Apple announced the launch of its new advertising network for iPhone and iPad applications. This new network is exciting to digital marketers, but has a cost that clients might not want to pay.
The great thing about this network is that clients can be assured that advertisements will display properly on Apple’s devices. Providing a consistent experience will go a long way to improving brand recall and drive purchases whether it’s on the iPhone or iPad. Clients can be assured that the money they spent on creative will be money well spent.
But on the flip side of the coin is Apple’s business model for placing ads on the network. Apple says it will share profits with application developers in a 60/40 split. That means that for every dollar your client spends to put an ad on the network, the application developer (who would be considered a third party on the deal) would make 60 cents. Clients may not like the idea that 60% of their money spent to deliver advertising to customers is being handed over to someone they don’t think of as being part of the process.
Don’t get me wrong, I think developers need to be paid for their hard work. Without them, there wouldn’t be any applications to deliver ads on. But the sticker shock to clients may dissuade them from placing advertising on Apple’s mobile devices, despite possibly lucrative returns.
Steve Jobs unveiled the newest gadget from Apple, the iPad. But during his keynote, I noticed two things.
- Steve said that Apple looked to create a third class of device between the iPhone and the MacBook.
- Over and over again, their was talk to experiencing some aspect of the device.
Interestingly, Apple is creating a new market based on the idea that there is something lacking between the iPhone and MacBook markets. This unserved market segment apparently desires a new way of experiencing the technology.
As for the technology itself, there’s nothing really remarkable about it. The OS is just a repackaging of the iPhone OS. The device looks like a really big iPhone. In just about every way, the iPad is another iPhone. Aside from running some new iLife programs, I don’t see the benefit.
What Apple is counting on is that people want to experience everything media related (movies, music, web sites, books) via a touchscreen interface. As a result, Apple is counting on marketing an experience, not a device, to their target market segment. It’s an interesting idea, but success or failure is going to come down to an intangible rather than clear cut benefits. It’s a huge shift, and if Apple succeeds, it might create a template that other companies will soon follow; or it may become a cautionary tail.