Why iAds will fail

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iAd is just a second-rate widget
Calling iAd creations "advertisements" is misleading. iAd advertisements are, in reality, widgets. I presume Apple doesn't want to call them widgets because the term feels a little sour -- we've learned that effective marketing widgets are hard to find. Would anyone be so excited if Apple had said it supported a new widget technology? You can do wonderful things with iAd, just as you can with any widget, but consumer responses have shown good widget penetration is extremely hard to achieve. Widgets that succeed provide services, so the iAd isn't really an advertising system so much as a system for sponsored service delivery.

Widgets have their place, but we already know they can't replace all other forms of online marketing. How many times have you asked yourself : "Should I deploy a banner ad or a widget here?" -- that's how often iAd will provide a viable alternative to banner advertising.

iAds can be created in Objective-C and/or HTML 5. Objective-C is a difficult and cumbersome language. It runs at one-third the speed of C++, and has a poor reputation with C developers. A number of development agencies have announced they will not produce iPhone apps because Objective-C is not a cost-effective development platform. Unfortunately, HTML 5 is merely an idea, not a reality. Keeping HTML 5 iAd widgets alive over the next few years is almost certainly going to require frequent re-coding. As HTML 5 is developed Apple will need to change browsers to support each step. Consumers will not upgrade at a consistent rate, so this will lead to the development of different versions of the same iAd widget for each permutation of HTML 5 deployed by Apple. This will significantly increase the cost of development and reduce the potential ROI. Thus, from a developer perspective, iAd is not an attractive platform.

Apple dictates -- you obey
When he announced the iAd, Steve Jobs said he didn't want advertisers to segment the iPhone audience. He didn't want behavioral targeting, demographic analysis, or other forms of segmentation. He said he wanted advertisers to treat the community of iPhone users as a single demographic. All the advertising people I have spoken to don't see this as realistic.

As Ian Wolfman, CMO of IMC2, pointed out, simply selecting the apps you'll put iAd widgets into is already segmenting to some degree. However, in the longer term, he doesn't see how agencies can make convincing arguments to clients for iAd campaigns if they can't segment their deliveries.

In order to help control this space, and prevent segmentation, Apple will not allow any third party measurement of iAds. Apple has announced it will provide 15 standardized metrics, which it will gather and report for you. If those metrics don't suit your needs -- too bad. This also means you have to trust Apple when it takes its 40 percent cut of iAd revenue. Apple measures, it charges, you trust.

As Wolfman says, "Apple will have to change. It's not sustainable, people will need to make their own assessments. I think Apple wanted to start with something simple and controlled, but I expect them to change the program very quickly."

Roy de Souza is CEO of Zedo, one of the world's leading ad technology companies. Ad metrics are core to his business. According to him, "It is important for advertisers to track with their own technology because they need their own data if they are to trust that the ads were shown to users as promised. This accountability creates a strong incentive for Apple to make sure that the ads are served correctly. Google initially did not allow advertisers to use their own tracking but now they do. I would urge Apple to follow suit."

Conclusion
The iAd is a symptom of Apple's inability to come to terms with the way computing has been for the last 30 years. While designing innovative products, as a business Apple still strategizes like it's the 1970s -- trying to create isolated ecosystems when everyone else knows the world wants one big open inter-connected system. 

Apple seems wedded to the idea that it can own all aspects of its customer experience, even though its own corporate history shows this is unsustainable. The smartphone environment is a mirror of the early days of personal computing, yet Apple shows no sign of having learned from this experience.

The iAd system depends on unfinished technology, and therefore cannot be sustained in its current form, increasing the cost of ownership for those who develop iAd widgets. At the same time, Apple wants advertisers to forget about demographics and segmentation, rolling back the clock to the days of TV and radio-style mass delivery. In addition to asking advertisers to work with flaky technology in an old-fashioned manner, Apple proposes to deny them the ability to assess their own work, or to check that it is doing what it's being paid for. Under these circumstances, iAd only has a future while there is no alternative. History has shown us an alternative will inevitably develop.

I'll leave the final word to Ian Wolfman:

"I'm not convinced iPhone/iPad has a long-term future. It's a closed system. It's attractive now because the U.S. lacks an open alternative, but it's inevitable that one will develop."

Brandt Dainow is an independent web analytics and marketing consultant.

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Comments

Henry D
Henry D June 3, 2010 at 2:34 PM

Now that AT&T just changed it's data plans to ban unlimited data does that mean that users are now paying for the file size load of these ads from their allowed data cap? It seems that every time you use your apps the phone/ipad will need to load a small text ad in addition to content if you click on it. That's like sending millions of text messages to phones all day long via the AT&T network (obviously coming from the mobile company that Apple bought). Why isn't Apple sharing a portion of the revenue with AT&T if it's their network that is going to get bogged down?

Miguel Buckenmeyer
Miguel Buckenmeyer May 23, 2010 at 5:36 AM

Some of these comments are way too harsh.

I don't necessarily agree with the conclusion but I agree that "closedness" as opposed to openness could marginalize Apple's platform over the long run if developers slowly gravitate to other platforms.

For those of you that don't agree you should read both Wikinomics by Don Tapscott and Anthony D. Williams and the book The keystone advantage: what the new dynamics of business ecosystems mean for strategy, innovation, and sustainability by Marco Iansiti and Roy Levien.

The reason that I will side with Apple on this one is that I think consumers will "satisfice". We ultimately realize that we don't need access to infinite information or apps. As long as we have just enough to do what we want to do then we are happy.

The world was a lot different back then and there were very few "apps" or programs and Windows seemed to offer the most possibilities. The world is a lot different now. I can't see myself leaving iPhone because I don't have access to latest pointless app that makes my screen appear to cloud up.

Too many possibilities is also a turn off from a usability perspective and this is what the success of Apple lately is demonstrating. Keeping a consumer tech product simple is a good business strategy.

Josh Gordon
Josh Gordon May 23, 2010 at 1:28 AM

I read this article through. I still don't understand why Brandt Dainow thinks advertising on the IPad will fail. There is a lot of tech talk that has noting to do with the advertising function. Technology is only an advertising enabler. It almost never determines the success or failure of an ad medium.

John Dennis
John Dennis May 22, 2010 at 7:34 PM

Did not even read this crap. Here's what I will say just based on the headline. Put your money where you mouth is. Bet your life savings against Apple. You will be standing in line with a bunch of other myopic quasi tech journalist who said the Apple's purchase of NeXt was dumb, the original iMac would fail, the iPod was just another expensive MP3 player that would fail, that Apple did not know anything about phone and the iPhone would fail, that the iPad would be a flop ......

Apple under Steve Jobs has been 2 -3 steps ahead of everyone else.

Johnny HasABrain
Johnny HasABrain May 21, 2010 at 2:30 PM

Brandt Dainow, you need to rethink your life. Consider what has brought you to this point: writing an article that is no more than a troll post, with better aim than to sell some advertising. You've just wasted my time and many others' time. Do something worthwhile, if you can, you troll.

matt del vecchio
matt del vecchio May 21, 2010 at 2:14 PM

hard to take a website seriously when it doesnt know when to use a JPEG and when to use a GIF! 6 colors, dude.

Gretchen Hyman
Gretchen Hyman May 21, 2010 at 12:26 PM

As a trade publication, iMedia Connection represents as many diverse voices and opinions as possible. I encourage all of you to get in touch with me to talk about blogging or writing for iMedia on this same subject. We are always looking for new perspectives, and infact ran a piece a few weeks ago titled: How iAds will revolutionize the industry. I encourage you to check it out as well: http://tinyurl.com/28ougd3 .

If you would like to discuss this further, please contact me at: Gretchen@imediaconnection.com.

A Pope
A Pope May 21, 2010 at 11:29 AM

If you have such little respect for your readers as to split articles into pages to artificially boost your page views, I guess it's no surprise you'd be prepared to stoop to the level of linkbait.

elder norm
elder norm May 21, 2010 at 10:46 AM

Sorry,, but this article just smells of..... "What ever I like and use must be the wave of the future... even if its based on the past..."

Time and again he makes comments that are wrong then procceeds to base his comments on wrong "facts".

Its almost like he hates Apple and is sure the iPod will die, the iPhone will die, the iPad will die, Macs will die.. only companies that do things the old ways will survive.

Er.... wrong... just wrong. Way to many wrong comments to deal with. Just wrong. In fact I have to wonder why imedia allowed the article to be posted.

Just a thought,
en

Dru Richman
Dru Richman May 21, 2010 at 10:42 AM

So many words, so little understanding.

The good news is that Mr. Dainow joins the company of such notable crackpots as John C. Dvorak, Rob Enderle, Matthew Lynn, Paul Thurrott, and others of their ilk who have been predicting the imminent demise of Apple and it's products since 1984. They weren't right then and Mr. Dainow isn't right now.

To quote Mr. Gershwin:
"They all laughed at Christopher Columbus
When he said the world was round
They all laughed when Edison recorded sound
They all laughed at Wilbur and his brother
When they said that man could fly
They told Marconi
Wireless was a phony
It's the same old cry

They all laughed at Rockefeller Center
Now they're fighting to get in
They all laughed at Whitney and his cotton gin
They all laughed Fulton and his steamboat
Hershey and his chocolate bar
Ford and his Lizzie
Kept the laughers busy
That's how people are

Ha, ha, ha!
Who's got the last laugh now?"

In answer to Mr. Gershwin's question - that would be Apple.

Dwight Homer
Dwight Homer May 21, 2010 at 10:39 AM

Long long article short on substance. Hard not to believe this is disinterested analysis. For an genuine (and neutral) alt view see today's note on the controversy by Tony Bradley of PC World http://www.pcworld.com/businesscenter/article/196870/adobe_faces_tough_fight_for_flash_survival.html TB is in no sense a Mac fancier, but he understands how technology develops. If you think html5 is vaporware check with Google on its role in their development plans.

Martin Anderson-Clutz
Martin Anderson-Clutz May 21, 2010 at 10:00 AM

I wish I had a dollars for every "analyst" that had predicted the demise of Apple over the years.

Then again, I wish I had put $1000 into Apple stock just before the return of Steve Jobs. Enough said.

Has Apple succeeded in everything it has tried? Definitely not?

But let's review the markets Apple entered where everyone said their approach was doomed to failure: Music, Retail, Mobile Phones.

If I had money to bet, I know which side I'd be betting on.

Adam R
Adam R May 21, 2010 at 9:42 AM

Disabling comments is a sure sign that you probably are wrong.

John Musci
John Musci May 21, 2010 at 5:18 AM

Mr. Dainow is right that iAd won't be waltzing to the bank -- few advertisers will pony up the $10M entry fee. Moreover, after some deep-tissue massaging of the iAd knot, we worked out how Apple's ad platform will kink the economics and innovation of advertising -- ultimately more concerning than failure to live up to hyperbole: http://bit.ly/acQBYA

John
Blogads

Gary Makin
Gary Makin May 21, 2010 at 4:15 AM

Wow! Just Wow! That article is the worst I have read in a LONG time. This site should just delete it now to save themselves any further embarrassment.

There are so many mistakes, big mistakes. To show how big, I'll pick just one.

"When Steve Jobs announced MS Office for the Mac to a stunned audience in 1997..." Word was on the Mac in 1984. Excel started on the Mac. Office was on the Mac before Windows. What Steve announced in 1997 was that MS was going to continue to develop Office for the Mac, and this was seen as a very good thing.

Rubbish article. Pure rubbish.

Player 16
Player 16 May 21, 2010 at 3:08 AM

Linkbait. Yep. I got as far as the 1st page then I started reading the Comments. This bloke is just spewing crap that isn't in anyones business. I may read the rest later but some cartoons are about to come on the telly that makes MUCH more sense than this guy.

Bill CSAP Psy
Bill CSAP Psy May 21, 2010 at 2:06 AM

Linkbait!!!!!!