Apps (and Apple) raise the stakes for mobile advertising
Apps (and Apple) are raising the stakes for mobile advertising. Publishers should take note of how the landscape is taking shape.
Apple announced this week that its iAd platform for the iPhone and iPod Touch will be live in July. The company claims it already has more than $60 million in commitments from major brands such as Best Buy, Disney and Unilever. (Oddly, there was no mention of the iPad in this week’s release. Spokeswoman Randi Wolfson wouldn’t comment on the omission, saying, “What’s in the press release is what’s there.” Helpful. Poking around Apple’s website did turn up what's been previously reported: that iAd support for the iPad is scheduled for this fall.)
Apple caused a bigger stir with revisions to the developer terms for the iOS software that powers Apple’s mobile devices. The new terms prohibit app developers from passing information such as location or unique device identifier to companies (ad networks) that have competing handsets, operating systems or development environments. This means, basically, Google, which just completed its acquisition of advertising network AdMob.
In a post to AdMob’s corporate blog, CEO Omar Hamoui said the move “would prohibit app developers from using AdMob and Google’s advertising solutions on the iPhone,” a change that he added “is not in the best interests of users or developers.”
Publishers should be wary of Apple’s attempts to wall off its iPhone and iPad platforms to third-party ad networks. Apple’s bid to control the platform, the content AND the advertising will ultimately hurt everyone but Apple. The company may well believe that “iAd is the perfect mobile format to reach and engage with our customers,” as it states in its press release, but it shouldn’t be the only format.
As Apple prepares to release iAd, others are jockeying for position. Adobe this week announced a partnership with Greystripe to translate Flash-based advertising content to HTML5 so it can run on iPhone and iPad devices.
The land grab is understandable. CPMs for the iPad are coming in at a premium. The Washington Post reported that USA Today is charging $50 CPMs for advertising on its iPad edition, about five times more than it charges for its website inventory. Phuc Truong, managing director of the mobile marketing company Mobext U.S., told WaPo that publishers have been asking two to four times the usual rate of online advertising for their iPad editions.
Apple is also reportedly taking a premium cut for the iAd platform. According to published reports (which Apple of course would not confirm or deny), it is essentially double-dipping, charging a $10 CPM plus a $2 cost-per-click. AdAge notes that this works out to a $30 CPM for a campaign with a 1% click-through rate, which is “rich for a mobile ad campaign but in line with mobile video, where inventory is tightly constrained.”
Mobile video poised for take-off?
Mobile video advertising is another area that could be poised for take-off. Mobile ad network provider Jumptap announced this week the addition of video to its premium mobile ad network. Jumptap’s publishing partners will now be able to add video inventory to their mobile content assets, along with search, display, rich media and in-app advertising through the Jumptap platform.
Jumptap CMO Paran Johar said the time was right to add a video component. “We’ve reached a tipping point in terms of video,” he said. “Overall fill rates are increasing dramatically.” Johar noted that video inventory commands higher premiums, from 15 CPMs (for interstitials) to as high as 40 CPMs (for pre-roll, with targeting).
The growth of mobile video and the emergence of larger-screen devices such as the iPad offer fertile ground for publishers seeking new and more sustainable revenue streams. Acknowledging the novelty of the iPad and other e-readers as advertising platforms, the Internet Advertising Bureau announced that it was forming a new “Tablet Task Force,” whose mission is “to explore and define comprehensive best practices in the area … and provide guidance on the development of ad standards that enhance the lush consumer experiences that these devices promise.”
The IAB also released a report that examines the potential of what it has dubbed “tabvertizing” (pdf).
I asked Johar what advice he would give to publishers looking to monetize their mobile assets. “Choose your partners carefully,” he said. “Make sure they have a strong value proposition.” He wasn’t referring specifically to Apple, but publishers would be wise to consider Apple’s end game before giving Steve Jobs & Co. the keys to the kingdom.