Apple unveiled the 4.0 version of the iPhone operating system yesterday and a big part of the announcement was about a new advertising platform called iAd. Apple will soon provide an easy way for app developers to put advertisements in their mobile apps and keep 60% of the revenue.
Tech financial analysts are going bonkers over the news, with one headline-grabbing prediction putting the opportunity at $4.67 billion per year for Apple. Why? Because the platform has the potential to change online advertising like nothing else has in a long time.
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Cullen Wilson offers this explanation on the Austin Startup Blog:
The reason iAd has a chance to change how users interact with ads is simple: The fear and unknown of clicking on an ad is gone. Apple is throwing its brand behind an entire ad network to create the perception that if you trust Apple, you can trust these ads too! Worried about installing malware from clicking on that ad? Hate that ads open up a new window? No problem, Apple has solved this by keeping these ads within the app itself and vetting all of the ads on their network.iAd reminds me of two ad networks I'm already a fan of, The Deck and Fusion Ads. Their ads are well designed, they advertise in applications I use and love, and they vet everyone on the network before accepting them. If you've ever used the free Twitter clients Tweetie or Twitterrific, you've seen these ads.
If Apple can convince its users that it's safe to click anything with the iAd logo they will have single handedly changed the perception users have of ads, resulting in more clicks and more money made by both Apple and developers.
They will have done this by taking advantage of a closed system, their own brand, and a platform that their users already love (the app store).
The iPad is clearly changing peoples' experience with computing - take one out around non-geeks and you'll see strangers clamor to get their hands on it. But if Apple can transform mobile advertising from an annoyance to a trusted, appealing experience - that would be huge. The iAd platform could impact advertising more than the iPad impacts computing. It may very well generate more revenue, too.
Wilson points out that though many people complain about the closed nature of the App Store, this is the other side of the coin and is worth considering. One question I have about this is how scalable vetting such a huge ad platform could be. Where there's money to be printed, there must be money to pay ad examiners, though.
If the platform can prove effective and make app building all the more financially viable, then we as users can cheer for a new world of apps that will be built in the future. If Apple can deliver a high-quality experience on the iAd platform, then we as users can cheer for a less grating experience than a wild west of mobile advertising would likely deliver. There is something a little frightening about Apple's end-to-end control over the platform though, isn't there?
What do you think about iAd? Do you think it will be effective? Revolutionary? Do you think it's fair?
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