Will Content Blocking push Apple into advertising’s wheat business?
[Update on 3 January 2016: Buzzfeed reports that Apple is killing iAd and getting out of that business, ending the conflict I detail below. For a look at what I am sure is behind that decision, scroll down to “Sacrificing its adtech business…”.]
A couple weeks ago, I posted Separating advertising’s wheat and chaff, contrasting privacy-respecting brand advertising (the wheat) with privacy-offending tracking-based advertising (the chaff), better known in the industry as “adtech.”
Apple pushes both, through its own advertising business, called iAd. The company is also taking sides against both — especially adtech — by supporting Content Blocking in a new breed of mobile phone apps we can expect to see in iOS 9, Apple’s next mobile operating system, due next month.
In Apple’s Content Blocking is chemo for the cancer of adtech, which I posted a few days ago, I visited the likely effects of content blocking. Since then a number of readers have pointed to posts about iAd and the opt-out choices Apple provides for advertising on iPhones and iPads.
Both iAd and the opt-outs reveal that Apple is as much in the adtech business as any other company that tracks people around the Net and blasts personalized advertising at them.
Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.
What we have here, then, is Apple’s massive B2C business in conflict with one of its B2B businesses. Since there is a lot of history here, let’s review it.
On 8 July 2010, Engadget published iAds uses iTunes history, location information to target advertising. It begins,
We’ve heard about this before, but now that it’s up and running, this is probably worth a revisit. Apple’s iAds system actually uses lots of your information, including your iTunes purchasing history, location data, and any other download or library information it can suss out about you, to determine what ads you see. So say a few marketing firms working with the large companies now buying and selling iAds.
A recent series of ads for soap was able to target “married men who are in their late 30s and have children.” That’s very specific, and when Apple rolls out the full program, it’ll even be able to use things like iBooks purchases and iTunes movie and TV downloads to target you with advertising.
On 15 October 2014, Digiday published Apple revamps mobile ads with retargeting options. It begins,
Apple’s release of its new mobile operating system last month came with an overlooked gift for marketers: the ability to retarget ads based on users’ in-app browsing behaviors.
According to ad agencies, Apple is actively pitching the new capability as a way to effectively solve the mobile cookie problem.
Say, for example, a visitor to a retailer’s iPhone app adds a pair of shoes to his cart but ultimately decide not to buy it. In this scenario, the retailer will now be able to retarget that user with an ad for that exact pair — even in another app on his iPad. When tapped, the ad would direct him back to his abandoned checkout page and automatically add the shoes to his online shopping cart.
That was when iAd was new. Since then it has come to be regarded, at least by the online press, as something of a failure. On 16 Ocbober 2014, Business Insider published Here’s Apple’s Plan To Turn Around iAd, One Of Its Biggest Flops. The gist:
Several sources have confirmed to Business Insider that Apple is currently visiting mobile specialists at the top media agencies in New York City to push the new function. (Cross-device retargeting.)
Cross-device retargeting is of most use to retailers: if a customer spends some time looking at a dress on their iPad app but decides not to buy it, that same retailer can “retarget” them with an ad displaying an image of that dress, options to buy, or directions to the store when they next pick up their iPhone.
On 19 November 2014, AdExchanger published iAd starts selling programmatically, and explains how it works:
iAd has more than 400 targeting options for advertisers. Its audience is also validated, since users must create an iTunes account in order to download apps. With the release of iOS 8, Apple announced that those Apple IDs could be used by iAds advertisers to retarget users across their devices. Those capabilities make it a good fit for advertisers doing audience-based targeting, who often prefer transacting in programmatic channels.
iAd has scale: “Apple iAd’s sell-side SDK is one of the most penetrated SDKs in the industry,” said Michael Oiknine, CEO of Apsalar. “They now have added iTunes radio inventory, so it’s a smart yield maximization strategy for Apple and is akin to Facebook strategy, which maximizes inventory sales via FBX and PMDs.”
On 21 November 2014, Venturebeat published Apple and AdRoll enable iOS ad retargeting — with extra data from iTunes and the App Store. It begins,
In a significant move for the mobile advertising industry, Apple and retargeting leader AdRoll have announced a partnership that will see AdRoll providing its retargeting and programmatic buying capability for iAd. In addition, Apple will enable advertisers to target potential customers via access to its proprietary data sets from iTunes and the app store.
On 21 November 2014, AdWeek published Get Ready for More Mobile Ads on Your iPhones as Apple Launches New iAds. The gist:
Today, Apple is unveiling partnerships with companies like AdRoll, which will flip a switch and start serving iAds through its automated marketing platforms. This turn toward programmatic mobile advertising has been in the works for at least a year. Last year, the company stopped treating iAd like a high-end marketing platform for only the top brands with the most cash.
Apple wanted to build a self-serve mobile advertising system in house, and it bought Quattro Wireless to help. Sources said that effort faltered, and Apple decided to partner with ad tech companies like AdRoll and The Rubicon Project to compete with mobile ad giants like Facebook, Google and Twitter.
AdRoll is a retargeting specialty firm that lets marketers use their own consumer data profiles to deliver ads across such platforms. And Rubicon unexpectedly leaked word earlier this week that it was partnering with Apple.
On 22 January 2015, ExchangeWire asked What will Apple’s Ad Tech Play look like? They say,
Apple’s renewed designs on the advertising business were revealed when it was announced it was to start selling its iAd inventory on a programmatic basis, with several firms including MediaMath, Rubicon Project, among others, over four years after its iAd unit was initially launched, asking advertisers for (the then audacious sum of) $1m per campaign on its iOS devices.
Since launch, Apple’s presence in the advertising business has been largely underwhelming (apart from its own spend). But the revelation it had chosen several supply-side platforms (SSP) to sell programmatic guaranteed opportunities on behalf of the 250,000-plus App Store developers indicated its renewed designs on the sector.
The announcement itself made waves, not least because of the bungled nature of the announcement,which itself raises a number of issues to debated about Apple’s influence in the ad tech sector (more on that later).
The initial announcement read: “Apple’s iAd provides 400-plus targeting options to advertisers, based on hundreds of millions of validated iTunes accounts worldwide. This rich first-party data asset makes it easy for buyers to target the specific mobile audiences of their choice.”
The move represented, for the first time, that Apple is willing to loosen control over its first-party iTunes data with advertisers expected to be willing to pay top dollar for the access.
Apple has since started to advertise for roles within its iAd business, requesting applications for UK candidates to join its iAd Marketplace Sales Organisation.
Among the skills requested are: “Apple’s customers on the various products iAd has to offer as well as how to leverage iAd’s self service buying platform, iAd Workbench.”
In addition: “Third-party tags familiarity a plus.”
What is clear, from all these pieces and many others like them, is that Apple’s adtech business is little if any different from the rest of them — meaning just as creepy and privacy-abusing — and notable as well for failing to live up to its original ambitions, which were both huge and (via Business Insider) outlined by Saint Steve himself:
At launch, Jobs set out the bold ambition that iAd would capture 50% of the mobile ad market. Apple marketed iAd as a best-in-class solution for advertisers because it owns both the hardware and operating system the ads ride on and gains valuable data when people sign up for Apple ID to register for iTunes accounts. That means it can target ads by age, gender, home address, iTunes purchases and App Store downloads.
However, it’s still somewhat behind that lofty 50% target. iAd made up just 2.5% of the mobile ad revenue booked in the US last year, according to eMarketer, behind Google which takes the lion’s share (37.7%) and Facebook (17.9%). The most recent data from IDC states Apple generated $125 million in mobile ad sales in 2012.
Apple’s total sales in FY 2012 were $125 billion, or 1000x its mobile ad sales that year. Put another way, iAd contributed 0.01% to Apple’s sales.
Meanwhile, does any Apple customer want advertising on their iPhone or iPad?
Apple knows the answer to that question, which is why Apple provides ways for you to “limit ad tracking on your iPhone, iPad, or iPod touch” and “ads based on your interests.”* (Just go to Settings > Privacy > Advertising to “Limit Ad Tracking,” and to Settings > Privacy > Location Services > System Services. to turn off “Location Based iAds.”) And soon we’ll have Content Blocking as well.
Sacrificing its adtech business would position Apple in full alignment with three things:
- Tim Cook’s privacy statement. It would take the loopholes out of that thing.
- Market demand. People are fed up with losing their privacy online — almost all of it to the tracking-based advertising business. (Sources: Pew, TRUSTe, Customer Commons, Wharton.)
- The moral high ground called simple human decency. Most people don’t want to be tracked in the online world any more than they want to be tracked in the physical one. Nor do they want information about them known by first parties to be sold to third parties, or to anybody, with our without their knowledge, no matter how normative that practice has become.
Dropping adtech would also be good for iAd, which could then concentrate on placing non-tracking-based brand ads, which are more valuable anyway: to brands, to publishers and to the marketplace. Also to Apple itself, because they would be selling wheat, rather than chaff.
Until then, the loopholes persist in Tim Cook’s privacy statement, and Apple retains major conflicts between its massive B2C businesses and its struggling B2B adtech business.
It will be interesting to see what the company does once the Content Blocking chemo hits the App Store bloodstream.
* “Based on your interests” (aka “interest based advertising“) is a delusional conceit by both adtech (examples here , here and here) and online retailing (prime example: Amazon). Neither visiting sites nor buying are measures of interests. All they show are actions that could mean anything — or nothing.
The interest-based advertisers say our interests are “inferred” by what we do (and they like to observe, constantly and everywhere). And yet those inferences are weakened by another assumption that is flat-out wrong, nearly all the time: that we are always in a shopping mode. In fact we are not.
We are, in fact, always in an owning mode, which is why I think that’s the real greenfield for e-commerce. If companies shifted a third of what they spend on adtech over to customer service, they would vastly increase both customer loyalty and brand value.
By the way, Apple knows this, possibly better than any other technology company. That’s one more reason why I think their B2C smarts will correct the adtech crowd-following errors of their B2B ways.
Good to know. Apple’s iAd site doesn’t make that clear (to me, at least). What this tells me is that iAd is in the chaff business while Content Blocking encourages wheat on Safari. Doesn’t change the point of this post, or the earlier ones.
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@tomfgoodwin I hate shower gel and get bothered when there is no soap. So maybe we're even. Or something.