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The iPad Might Save Newspapers, But Salvation Will Be Expensive

NYT iPad app

From the Merc News:

“Roger Fidler, head of digital publishing at the Donald W. Reynolds Journalism Institute in Columbia, Mo., said Apple probably will take a 30 percent cut of all subscriptions sold through the company’s online App Store, and as much as 40 percent of the advertising revenue from publications’ apps.”

Wait, can I change the above headline? It sounded expensive when I first read the article, and then I thought about it. Take a look at the budgets of print and online magazines: The big costs are sales, marketing, collections, IT, paper and printing, etc. The editorial function usually represents less than a quarter of the total expense budget. Same is true for newspapers. Outsourcing 75% of the costs in exchange for 30-40% of the revenues — that has to increase profitability, right?

As I write this, I’m looking out the window at a crane that’s installing a cellphone tower on our roof. Our newest rent-paying neighbor is moving in upstairs. Digg (like Verizon or Sprint, as of today) leases space from the SF Bay Guardian, a free ad-supported weekly paper that is, I gather, very eager to find any new channels to increased profitability.

Apple's iAds for Developers Program

Sample iAd for Developers

One thing that’s made me a fan of Apple’s iAds approach is its focus on building a mobile advertising experience for brands wanting *create* demand in mobile environments, rather than a platform that allows retailers and direct-response marketers harvest demand that was created elsewhere (the Google approach). As mobile advertising matures, brand advertising and DR advertising will both be elements of the winning model. But in these early days, as the the big players — namely Apple and Google — are establishing their ad products and their reputations, I’m wondering if it’s a good move for Apple to open the floodgates to mobile banners from app developers pitching you on their $0.99 downloadable products. When advertisers optimize for click-through and conversion-to-immediate-sale, the banners tend to favor jarring colors and annoying tactics to fool us into clicking — not beautiful ads that enhance the experience, like Superbowl commercials that are more fun to watch than the game. According to the Business Insider,

“the new iAd for Developers program is Apple’s way of getting more (albeit cheaper) ads in its system to fill its inventory glut, while also moving more app downloads through its App Store, and helping the developers who run its ads in their apps make a little more money. A potential win-win-win, if it works out.”

Cheaper ads to fill an inventory glut? That doesn’t sound like the formula that’s made Apple successful elsewhere.

Bob Buch on Apple’s iAd Strategy

In the inaugural post at his eponymous blog, my colleague Bob Buch suggests Apple’s vertically-integrated approach to business and not-integrated-enough approach to mobile advertising may limit its initial success.

“After launching DiggAds, I’ve become convinced that the future of advertising will be to integrate ads into the user experience of the site. This doesn’t mean just sticking them in the middle of the page, it means including the functionality of the site within the ad itself — essentially, transforming ads into content. Examples of this include DiggAds, Facebook’s social ads, Twitter’s new Promoted Tweets product, and of course, Google AdWords. I was disappointed that Apple did not follow this model.”
Amen.

More thoughts on the battle between Apple and Google for mobile ads.

Steve Jobs Takes Medical Leave; AAPL Down 7%

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Most companies envy the strength of the Apple and Steve Jobs brands. Because the two are so closely linked, though, bad health for one creates bad health for the other. From SAI:

“Apple (AAPL) CEO Steve Jobs will take a medical leave of absence until the end of June. Apple COO Tim Cook will take over for Steve until then. Apple shares are down about 7% in after-hours trading.”

The Man Between release

Martha Stewart’s crisis, a few years back, was moral and legal rather than physical, but her company’s stock suffered right along with her, too. Allegations of her insider trading broke in 2002 (first arrow), and she was order to serve some jail time in mid 2004 (second arrow).

Martha Steward stock price

World's Most Valuable Brands

Interbrand’s Best 100 Global Brands (see Ad Age) puts Coke in the #1 spot again this year. Microsoft slid one position, from #2 to #3. Big upward movers were Google (+43%), Apple (+24), and Amazon (+19). BlackBerry broke onto the list for the first time at #73.

NBC Pulls Shows From iTunes

From TechCrunch:

NBC Logo and Login

“See the list of TV networks featured on iTunes at right? NBC used to be right after National Geographic. Its absence leaves a very noticeable hole, and is a marked reminder of how Apple is not able to dominate digital video to the same extent that it has digital music.”

Alex Frankel's New Book, Punching In

My friend Alex Frankel is out with his second book, Punching In. (His first, Word Craft, is also worth a read, if you’re interested in how products get named.)

Frankel’s Punching In

In Punching In, Frankel joins on with the “brand armies” — the platoons of rank and file front-end staffers — at UPS, Starbucks, Gap and Apple Stores to better understand how brands express themselves through the uniforms, trained behaviors and scripted speech of their entry-level employees. From the introduction:

“The new ‘retail environments’ and ‘store experiences’ that increasingly surround us and draw us into daily interactions demand more of workers than the mechanical work that [19th Century industrial theorist Frederick Winslow] Taylor studied to develop theories on work efficiency…. Beyond studying workers’ movements, some companies had come to study their minds, to find better ways to win them over, to make them believers.”

For brands like Starbucks to capture the premiums they charge, they need their retail employees to convince us that the premium is worth it; service brands need to start their brand marketing efforts right there in the HR department.