The late Apple CEO Steve Jobs had big hopes for Apple’s iAd, a mobile advertising platform that combines the emotion of TV ads with the interactivity of Web ads. But it looks as if Apple may be ready to exit the business, or at least change its strategy.
After six years of pressing into the mobile ad network space, a report in BuzzFeed yesterday suggests that Apple is slowly getting rid of its iAd sales team in favor of an automated platform. That’s a big shift, considering Apple was looking to charge advertisers about $1 million to put their marketing messages on iPhones, iPod touches and iPads in the early days.
Apple could not immediately be reached for comment. But on Monday, the company acknowledged that it would indeed be expanding the iAd platform with a self-service ad-buying feature sometime in the next two months because it had been so popular with publishers.
When iAd launched on July 1, 2010, the Wall Street Journal reported that Apple could charge companies as much as $10 million for the right to push ads over its iconic devices. At the time, the iAd platform was positioned as the premium advertising product for mobile devices, with typical ad costs between $100,000 and $200,000.
A Glorious Launch
The only problem is that iAd didn’t pan out the way Jobs envisioned it despite a megabrand-charged launch. When iAd debuted in 2010, it kicked off with mobile ad campaigns from the likes of Target, AT&T, Best Buy, Walt Disney Studios, State Farm, Nissan and many others. Apple had iAd commitments for 2010 totaling over $60 million, which represented nearly 50 percent of the total forecasted U.S. mobile ad spending for the second half of that year.
Apple’s iAd was attractive because it was solving a real mobile ad industry challenge. When users clicked on mobile ads in 2010, they were almost always taken out of their apps to one Web browser or another, which loaded the advertisers' Web pages.
Users then had to navigate back to their apps but it was often difficult to return to exactly what they were doing. iAd solved this problem by displaying full-screen video and interactive ad content so users would never have to leave their apps -- and letting users return to their apps anytime they chose.
But for all the promise, Apple fell short of the predictions. According to market research firm eMarketer, 2015 was a benchmark year for ad spending in the United States. The firm predicted mobile advertising would outpace desktop advertising for the first time. Specifically, the firm reported mobile would make up 51.9 percent of digital spending in 2015 and desktop’s share would keep dipping through 2019.
Tim Cook’s Issue
But Apple has not been realizing what it considers its fair share of those dollars. eMarketer estimated iAd generated about $487 million in 2014, the most recent numbers available. Google, by contrast, generated $59.6 billion and Facebook $11.5 billion in the same period. That puts Apple’s market share at 2.5 percent in 2014. The firm has predicted that iAd’s share will grow to 2.9 percent by 2019 but that is still insignificant in the big picture.
So what happened? Did Job’s death stymie Apple’s vision for ads? Did Tim Cook’s philosophy on data aggregation influence the strategy? In 2015, Cook called out ad-driven companies like Google and Facebook for how they use consumers’ private personal information for profits.
“Advertising was never a business Apple was culturally comfortable with,” Greg Sterling, vice president of Strategy and Insight at the Local Search Association, told us. “Think about Tim Cook’s recent criticisms of the use of personal data by online ad companies. Apple also greatly underestimated how challenging it would be to make iAd successful.”