iAds Secret Sauce: How Apple's Recipe Will Cause a Paradigm Shift

Apple's Secret
Sauce

We’ve seen this happen before. A breakthrough platform is released and a disruption occurs. Those who were enamored by print ads were blown away once those pictures started moving on Television. Then came internet Banner ads. As channels of distributed content increased, so did targeting. On the flip side, as the number of ads displayed increased, ad efficacy went down. This is referred to as Diminishing Returns, or a saturation effect. Our behavior has adapted to filter out most ads to increase our content absorption. The ad campaigns fought back. Full screen flash ads popped up demanding our attention. Content seekers responded with Pop-up blockers.

The battle of Content Seekers vs. Ad Providers has gone back and forth with constant escalation. Like when police started carrying semi-autos and then criminals responded by toting armor-piercing semi-autos. The tools on each side have become more and more sophisticated while the companies selling those tools (or weapons) get wealthier.

Enter Apple. Enter the paradigm shift of iAds: It’s no longer Content Seekers vs. Ad Providers, It’s Content Seekers & Ad Provider (Apple). The Ad is no longer the enemy, it’s a very, very, well-targeted interaction. And it’s not the interactivity and engagement that’s making this possible, it’s the fact that Apple can target your specific needs. I know, I know, this is a big claim so allow me to explain.

Basic Assumptions about high CTRs\

Relevancy is the main factor: No matter how interactive and emotional an ad is or isn’t, if it is something that I am already interested in, I will probably click it.
Interaction and Emotional engagement are secondary factors: Both are important for creating new customers and bringing customers into new markets.
Novelty is a tertiary factor: Novelty is the attributing factor to the high CTRs we see when any new platform becomes adopted. In the beginning, internet ads hit CTRs as high as 25% because people wanted to see what they were and weren’t used to visually blocking them out. It happened again in the mobile market with some ad servers touting ratios as high as 15% when the iPhone hit it’s stride. Humans are curious creatures and novelty will always produce results, at first…

Now lets look at some of the more recent mobile numbers. In 08, mobile ads were looking at CTRs from 2%-8% compared to .83% for non-mobile ads. In 09, the spectrum inverted. According to a report by Chitika, mobile ads only accounted for .48% CTR when compared to a steady .83% for non-mobile. There were some agendas and poorly controlled variables in this test (Techcrunch Analysis%20Users%20Not%20Keen%20On%20Clicking%20Ads%20%20Read%20more:%20http://techcrunch.com/2009/09/12/study-smartphone-particularly-iphone-users-less-likely-to-click-on-ads/#ixzz0lftX1yak "Techcrunch: Study: Mobile (And Particularly iPhone) Users Not Keen On Clicking Ads")). Nevertheless, when our company, reflect7, researched other companies for our mobile ad campaign, we found that a 2% CTR was extremely good. We ended up landing around the .45%-.55% mark.

So how is Apple going to change all of this? By turning ads into something that you want to see and interact with, rather than ignore.

Apple eats your cookies for breakfast. They don’t need to analyze your cookies for mobile browsing patterns, because mobile searching is not what users are doing. Instead, users are spending an average of 30 mins per day on their apps. You can bet your third nipple that Apple has been gathering that data since day one. It’s called your Apple ID and they know what you’ve purchased and when you purchased it.

Every app/song/ebook/movie/show/probably-tickets-sooner-than-later/anything digital is broken down into an iTunes Store category. With this information, Apple can configure your mobile purchasing profile with greater accuracy. Do you subscribe to Time Magazine on the iPad? Do you purchase mostly sports apps? Let’s get really crazy and cross-reference all of the meta keywords for each app to find compliments and/or matches. Supplement that with User Age, Gender, and Location and you have one hell of a hyper-targeted iAd. That’s why it makes sense for Apple to launch it’s own Ad Platform - because it can keep your information “private” from other ad companies while still delivering a “superior user experience.”

This Hyper-Targeting is where the paradigm shift takes place. No longer will I scowl when seeing Hotel ads for chains that aren’t in my location while rocking out to Pandora. Now, I can see ticket ads for the next music event.

Bottom Line: Don’t be fooled. More ad interaction is great, but more interaction has been attained in the past when more advanced technologies were adopted. The trump card is Apple’s ability to hyper target their ads to meet your needs.

Look for the next Secret Sauce installment Saturday when I talk more about Apple’s ad strategy and how it meshes with html5 and their competition.\

-Brian\

If you made it this far, you should follow me on Twitter. Follow @jprichardson

-JP