Apple’s Mobile Marketing Dilemma

Within Apple’s headquarters in Cupertino, California, you’ll find a company with a loathing mistrust of modern advertising. Earlier this year, CEO Tim Cook said of companies such as Google, Facebook, and Twitter, “They’re gobbling up everything they can learn about you and trying to monetize it. We think that’s wrong. And it’s not the kind of company that Apple wants to be.”

Turns out that all those billboards Apple uses on California’s Route 101 aren’t just there to sell you phones, tablets and watches. They’re also a very public confession of Apple’s preference for advertising’s future: Madison Avenue production and not much in the way of targeting.

Apple’s dislike of advertising’s modern techniques isn’t unique, but it implies a rejection of the belief that’s at the core of the companies driving the mobile/digital revolution in marketing. That thesis looks like this:

  • Gathering more consumer data will result in information that helps advertisers better understand their customers.

  • In return for consumers sharing that information, consumers’ advertising experience should improve as they’re served ads that are informed by the insights advertisers glean from this data.

  • This in turn will ensure that future providers of “free” digital content – which covers nearly every network, newspaper and magazine ever to exist – will have the opportunity to successfully monetize that content via advertising.

While Google, Facebook and others build on these assumptions, Apple would like nothing more than to tear them down. Herein lies a worldview distinction that is more relevant to the future of technology than anything else I can imagine, given the size of the media and advertising economy worldwide.

It’s not that Apple has a death wish against media companies. It just believes that they would be better served by altering their business models. Instead of acquiring and using massive volumes of consumer data in an attempt to deliver relevance, presumably they should go back to the Mad Men days of lightly targeted advertising.

If these ad revenues aren’t enough to pay the bills, Apple wants to help make it easier for consumers to pay publishers directly for their content. The company already has some experience getting people to pony up for stuff previously available for free. It’s called iTunes, which first emerged just as many consumers were discovering how easy it was to copy their CDs to digital formats and share them at no cost with millions of others.

A decade later, you could argue that iTunes has done more than any other innovation to remind all of us that premium content isn’t and shouldn’t ever be free.

Replicating iTunes success to wean consumers, developers, and publishers off advertising is a tall order (Apple Newsstand, one such attempt, is rumored to be on the way out), which is why Apple is hedging its bets. The company has built a tool called iAd to run ads in iOS apps. Not surprisingly, its targeting capabilities are more limited than the competition Cook loathes for their data practices.

So far, marketers haven’t embraced iAd.  With just three percent of the U.S. mobile advertising business, iAd hardly has moved the needle, which means publishers and developers probably aren’t making much money with it.

Meanwhile, more marketers are discovering the benefits of leveraging Facebook’s and Google’s customer data. Specifically, they are detecting consumer intent and producing relevant ads that don’t just generate awareness. They drive revenue, meaning that many mobile marketers can contribute to their companies’ bottom lines. Not surprisingly, these two companies have captured 52 percent of the U.S. mobile ad market.

Coincidentally, Apple’s share of the mobile advertising market is about the same as Microsoft’s share of smartphones. Both of these companies have low tolerances for such miniscule slivers of any market they enter, which is why I predict Apple will retire iAd if it can’t somehow change its fortunes.

Apple therefore is left with a mobile marketing and content publisher dilemma: continue with the laggard iAd or come up with some other scalable vehicle for publisher and developer monetization.

Apple’s disdain for data-driven marketing is ironic. After all, if Apple’s rivals are anything like the way Nokia used to be, they laud the company for the simplicity and effectiveness of its own advertising. It’s ironic, too, that a company that has come to define the present and future of the way we engage the world around us wants advertising to go back to the past.

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One comment

  1. […] consistent with its self-proclaimed modesty about data collection and usage – see its iAd advertising platform, its much-maligned maps, and its refusal to cooperate with the FBI in the San Bernardino […]

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