Apple Age
For a big group of performance-marketers, a trip to the Moscone Center in San Francisco automatically conjures up associations related to April and ad:tech. For another group of patrons, the Moscone Center means something else entirely, and for more than a decade that audience (mainly developers) and ours not only played in different sandboxes but had little chance of any overlap. The developers descended upon downtown San Francisco not to party, but to play with all things Apple. That a mention of Apple would at all belong in a conversation on advertising is in and of itself an absolutely amazing thing and the subject of at least one prior article. When we stop and consider the changes over the past two years, to think that a family of products could influence advertising is absolutely amazing. We always think of how the internet has changed advertising, because the internet changed how media was consumed. It was always about the internet not a particular computer or brand of computer. We didn’t hear about Dell or H-P having a guiding hand, whether others like it or not, in media and advertising.
The potential/threat/ability for Apple to continue influencing media and now advertising was on display this past week when the company showed off the next version of the iPhone at its Moscone Center event. Who would have thought a smaller package, a flash, better resolution, HD movie making, iMovie integration, and a front-facing camera would have warranted such news coverage, but it did. Here too is what makes this such a monumental time to operate in the online advertising space. Think four years ago, before apps, before smartphones became true consumer devices. The launch of a new phone, like a new Sidekick model, would have made news, but it wouldn’t have caused us to pay attention as an industry. It would have us, as was the case with the first iPhone, potentially lining up to own one, but we wouldn’t have been wearing our online marketing hat (unless of course the day job involved working at an incentive promotion company). Today, the launch of the new iPhone transcends simply talking about the gadget itself and thinking through how it impacts us professionally. Now, instead of talking about the internet as a medium, it is simply the enabler for content consumption. That which controls content consumption controls the ad dollars. The internet has enabled Apple to go from creator of cool tools to the next broadcast television network.
Stockholders of Apple should feel quite good, but their actions have endeared them to others. The company likes to have control, and that control has them at odds with others who would like to reach the audience who accesses content from their phones. A year ago you probably wouldn’t have thought Google would feel threatened by Apple. They were on a collision course with one another but not as equals. How things seem to have changed. The tough part is that we don’t really have a historical comparable for this situation. Television provides the closest analogy. When it comes to television, you as a consumer by the set from a manufacturer. Their job is to create a product that allows you to enjoy content produced by others. In the current television world, the relationship with a consumer ends after purchase and a new relationship begins. There is a relationship with an access provider, e.g., the cable company, and there is a relationship with the content aggregator.
In the television landscape, the content aggregator, the network, has the responsibility for monetizing the content. They are the ones that control the ad inventory. It is their collection of content that draws a particular number of viewers, and it is they who have the ability to determine pricing. Ad dollars ultimately support the continuation or lack of continuation of content with the network reaping the benefits and bearing any losses. As an advertiser, you don’t pay the cable company, and you certainly don’t owe the hardware manufacturer anything. The hardware manufacturer doesn’t get to determine what stations a consumer has access to and they don’t get to put restrictions around what ads the networks get to show. All of which makes Apples situation so unique. They are the hardware manufacturer. They are the gatekeeper for which content can become the tv channel equivalents, and they play a direct role in governing who gets to advertise on that content. It’s an absolutely unheard of situation.
That Google and presumably others have complained about this new content standard has some aspects of a double standard. Google has many of the same controls in place that Apple does, a big difference being one uses manual controls versus purely automated ones. In the search ecosystem, you must play by Google’s rules, even if it isn’t as explicit as Apple’s. Those who have been banned from Google as an advertiser or a publisher know the impact it has on a business. Especially on the advertiser side, Google controls the traffic, and they get to dictate who gets to advertise where. That’s not too different from Apple or any platform with a dominant position in traffic. Where Apple’s power differs is that they control access for the entire ecosystem – advertisers and how publishers monetize. On the web, you can monetize with Google or any number of other companies. It’s your content, and you don’t have to follow any one single company’s rules. The only thing saving Apple today is its non-dominant market share. If, though, you believe Steve Jobs, who proffers that Apple’s iAd will claim 50% share of mobile ad dollars in the second half of this year, they do in fact control the market. Apple might not have 50% of the hand set market, but they have at least that much influence over the content / advertiser side.
None of Apple’s inescapable ascendancy matters to those in the performance marketing community, not yet at least. But, in this world of historically low barriers to entry, we are seeing the immergence of never seen before barriers. The continents aren’t just shifting and going through a process of slow realignment. If anything, we are on the verge of the next ice age, that is a dramatic climate change that will redefine our operating environment for years to come. Like the coming of a new ice age, this new environment represents a radical departure of the moderate and predictable climate of today. Survival will mean learning a whole new different set of skills to take on the new challenges and new opportunities. Like today’s global warming, though, it’s hard to predict whether this rapid ice melt and temperature increases will really result in a new world order or just a brief period of concern with the status quo in effect for a little while longer.
