile ad market overall.



IDC predicts iAd will fade away



IDC analyst Karsten Weide failed to connect those dots when interviewed by the Wall Street Journal however, announcing instead that "Apple we believe will, over time, fade into the background," in the market for mobile ads, largely because Apple's iAd program only advertises to iOS devices.



Weide said iAd "was attempted to make sure that even consumers advertising experience on Apple devices was perfect, but it hasn't really worked."



Apple is currently straddled with 15 percent of the $630 million mobile ad market, putting it in third position behind Google and Millennial Media, but ahead of Jumptap, Microsoft and Yahoo.



Apple's share is actually larger than Microsoft and Yahoo combined, making it curious why the Wall Street Journal and IDC worked so hard to portray iAd's $95 million in revenue as a fumbling failure destined for certain death.



Apple paid $275 million for Quattro Wireless at the end of 2009, after losing its bid to acquire AdMob, which Google paid $750 million for in its parallel efforts to enter the mobile ad market.
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Comments

  • Reply 1 of 55
    Let's face it, Apple is not an ad agency, but they should form revenue sharing deals with a number of smaller, smart, nimble agencies who are willing.
  • Reply 2 of 55
    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    The analysis seems rather short-sighted as it makes no mention of the potential game-changing effect that Siri will have on Google and others ability to advertise(at least on iOS). Once Apple is able to fluidly connect Siri with iAd it will be a whole other story.
  • Reply 3 of 55
    2oh12oh1 Posts: 503member
    Quote:
    Originally Posted by .:R2theT View Post


    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    No kidding! Talk about some odd reporting. Quattro Wireless had 9% of the mobile ad business in late 2009. Apple bought them and, in 2 years, increased that to 15% of the mobile ad business.



    And this is bad?
  • Reply 4 of 55
    steven n.steven n. Posts: 1,214member
    Not because they question iAD (I do as well) but their numbers are known to be dead wrong:



    "Apple is currently straddled with 15 percent of the $630 million mobile ad market,"



    Given we know for 100% certainty that Google alone has a $2.5 billion/year run rate on mobile (with 2/3 coming from iOS), the 630 million is just dead wrong on all accounts.



    Can I get a job making lots of money making up opinions based on faulty data?
  • Reply 5 of 55
    Quote:
    Originally Posted by .:R2theT View Post


    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    The analysis seems rather short-sighted as it makes no mention of the potential game-changing effect that Siri will have on Google and others ability to advertise(at least on iOS). Once Apple is able to fluidly connect Siri with iAd it will be a whole other story.



    The question is, why would I want this? We all complain about Google raping our identities for ads, why is it okay for Apple to do the same? Apple does not need the revenue from ads, and I'm pretty sure they created iAd in an attempt to simply limit Google's income. Apple has your money when you buy the device, and make you want to buy another device by selling you apps, getting you into iTunes, iBooks, etc., and providing top-notch support when any issues come up.



    OTOH, Google has your identity, and then sells it for profit. Not exactly the type of company I want Apple, who seems to be one of the leaders in customer privacy, to turn into.
  • Reply 6 of 55
    hmmhmm Posts: 3,405member
    Quote:
    Originally Posted by SpamSandwich View Post


    Let's face it, Apple is not an ad agency, but they should form revenue sharing deals with a number of smaller, smart, nimble agencies who are willing.



    We don't really need more Ads in general. It's completely stupid, and it is a bad way for Apple to push growth. You go to a site like google to search for things. They collect information. They do serve ad content, but you are not paying google to search their database. You are paying Apple for a phone and any applicable apps.
  • Reply 7 of 55
    paxmanpaxman Posts: 4,666member
    Quote:
    Originally Posted by SpamSandwich View Post


    Let's face it, Apple is not an ad agency, but they should form revenue sharing deals with a number of smaller, smart, nimble agencies who are willing.



    Yes, It all seems a bit of a half assed effort. If the big Apple Television thing happens life for iAds may change, but I wouldn't bank on it.
  • Reply 8 of 55
    It's not such a bad thing that Apple sucks at selling its customers.
  • Reply 9 of 55
    malaxmalax Posts: 1,598member
    iAds is supposed to be a way for developers to generate income from Apps.



    More good, cheap/free apps for the iOS platform is good for Apple. The only relevant question from this perspective is does the iAds income from an iOS app equal or exceed that from an Android app (or is it at least sufficient to tip the balance in favor of developing for iOS)?



    If, and this is a big if, thanks to market share of Android and great mobile ad revenue, developers start prioritizing Android development then that would be a problem.



    The way to get an answer to that would be to hear from developers with large-volume ad-supported apps on both platforms.
  • Reply 10 of 55
    iArrogant- When iAd launched July 2010, Apple originally asked marketers to commit to spend at least $1 million dollars. Today, less than 1.5yrs later $300,000.



    iBlunder- Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers, ad executives say.

    Instead of charging marketers every time a user taps on an ad?a policy which often led to ad budgets quickly being exhausted?Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.



    iFail- "Apple said, 'Let's try to disrupt the advertising business.' On this one, they didn't succeed," says Alexandre Mars, head of mobile for Publicis Groupe SA. "They know that they need to adapt themselves now if they want to survive - even if it is Apple."





    Read the complete article at: http://online.wsj.com/article_email/...#ixzz1gOFlJA00
  • Reply 11 of 55
    I think iAd is important as an enticement to developers. iAd continues to generate revenue for the best developers well after their apps have reached market saturation.



    I would like to see Apple purchase Hulu and use iAd as their advertising platform for a reinvigorated, re-envisioned Apple version of Hulu. If Apple could offer a basic programming package for iTV supported by advertising revenue from iAd they would virtually ensure the success of both iAd and iTV in my opinion.
  • Reply 12 of 55
    andysolandysol Posts: 2,506member
    Quote:
    Originally Posted by MacBook Pro View Post


    I think iAd is important as an enticement to developers. iAd continues to generate revenue for the best developers well after their apps have reached market saturation.



    I would like to see Apple purchase Hulu and use iAd as their advertising platform for a reinvigorated, re-envisioned Apple version of Hulu. If Apple could offer a basic programming package for iTV supported by advertising revenue from iAd they would virtually ensure the success of both iAd and iTV in my opinion.



    I would love apple to buy them too. But I don't know off the top of my head anything apple has given for free.

    I guess iTunes- which is a great media organizer- but we know that's a means to an end. I guess they could use Hulu and have it exclusively on apple tv- but I'm not sure if that'd even be allowed (and almost impossible to recapture the money they would have purchased it for). That'd be a ton of ad revenue just to recapture the purchase price if it was open market. Same thing with Netflix- it just doesn't seem profitable enough for apple- and they don't "open source" anything. I dont see it fitting.... BUT- I, too, wish they would.
  • Reply 13 of 55
    Quote:
    Originally Posted by malax View Post


    iAds is supposed to be a way for developers to generate income from Apps.



    Where do you think that income is coming from? Advertisers! Advertisers feel they are not getting their money's worth with iAd.



    Quote:
    Originally Posted by malax View Post


    More good, cheap/free apps for the iOS platform is good for Apple. The only relevant question from this perspective is does the iAds income from an iOS app equal or exceed that from an Android app (or is it at least sufficient to tip the balance in favor of developing for iOS)?



    Give iOS app developers a larger cut? Wrong perspective to have if you want to iAd to survive.



    Quote:
    Originally Posted by malax View Post


    If, and this is a big if, thanks to market share of Android and great mobile ad revenue, developers start prioritizing Android development then that would be a problem.



    It's already a problem.
  • Reply 14 of 55
    Quote:
    Originally Posted by .:R2theT View Post


    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    The analysis seems rather short-sighted as it makes no mention of the potential game-changing effect that Siri will have on Google and others ability to advertise(at least on iOS). Once Apple is able to fluidly connect Siri with iAd it will be a whole other story.



    Quote:
    Originally Posted by 2oh1 View Post


    No kidding! Talk about some odd reporting. Quattro Wireless had 9% of the mobile ad business in late 2009. Apple bought them and, in 2 years, increased that to 15% of the mobile ad business.



    And this is bad?



    Yes it is.



    Since iAd is only on iOS devices, and iOS devices have a 28% market share, shouldn't iAd have 28% market share as well?
  • Reply 15 of 55
    Quote:
    Originally Posted by Russell View Post


    iArrogant- When iAd launched July 2010, Apple originally asked marketers to commit to spend at least $1 million dollars. Today, less than 1.5yrs later $300,000.



    iBlunder- Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers, ad executives say.

    Instead of charging marketers every time a user taps on an ad?a policy which often led to ad budgets quickly being exhausted?Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.



    iFail- "Apple said, 'Let's try to disrupt the advertising business.' On this one, they didn't succeed," says Alexandre Mars, head of mobile for Publicis Groupe SA. "They know that they need to adapt themselves now if they want to survive - even if it is Apple."





    Read the complete article at: http://online.wsj.com/article_email/...#ixzz1gOFlJA00



    iWhoCares - the total mobile display market is $630MM? So the difference between 15% and 24%(Google) market share is roughly $57MM. Apple just sold that many iPhones, iPads, and MACs in Grand Central Station over the weekend.
  • Reply 16 of 55
    Quote:
    Originally Posted by Andysol View Post


    I would love apple to buy them too. But I don't know off the top of my head anything apple has given for free.

    I guess iTunes- which is a great media organizer- but we know that's a means to an end. I guess they could use Hulu and have it exclusively on apple tv- but I'm not sure if that'd even be allowed (and almost impossible to recapture the money they would have purchased it for). That'd be a ton of ad revenue just to recapture the purchase price if it was open market. Same thing with Netflix- it just doesn't seem profitable enough for apple- and they don't "open source" anything. I dont see it fitting.... BUT- I, too, wish they would.



    Your statements confound me.



    "...I don't know off the top of my head anything apple has given for free."



    While iCloud is essentially rebranding of MobileMe, iCloud is an outstanding service primarily because it is free.



    The "PC Free" feature in iOS 5 shouldn't be under appreciated either; "PC Free" implies and realistically allows use of iOS devices without requiring a computer. In the instance of iPad this almost certainly costs Apple some sales of MacBooks.



    AppleTV includes Netflix, YouTube and a few other services that, while they make a more compelling value proposition for AppleTV almost certainly reduce iTunes revenue from movie rentals (and TV shows).



    iTunes Movie Trailers is free as well albeit (most likely) another revenue stream (although I am unsure how the app generates revenue).



    Apple provides updates to their entire iOS product line for a couple of years at no cost. Although this may not seem important immediately, the implication is that Apple wants you to be sufficiently satisfied with their current products that upgrading is a compelling value proposition rather than compulsory.





    "...they don't "open source" anything..."



    You should review the following website for an extensive list of Apple's contributions to the open source community.



    http://www.apple.com/opensource/
  • Reply 17 of 55
    Quote:
    Originally Posted by .:R2theT View Post


    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    The analysis seems rather short-sighted as it makes no mention of the potential game-changing effect that Siri will have on Google and others ability to advertise(at least on iOS). Once Apple is able to fluidly connect Siri with iAd it will be a whole other story.



    If you were to ask Siri where the closest coffee shop is, do you want her to tell you the closest one or the one that paid for an ad?
  • Reply 18 of 55
    You all are forgetting one thing not factored into this report designed to circumvent the impenidny threat that is Apple in the advertising arena, that is already beginning to unseat traditional means of advertising (print), and is now moving into the Internet arena.



    iOS "mobile" devices may be the only thing that run iOS and iAd under the purview of this incomplete (intentionally incomplete and thus misleading) analysis report. Apple came into the living room, if no one has remembered that, via the use of a small, $100 box that's also such a threat cable and internet providers are scrambling to determine a way to circumnavigate it without encountering anti-trust violations (they ARE "Utilities", after all) :



    Apple TV



    I can't say that apple will build an actual television. With their history it would be overpriced and buggy, but I can see them building a set top box, as they already have, with increased functionality, and it runs iOS, and thus in theory also be compatible for iAds.



    That now provides an entirely new market and audience, especially ad people begin to decouple from traditional cable tv offerings and the model leans more and more to a la carte service that promises to change the paradigm.



    (I take many articles with a grain of salt here on AI, as I overheard an HP exec stating they were dropping tablet devices completely due to not being able to complete with apple) but I do believe they changes their name to Apple Inc and now consider themselves a "consumer electronics" company for a reason and they will produce a device that changes televising in the next year.



    I mean, that should have been obvious when they installed a mini hdmi on the Mac Mini and shrunk the Apple tv to a box that no longer could hold a HDD.



    The message was clear:

    if you want a media pc, get a mac mini.

    If you want to have streamlined access to iTunes and programming, get an Apple TV.

    Also, the price and it's foot print ENSURED many would purchase it and if they can find a way to slash the price further, I guarantee you, they WILL.



    This article is FUD.



    Apple's iAd is actually a HUGE threat to the advertising industy and their lobbies.
  • Reply 19 of 55
    Quote:
    Originally Posted by Harleigh Quinn View Post


    You all are forgetting one thing not factored into this report designed to circumvent the impenidny threat that is Apple in the advertising arena, that is already beginning to unseat traditional means of advertising (print), and is now moving into the Internet arena.



    iOS "mobile" devices may be the only thing that run iOS and iAd under the purview of this incomplete (intentionally incomplete and thus misleading) analysis report. Apple came into the living room, if no one has remembered that, via the use of a small, $100 box that's also such a threat cable and internet providers are scrambling to determine a way to circumnavigate it without encountering anti-trust violations (they ARE "Utilities", after all) :



    Apple TV



    I can't say that apple will build an actual television. With their history it would be overpriced and buggy, but I can see them building a set top box, as they already have, with increased functionality, and it runs iOS, and thus in theory also be compatible for iAds.



    That now provides an entirely new market and audience, especially ad people begin to decouple from traditional cable tv offerings and the model leans more and more to a la carte service that promises to change the paradigm.



    (I take many articles with a grain of salt here on AI, as I overheard an HP exec stating they were dropping tablet devices completely due to not being able to complete with apple) but I do believe they changes their name to Apple Inc and now consider themselves a "consumer electronics" company for a reason and they will produce a device that changes televising in the next year.



    I mean, that should have been obvious when they installed a mini hdmi on the Mac Mini and shrunk the Apple tv to a box that no longer could hold a HDD.



    The message was clear:

    if you want a media pc, get a mac mini.

    If you want to have streamlined access to iTunes and programming, get an Apple TV.

    Also, the price and it's foot print ENSURED many would purchase it and if they can find a way to slash the price further, I guarantee you, they WILL.



    This article is FUD.



    Apple's iAd is actually a HUGE threat to the advertising industy and their lobbies.



    I will only add that Apple poses a credible potential threat to television manufacturers, subscription television service, game consoles, entertainment software and advertising as we know today.



    If Apple can provide a competitively priced alternative to the current model with competitive advantages such as the following then their long term success is assured:



    iCloud integration

    Subscription television service supported via a nominal fee and iAd advertising (ala Hulu)

    iTunes integration

    App Store

    Multi-user "mission control" (think of a digital version of the proverbial front of the refrigerator with a family schedule, home voicemail, intra-family messaging)

    Game Center with obligatory game console functionality

    Siri interface

    FaceTime





    The key is to make the user experience so compelling that the average user doesn't feel they need to connect several different devices or services (cable box, Blu-ray player, game console).
  • Reply 20 of 55
    Quote:
    Originally Posted by .:R2theT View Post


    15% doesn't seem too bad for the time Apple has been at the mobile ad game.



    The analysis seems rather short-sighted as it makes no mention of the potential game-changing effect that Siri will have on Google and others ability to advertise(at least on iOS). Once Apple is able to fluidly connect Siri with iAd it will be a whole other story.



    You must be kidding. If you want to instantly kill a feature on an iPhone is to plug any sort of advertising into it. People who use Siri want unbiased answers, not what company Apple is currently hawking.

    iAd looks to have been a failure from what it was portrayed as. It was sold as the next great thing in advertising, and it isn't even close. Probably their 15% now is less than what it was before. With all the fanfare that it was kicked off with, I've seen a lot of advertisers disappear off the map.
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