No, Apple Doesn’t Suck At Peddling Ads




A really great article published in Advertising Age this week by data specialist Kate Kaye about Apple and Amazon said (to paraphrase Breaking Bad’s Saul Goodman): “You two suck at peddling ads. Period.”

Well, that’s what Madison Avenue thinks, anyway, according to the piece. Here’s why Madison Avenue is wrong.

The problem with Apple from an advertising buyer’s perspective — Apple has been in the ad racket since 2010, a relative newcomer with its iAd offering — is that the company is considered “slow, cocky and downright stingy,” it takes too long to develop ad “products” (new ways to advertise), the company is “too reticent to foster relationships” and has failed to create “a strong business-to-business sales or service culture,” according to the article. Apple, one source told Kaye, “doesn’t even have official sales targets for its ad business.”

The biggest problem ad buyers have with Apple, however, is that the company won’t share user data with the advertisers like everybody else (except Amazon) does. One ad executive quoted in the article said that “Apple’s refusal to share data makes it the best-looking girl at the party, forced to wear a bag over her head.”

The fact is that Apple is marginally successful in mobile advertising. Apple is the third highest ad-revenue earner (after Google and Facebook). Google made nearly $4 billion in mobile ads in 2013. Facebook raked in $1.5 billion. And Apple came in at around $258 million.

The way mobile ads usually work is that they’re cookie based, which enables advertisers to tailor and tweak their targeting. With Apple, on the other hand, agencies have to tell Apple what kind of users they’re trying to reach (say, women between the ages of 18 and 45), and then they have to trust Apple that those targets are being reached.

Advertisers say Apple would be a much more compelling ad company if it would simply share the user data with them and allow them to target as they will.

Why Apple Doesn’t Suck At Peddling Ads

While Apple’s approach to advertising may frustrate ad buyers, I think they’re doing it right.

Apple doesn’t share data. This isn’t a bug, it’s a feature. We’ve all been bludgeoned into accepting (not liking, but accepting) the common practice that one company (like Google or Facebook or, say, mobile carriers like AT&T) uses their product or service to capture and save all kinds of personal information — name, address, phone number, contacts, age, zip code, occupation, browsing habits and so on — then sells it to any ad company that comes along with a wad of cash.

While users are generally against having their personal data sold to advertisers, the ability to do that is precisely what companies are selling. For example, Facebook this week greatly “improved” its ad product by offering to share more user information with advertisers. Here’s Facebook pitch to advertisers.

Facebook’s “Core Audiences” feature “now covers information like workplace and job title, and offers expanded information about education.” As another example, Facebook says they’ve “developed a new methodology that increases the precision of interest-based targeting by allowing advertisers to simply choose one segment. Now, if you want to reach baseball fans, just choose “baseball” as your targeting segment — it’ll pull in all the people that have liked or expressed interest in baseball-related topics on Facebook.”

As you can see from the comments below Facebook’s announcement post, advertisers love this user data sharing.

But unlike Google and Facebook, Apple isn’t mainly in the advertising business. Apple is in the user experience business. And advertising always requires a tradeoff between what advertisers want and what users want.

The other reason why Apple does Advertising right is that they make sure they never have to rely on ads for success. By taking a little ad revenue, but keeping it on the periphery, Apple maintains a more sustainable business model.

The reason is that ads are fickle, and subject to the ever-changing whims of the market. Advertisers are always looking for the next big thing, and when they find it they unceremoniously dump the old thing. So a company with a thriving ad business today can suddenly find all their customers gone overnight.

Advertising always evolves. With each passing month, advertising becomes more ubiquitous, more distracting, bigger, louder, more in-your-face.

Nobody can predict the future of advertising. But we know this: Today’s models will be different from tomorrow’s models. So ad companies can either get in front of every new trend in advertising or be left behind. Those are the only two choices.

By giving advertisers what they want, Apple would jump on the ad evolutionary bandwagon, and start steadily eroding user experience. Just look at what Google has done, for example. Look at how much longer, bigger, and more obnoxious and intrusive advertising has become on YouTube over the past three years. It’s going to get way worse.

And look at what Facebook is doing. They’re testing auto-playing videos. And they even implemented the official policy of lying about ads, calling them “suggested posts.” (Facebook has since backed off that lie.)

Advertising will continuously encroach upon our attention. And advertising companies are really in the business of calibrating ads to push right up to the limits of what users will tolerate, while at the same time training the public to tolerate more and more.

By choosing not to participate in the aggressive evolution of advertising and user tolerance for advertising, Apple is making its overall products better. And for Apple, that’s where the real money is.

So, yeah, for ad buyers, Apple sucks at peddling ads. And that’s why they’re doing it right.

  • exodus_honey

    Mike, you do contribute interesting insights and editorials on all manner of apple related subjects, that I love. But your use of the words ‘…here’s why’ is pure link-bait, I see it in every article you have ever done. There’s no need, truly. If the headline is interesting, I’ll read it. But the ‘…here’s why…’ parts of your articles dare I say, cheapen the conversation a little.

    • I don’t mind “link baiting” as you call it as long as the content of the article is good. COM keeps the site running through ad dollars, so they need to get readers to come read their posts. Having a certain writing style that employees specific phrases a lot does not constitute link baiting. We all use certain words or phrases when we write, or speak. There’s nothing clandestine about it. It’s normal behavior for us all.

  • aardman

    Apple is saying, “We’re going to do ads our way, which is to not let ads diminish the user experience, which allows us to offer a better product, which lets us charge a premium for our product, which means our average customer is more affluent, who will thus have more money to buy the stuff you are advertising Take it or leave it.”

  • I like your take on this whole issue. When I first read that advertisers are annoyed with Apple over their not wanting to share user data, I laughed. They’re not entitled to my information, my buying habits, my interests, etc. If they want these things, then they need to offer me something that makes me want to share them. Apple can sometimes come up with policies that annoy the heck out of me, and sometimes their services (iCloud, iTunes Radio, etc) feel a bit incomplete, but I can say that I always have a great experience using these services. My MacBook Pro, and my Mac mini are rock solid stable. My iPhone and iPad always work great every day. Most users of competing products can’t say the same. Apple has chosen to focus on providing a great user experience backed up and supported by great services. Getting pummeled with ads (YouTube) all the time diminishes that experience. Apple will continue to kick butt in the technology market as long as they remain focused on the user experience. Once they sell their souls (and users) to advertisers, that’s when the end will come.

  • AlanAudio

    The advertising business is getting out of control. They seem to think that they have the right to intrude into our lives as much as they choose to and help themselves to every detail about individual consumers.

    I’m smart enough to understand that some things are only possible because of advertising, such as terrestrial commercial television or free newspapers and free web sites or apps. The trouble is that too many advertisers appear to see it as their mission to trash everything. If I buy a DVD, I have paid for it. It’s not free and supported by advertising, yet some cretin not only puts trailers and adverts onto the DVD, but also makes it impossible to skip them. They have chosen to diminish my enjoyment of the movie that I’ve paid to view.

    I stopped subscribing to US magazines some years ago. There were often stiff paper inserts bound in amongst the pages so that the magazine opens at that point. An article that needed four pages would be spread over eight or ten pages so that the reader is exposed to as many adverts as possible. The publishers co-operated with the advertisers to trash the user experience. European readers do not tolerate such intrusive advertising and are European magazines are much more enjoyable to read. Then there is the difference between US and European TV. American TV carries so much advertising that the programmes are ruined.

    Americans seem to tolerate a much higher level of advertising than Europeans do, but they also accept paying to use ATMs, extremely high monthly fees for cellular phones or even paying to receive calls and texts. It’s as though these businesses have an ambition to screw over their customers in every way possible.

    If you want advertising that is less intrusive, you need to to fight against it. Apple is showing the way and I applaud them. The more that the advertisers whinge and whine, the more convinced I am that Apple is getting it right. Apple has traditionally been acutely aware of the needs of the customer and this is just another example of how Apple looks after their customers in ways that others don’t even give a second thought to.

  • Excellent article Mike! Apple puts the user experience first, which aligns with the longterm Apple mantra “Do the right thing.” If customers are pleased with their experiences with the products, they’ll love you and will tell their friends, creating an army of devoted users and salespeople. Apple is absolutely doing the right thing by not putting advertisers first. Apple concentrates on the user, which is why it is the most valuable company in the world and why Apple fans are so staunchly devoted. Doing otherwise has always been called “selling out.”