The device of delivery is important
The last real advance in online advertising was when goto.com (not Google) provided contextually based relevant ads based on your search query. It gave the consumer choice. But let's face it -- it's about as emotional picking lint balls off a sweater.
As Apple so astutely pointed out, search does not dominate mobile, and while I occasionally click on an ad when doing search on a computer, I have never clicked on an ad when using mobile search. Never. Ouch!
As our use of mobile increases, search becomes less and less relevant. Actually, it's not search that isn't relevant to mobile but rather search engines as destination brands, as specific platforms for finding everything. Search is everywhere in mobile, it's just couched inside apps. So it's not about search ads, it's about search content. Mobile is all about local search content, local contextuality.
But until now, there hasn't been a handset that has been entrenched enough that platform-specific advertising made sense. The iPhone has changed that. All you have to do is look at the trends among young adults (The kids are iAlright, says Gene Munster) and there is the future.
Now, do I want to be in a world that seems to have less choice and is dominated by iPhones? Well, I thought not, until I realized that I just want it to work in a way that doesn't annoy me. Yes, the keyboard annoys me, but as I actually write this entire article on my iPhone, I realize that it bothers me less than I thought. I write waiting for my breakfast, on the train, and suddenly my downtime has become uptime.
I'm not looking at ads on the walls of the train. I'm not looking at the billboards driving by. I'm not looking at the product placement everywhere around me. I'm looking at my iPhone. On the golf course, I use Golf GPS. I don't go to my computer to use Zipcar, I use my iPhone. I don't go to Google maps on my computer before I'm going somewhere, I just head out and grab my iPhone and get directions on the way, and I'm not even the "bleeding edge."
LinkedIn, Facebook, The New York Times, OMNIfocus, email, and my iPhone dominate my internet usage, and on the iPad, my focus is on ABC, Netflix, Scrabble, and Wikipanion. My poor laptop just sits there, used for what? Photoshop, Illustrator, video rendering, and Hulu. What all of this means is that I'm not on my computer getting bombarded with banal banner ads. And I used to see a lot of them.
So the iPhone has essentially become an immersive device, but ads -- up until now -- haven't been very effective.
Experience enables immersion -- the iAd solution
We have long been subjected to mobile advertising. It was viewed as a nuisance, a necessary evil if we wanted a free version of an app, otherwise we avoided it like the plague.
Clicking on a small ad (however enticing) meant that we were bounced out of our app and into a web browser. Our experience was lost, and it was jarring. The page we wanted loaded too slowly, and the payoff? Pathetic! And good luck trying to get back to where you left off in your app. What did this mean? Well, that we never clicked on mobile ads. And how did that benefit advertisers or consumers? Not at all.
With iAds, once you click on the ad, you stay in your app. In fact, the ad actually pauses your app exactly at the point you left it. The iAd takes over the screen and essentially you have an app within an app. Of course the ad could just be a banner that expands, but that wouldn't be very creative, would it? By essentially having an app within an app the ad can benefit from something much more immersive.
So there are two key aspects that iAds address. The first is that the experience takes over the screen. The second is the ability the new iPhone OS enables by pausing your app and then returning to exactly where you left off.
Advertising as apps, utility is important
And this is where iAds change the game. Brands have been creating digital advertising for 10 years now, but the formats of the various forms of content have never had a holistic place to blend. Video, text, pictures, direct response, online stores, etc. The attempt at cohesion via Flash banners on the web has always been met with some resistance, mainly the disparate groups that need to be involved. But the iAd platform is designed for multiple layers of content.
Many have tried -- Eyeblaster being the most innovative by trying to bring the experience of the website to the consumer rather than driving traffic to the main website -- only to be stymied by the ease with which a consumer can just open another tab and go to a better experience.
That's the difference in mediums. On your computer, you are already within the browser, but on mobile, you are within apps, making that transition less germane to the consumer experience. And there is the beauty of iAds -- the transformation of the app into an ad delivery medium.
An app provides utility. Be it gaming or a restaurant guide, it's a utility -- simplifying an experience or providing entertainment. Advertising in gaming has been relegated to sponsorships or product placement, but that experience was mostly hard-coded into the game. Advertising was always a risk for the advertiser/client. Will the game be a success? No idea, but the product placement advertising had to make a bet on that and generally only benefited from brand impressions.
Contextual relevance has been the hallmark of search engine advertising. But when the ad is not about clicking through but interacting-in, the landing page the ad clicks through to becomes irrelevant. The assembled web concept brings the content to the user, not the user to the content. And that's really what we are talking about: content. When an ad seems to scream less at you and instead provides some entertainment value, it seems less like an ad.
I am reminded of all those pop-under games Orbitz used to display. Remember those? They weren't even directly related to travel, but they didn't scream at me. They encouraged you to interact with the banner, and in doing so, you interacted with the brand. And guess what, it worked. I had a positive experience with Orbitz because the associative dwell was a positive and entertaining experience. Combined with a good website for booking travel, dwell worked, which leads me to a slight diversion: Why aren't there any travel apps for the iPhone? I mean Kayak is nice -- but where is Orbitz? Where is Virgin America?
The advantage for iAds is that they don't just provide entertainment and utility, a direct response mechanism and branding. Dwell time will become the dominant measure of online ad effectiveness, or at least it will for those who understand what they're doing online.
The artificial division between direct response and branding was created by advertisers
Forget the whole line that advertisers and brands have drawn between "branding" and "direct response;" the iAd is both and neither. Is the ad a success if a certain amount of people download an associate app? Is it a success if there are sales through the ad? Is it a success if a certain number of people click to open? Yes, and...
You see, the iAd is the first "yes, and" format we have had. "Yes, and" is very powerful in advertising. It means that we will finally be able to move past "click-through rate" as the dominant and overwhelmingly flawed measure of an ad's impact. Dwell time is the metric we need to be examining.
We will have to see Apple's K-size restrictions before knowing for sure, but from the demos displayed using Nike, Target, and Pixar, it seems they are going to allow for something substantial, and most likely background loading ads.
On the computer, ads never really had an opportunity to load in the background since the speed at which most people cycle through pages makes each page a lost ad opportunity. The format and consumption method did not lend itself to the medium.
And this is where the iPhone has another advantage. The iPhone data plan is unlimited on the iPhone so the consumer does not have to worry about extra charges due to ad delivery. However, it could be a significant hit to AT&T.
Please AT&T, start spending some of those billions of dollars you say you will on upgrading your service because bandwidth is going to significantly increase if you're not connected to Wi-Fi.
But Apple has an out here if it develops two types of ads, one that downloads via 3G, and one that is Wi-Fi only with different K-size restrictions. So your iAd app would come in two flavors.
Monetization and who the advertising dollars benefit
The "browser web" has been trying to monetize content for years, but it has mostly failed in that regard. People just don't want to pay for content online that is accessible through a web browser. Look, if The New York Times has a difficult time getting people to pay for subscriptions to content online, guess what? Everyone else has no chance.
The ad model just didn't translate from the offline world to the web in an equivocal manner. Online advertising is just inherently less valuable than offline, and offline advertising has been bilking people for years because it had a stranglehold on content, and clients were not wise enough to know any different. However, TV is exempt from that, and continues to have the only place where emotive advertising exists -- advertising that takes over the experience and delivers a multi-sensory immersive experience that impacts our emotions.
How do you reward good content? You pay based on performance. If an app developer develops a truly useful utility that either improves our efficiency or reduces it significantly -- but wildly entertains us -- then the developer is the direct recipient of that ingenuity. You see, advertisers will now be funding the top developers to continue developing.
And if you don't think this will significantly change the agency landscape, then you're in for a surprise. Developers and coders once relegated to the back rooms of agencies will now become some of your most prized assets. So prized, in fact, that it will be difficult for you to hang on to them. The people who will really benefit are the coder creatives who have the coding skills to create what they envision.
You see, those Apple examples were not created by an agency, they were created by a technology company. And they were good.
What will they charge?
The value is significantly increased, but by what margin? What I would suggest for Apple is that it develop a two-tiered structure. Let's say, for argument's sake, a $4 CPM for delivering (the exposure), and a $15 CPM for interactions where a user actually engages with an iAd. Or the company could actually create a dynamic bid system, or values based on categories. Apple has many models to choose from. But I suspect that at launch it will be somewhat akin to my first suggestion, as the latter models depend on having enough advertisers, and background systems for operation on the advertiser and client side have not yet been developed.
It's an equivalency model to the current online advertising landscape, which is necessary to get the most advertisers on board. But even my first example, using Apple's estimate of a billion ad opportunities per day, that equals $120 million a month at a $4 CPM, $1.44 billion a year, with $864 million going into developers' pockets. Not a bad haul.
What does the iAd mean for you? And what will it mean for our industry?
The contextual possibilities of the iAd are significant, and while it will take some time for advisers and clients to adapt to the new format, the online world has shifted from "bring you to me" to the assembled web concept of "bring my products to you." Those who don't understand that fundamental difference will be sitting in front of spreadsheets watching their ever-dwindling metrics disappear. It's not about click-through rate, and it never was. Luckily, we now have a format that emphasizes that.
We now have a format that can let the creatives within digital shops shine -- a format that provides the first real opportunity to not annoy consumers. It's a format that respects where the consumer is in the process of consumption and seeks to limit the disruption to their experience. It's a format that is neither direct response, nor branding, but a unique combination of the two, and it takes the medium of consumption into account, and that rewards the quality of application development.
Are we up to the challenge?
Sean X Cummings currently runs his own marketing consultancy, sxc marketing, advising clients and agencies on everything from social media engagement strategies to brand voice and messaging.
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