In early June, Steve Jobs demonstrated iAds in front of Apple developers in San Francisco. The ad he showed off was a work-in-progress by Nissan. The demo, which included a 15-second video, an interactive application and a form to sign up for a competition, didn’t quite live up to Jobs’s aim of “trying to combine the emotion of video with the interactivity of the web”. But it was slick. In the future, Jobs promised, iAds would bring in the revenue that would allow developers to continue producing “free and low-cost apps to delight users”.
There are early signs that mobile advertising, like everything else touched by Cupertino’s genius, will turn to gold. During the eight weeks leading up to the presentation in San Francisco, Apple sold $60m-worth of iAds to the likes of Unilever and Disney. This compares with the $250m mobile online display revenue generated across the whole of 2009 in the U.S.
Smaller bite for media owners
For media owners, there are two major problems with Apple’s ad model, which the analyst Toni Sacconaghi of Bernstein Research suggested in a recent report has the potential to become an $800m-a-year business within the next year.
First, Apple’s approach threatens to reduce media owners to the status of “developers” alongside tens of thousands of competitors. The second problem is that Apple’s business model, like Google’s, reduces media owners’ involvement in advertising markets to a minimum.
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