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.