Apple to discontinue iAd June 30, as world’s largest company remains a frustratingly minor player in the mobile ad market
Apple’s mobile ad woes began when Google snatched AdMob away from it at the last moment, then decided that a good alternative was spending $275M on Quattro Wireless
If the report from John Paczkowski is true, and one would believe it is, Apple is giving up on iAd, its mobile advertising effort. This is probably good, Apple doesn’t do advertising well because advertising is about sales, compromise, and communications. Many of these things Apple does poorly, especially communications.
(See important update to this story below.)
Apple’s attempt to break into the mobile ad space was very much like its eBook pricing efforts. They came in like an elephant in a china shop, trying to dictate their terms, only to find out that the ad world wasn’t going to change its ways just for Apple. When Apple launched iAd in 2010, the company set the minimum spend for campaigns at $1 million, which got plenty of chuckles in the industry. Those who signed up were the same crowd who think dumping a year’s worth of ad budget on the Super Bowl is an advertising strategy.
Apple’s ad woes really can be traced back to AdMob, the very popular ad network that looked like was about to be acquired by Apple… only to be bought by Google, instead. Desperate to get into the game, Apple acquired Quattro Wireless for $275 million instead. Hardly a second prize, more like winning Miss Congeniality (but for Quattro Wireless it was hitting the jackpot). By August Apple shutdown the ad network to replace it with iAd, but it hardly matters, as eMarketer’s chart shows, Apple remains a small player in mobile advertising, dominated by the two giants, Google and Facebook.
Paczkowski now says that after six years, Apple is breaking up the band while “getting out of the advertising-sales business and shifting to a more automated platform.”
The idea is to let publishers do the sales, and even keep all the revenue. So large is Apple, thanks to the iPhone, that whatever ad revenue it earned from mobile advertising just couldn’t move the needle enough to matter.
This shouldn’t surprise. I warned TNM readers two years ago that the reason Apple was not maintaining the Newsstand categories and letting the App Store rot was that it didn’t matter to them. The millions of dollars publisher were losing in sales, meant that Apple was only losing millions of dollars, when only billions would get their attention. This was all very important to publishers, of course, but their trade associations were too busy trying to paint a rosy picture of the industry to actually do any work like lobbying Apple to fix things for their members.
“The big publishing groups will just fold programmatic buys into the stuff they’re selling across all their properties,” a source told Paczkowski. That sounds about right. The solution will involve programmatic advertising, something important to a few big publishers.
This still leaves the same issue we all knew was important all the way back in 2010: how and who will sell tablet and mobile advertising for the rest of the industry. In 2010 there was talk about new ad networks being started up that wanted to sell into these new digital platforms. A few of the new digital publishing platforms were even giving away their solutions (mostly PDF based) in exchange for a chance to grow an ad network. This didn’t work because most of the new tablet and mobile apps being created were absolutely terrible – and it turned out the platforms couldn’t sell the ads anyways because so few major publishers would agree to come on board (though it was sad to see publishers like Digital First Media fall for the sales pitch).
In the end, what Apple has done well during this past decade was create great new hardware products. Services, sadly, are not their specialty.
Neither is communications. For a company that hates leaks, it seems odd that Apple would not be bothered that a program that would effect its developers and publishing partners would be ended and word of it simply leaked out by BuzzFeed. But Apple didn’t officially announce the end of the Newsstand until just before the release of iOS 9, so I suppose we won’t hear officially about the end of iAd until days before the plug is pulled.
Update: It might be that Apple’s PR team doesn’t reach out to TNM anymore after all the criticism heaped on the company for the Newsstand, but maybe they are still reading the site. Because today they gave developers a notice inside the Apple developer site about iAd, letting everyone know that come the end of June the service will be shutdown: