ChasNote

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.

From TechCrunch coverage of Apple’s WWDC:

“Apple has iAd commitments for 2010 totaling over $60 million, which the company says represents almost 50 percent of the total forecasted US mobile ad spending for the second half of 2010. Jobs said in his keynote that Apple has only been selling iAds for 8 weeks.”

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.

Check out the full post.

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

Toward the end of Ben Parr’s post at Mashable on the nascent mobile-advertising battle between Apple (who recently acquired Quattro) and Google (who recently acquired AdMob) he says “Google’s greatest advantage against Apple is that it has more relationships and experience with web-based advertising, and it already has the technology to back it up.” But, then again:

“If tomorrow Apple launched an ad platform for iPhone and Google launched a comparable one for Android, Apple would win simply because it has a larger base of iPhone and iPad users to advertise against, making it more enticing to developers and advertisers alike. That advantage cannot be understated.”

Maybe.

But it’s not just about ad-sales experience or smartphone market share. It’s also going to come down to corporate DNA, and who’s wiring is better suited to capturing the types of ad dollars being spent in mobile. If mobile advertising is driven by targeting for local advertisers and retailers offering coupons — the transactional, direct-response arena that it dominates — Google will win big. If national and global marketers put their wallets behind building brands and stimulating (rather than harvesting) demand on mobile devices, I’m putting my money on Apple.

Earlier this week Digg launched its iPhone app. Chris Howard shares more of the details (including a chance to win an iPad) at the Digg blog.

Look out, Simon and Spearfishing 3D, the Digg app has entered this week’s Top 10 downloaded apps!

Back in November, the NY Times reported that Apple filed a patent for un-skip-able ads for iPhones and iPods. Speculation at the time by ChasNote reader RolfSF:

“methinks this is geared more toward some of the ad-supported software models, perhaps giving some ‘free’ iphone apps a means to be free for a price.”

RolfSF was listening in on Apple’s earnings call earlier today and heard something that confirms his speculation: Peter Oppenheimer said the company had acquired Quattro to “offer developers a seamless way to make more money” in their apps, particularly free apps.

You have to wonder if Apple plans to staff an ad sales team.

From NYT:

“Filing a patent application, of course, doesn’t necessarily mean that the company plans to use the technology. But the application shows, at the least, that Apple has invested in research to develop what it calls an ‘enforcement routine’ that makes people watch ads they may not want to watch.

“Its distinctive feature is a design that doesn’t simply invite a user to pay attention to an ad — it also compels attention. The technology can freeze the device until the user clicks a button or answers a test question to demonstrate that he or she has dutifully noticed the commercial message. Because this technology would be embedded in the innermost core of the device, the ads could appear on the screen at any time, no matter what one is doing.”

An “enforcement routine” to force ads down the throats of iPod users?! That will go over well! It reminds me of that ridiculous attempt by Japan’s government to make it a crime to skip TV commercials back in 2005.

In David Pogue’s glowing review of the iPhone 3G S, he reminds us why creating a passionate — and irrational — love affair between our brands and our customers is more important than selling them on the rational merits of our product and its price, why direct-response advertising alone can’t succeed without brand marketing. Here’s how he describes the pre-3G S models of iPhone:

“Your emotions were swept away by everything Apple does so well: beauty, polish, elegance, simplicity and the thrill of interaction. (Those were not, ahem, phrases typically used to describe existing cellphones.)

“Meanwhile, your brain kept waving its little hand in the back of the classroom. ‘But the camera’s terrible!’ it would say. ‘It can’t record video! There’s no voice dialing! No copy and paste! The iPhone can’t even send picture messages — even $20 starter phones can do that!’

“But 21 million iPhone sales later, it’s become clear that the heart usually manages to shut the head up.”

The heart doesn’t operate in a vacuum, though; it’s only a handful of inches away from its more rational sister organ. I mean, the original iPhone had to work through some very left-brain pricing snafus. The right answer for marketers, especially as they shift more dollars to online, will require a balance between sparking an emotional fire with customers (the specialty of brand advertising) and delivering the goods at the right time and right price (the realm of direct-response marketing).

What’s equidistant from Madison Avenue and Mountain View — Topeka, Kansas?

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The Deer Hunter

from a small survey by UK-based game consultant Adam Martin that suggests most iPhone app developers don’t make much money.

“Martin surveyed 100 development teams, received 85 usable responses, and found that 52% of the developers had earned less than $15,000 for their efforts and 33% earned less than $250.”

While his data set is small, I support his sound advice to aspiring app makers — given the poor odds of making a lucrative living as an independent iPhone app developer, “don’t quit your day jobs.” It’s much better advice than the NY Times was peddling

a few months ago in its article “The iPhone Gold Ruch.”

Free Willy film

I hate sloppy and irresponsible articles like The iPhone Gold Rush piece in today’s NY Times. OK, it’s in the Style Section, but still.

It’s a mini profile of three successful developers of iPhone apps who have made, respectively, $800,000 in five months, $100,000 in three months, and $250,000 in two months. The article’s subtitle — it almost reads like career advice — is “Develop a popular app and quit your day job.”

In the 15th paragraph, there is this dose of reality:

“There are now more than 25,000 programs, or applications, in the iPhone App Store, many of them written by people like Mr. Nicholas whose modern Horatio Alger dreams revolve around a SIM card. But the chances of hitting the iPhone jackpot keep getting slimmer: the Apple store is already crowded with look-alike games and kitschy applications, and fresh inventory keeps arriving daily.”

But it’s a short detour into reality. The article’s final words on the matter:

“‘I’m going to milk the gold rush as long as I can,’ Mr. Nicholas [one of the fabulously successful developers] said. ‘It’d be foolish not to.’”

I’m trying to imagine an article in the Times under the headline “Independent Movie Goldmine: Make a really good feature film and quit your day job,” with a profile Slumdog Millionaire’s simple formula for generating a $290 million global box office.

Congratulations to the 3 developers who’ve hit pay dirt. There are probably a few others, too. But 3 of 25,000 is a 0.012% hit rate. Let’s not all go quitting our day jobs just yet.

UPDATE: The article’s author, Jenna Wortham, strikes a much different tone in a related post on the NYT’s Bits Blog, starting with the more cautious headline, “Will the iPhone 3.0 Fuel a Second Gold Rush?” Should I blame the editor for erasing that question mark? By the blog post’s second sentence, Wortham’s already casting doubt on the easy path to iPhone riches:

“But the chances of hitting the iLotto have grown increasingly slim. As more developers seek their fortune in the glossy curves of the device, the App Store is becoming crowded. Competition is spiking, driving down application prices — and the chances of becoming the next iMillionaire.”

Hmmm.

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