The future of ad sales (3)
With the introduction of iAd, only shortly after the iPad, it’s interesting to see what Steve Jobs himself thinks of the future of advertising. Apart from selling his highly praised hard and software, he now also wants to take his share of the advertising income made on apps. I read how analyst Toni Sacconaghi (analyst at Sanford C. Bernstein) upgraded his estimates on May 7. He thinks Apple’s new advertising platform could generate an additional $800 million in revenue for Apple in fiscal 2010 and another $1.6 billion in fiscal 2011. And he also estimates Apple could keep another $250 million from more conventional advertising that runs on media ads/apps on the iPad. Apple will sell the ads, with developers who create the apps getting 60% of the revenue of any mobile ads, and Apple taking the remainder.
Mr. Jobs, speaking at an event at the company’s headquarters, took direct aim at Google when he noted that people are increasingly accessing the Internet on phones rather than search engines. He said ads inside apps were a more attractive way for companies to advertise on phones compared with traditional search ads, an area dominated by Google. Some people agree, others don’t. From the latter category, I read this interesting opinion: The idea that ads are best served inside the sanitized, controlled environment of the app — and not the free environment of the Web at large — is an idea that goes against the history of the Internet. Apple seems to be betting that the pendulum will somehow swing back, and money will flow back towards the simpler, cleaner experience offered by apps.
But, as a result of this line of thinking (iPad making the web safe for advertisers) some publishers believe that ads on the iPad should be more expensive than those in traditional venues because the iPad presents media content so beautifully. Others just argue against that and say that if the iPad increases the supply of advertising venues, and the number of different types of content in which ads can appear also increases, how could this possibly also lead to an increase in prices?
Suddenly, the market has a new view on how to attract audiences and advertisers. We just got used to Google, serving ads wherever the user might be, and regardless of the device they are using. And now there is Apple with their protected environment on iPhone and iPad, using the iAd platform, offering a simple, fun, bug-free universe for users and advertisers.
In both cases the loser might be the media agency, which could lose control over where ads are appearing – after studying data, planning and negotiating rates. Elements that might not be available that easy in the near future.
The future of ad sales (1)
Apple’s iAd – On April 8, Apple introduced iAd, an advertising platform that runs ads directly within applications for the company’s popular iPhone smartphone and iPad tablet. Advertisers will love it because in contrast to current web ads, users will not be pulled away from the content within the apps after visiting the link. On top of that, and maybe even more important, iAds will bring much more engaging advertising than online ads currently offer. Apple’s CEO Steve Jobs unveiled iAd during the introduction of iPhone 4.0, stressing that advertisers are better off targeting ads within applications rather than running ads alongside search results (read: Google). He thinks they can offer the opportunity to make 1 billion ad impressions a day on tens of millions of Apple mobile device users. iAds will allow apps developers to use advertisements in their apps, pocketing 60% of the revenue. Apple will sell and host the ads (!).
Well informed ad sales sources are quoted to say that Apple could charge advertisers 5-10x the normal amount for campaigns created for applications running on Apple’s iPhone and iPad. The price could reach as much as $1 million for iPhone and iPad ads, compared with $100k to $200k for comparable mobile ad deals, ad industry officials told the Wall Street Journal. Piper Jaffray analyst Gene Munster says he expects the mobile in-app ad opportunity will be roughly $220 million in 2011, the first full year of iAd, commensurate with the growth of Apple’s mobile device user base.
Ad sales view: Apple may charge advertisers a penny each time a consumer sees a banner ad, and $2 each time someone taps on that banner ad. Apple could also charge up to $10 million for ads in iPhone applications to begin appearing with the launch of the iPhone 4.0 in June, the Journal said.
An analyst view: “It seems the gap between the mobile budgets Apple is going for is much larger than most mobile budgets. The big brands might step in, but the reality is money from mobile still comes out of emerging media test budgets, which are smaller budgets. That said, if anyone is going to pull it off, it’s going to be Apple.”
iPad competition
`Nook`- the American book chain Barnes & Nobles will release an update for the Nook, the e-reader of this company. Users will be able not just to read books, but also surf the net and play games. Users can, after the update, also shop and check out books one hour for free in the Barnes & Nobles webshop. Apart from this, the bookshop chain will also deliver a better WiFi-connection which enables users to turn pages quicker and offers a better navigation for the touch screen.
The arrival of the iPad means more competition for the existing e-readers in general. Amazon.com already came up with an answer offering a simpler browser for the Kindle. In February, Barnes & Nobles announced that since the arrival of the Nook (Oct 09), their online sales has increased with a whopping 32%. The chain opened the webshop back in 1997 to compete with Amazon.com. The e-readers that were launched already before the Kindle and Nook were Sony’s Reader and iRex’ iLiad (Philips). More e-readers are about to be launched this year, among them Adam by Notion Ink and the JooJoo by Fusion Garage. The HP/MS joint venture for the Slate was unfortunately cancelled this week (see discussion on LinkedIn). A chronological order of e-reader introductions is listed below, including current price and OS.
Reader/Sony (Jp) (Nov 06, $350, E-ink, Linux)
iLiad/iRex (NL) (Aug 06, $499, E-ink, Linux)
Kindle/Amazon (US) (Nov 07, $259, E-ink, Linux)
Cybooks/Bookeen (Fr) (Dec 07, $350, E-ink, Linux)
Cool-er/Interead (US) (May 09, $249, E-ink, Linux)
Nook/B&N (US) (Okt 09, $259, ePub, Android)
iPad/Apple (US) (Feb 10, $499, ePub, iPhone, Safari)
Adam/Notion Ink (US) (Q3 2010, $325, Android, Firefox/Chrome)
JooJoo/Fusion Garage (US) (Q2 2010, $500, propriety OS)
Slate/HP+MS (US) (Q3 2010, $400, W7, Flash) project cancelled 04/2010
Courier/MS (US) (Q4 2010, $ ?, WCE6)
Apple Publishing Inc. (2)
Book publishers in general are happy with Apple’s iPad. The 30/70 revenue share was gladly accepted and seen as a way to break the Amazon dominance on the e-Reader market.
So much for the book publishers. One-off (book) revenue deals sound fair, but what about the newspapers and magazine market in the US? Recurring sales on newsstand is one, but just think about the subscriptions! These reader relations are dating back for years and will now be consumed by Apple.
Another issue is the ownership of subscriber data. Publishers have spent millions of the years to collect data about their readers. That knowledge not only influenced their marketing plans, but also sometimes the editorial directions a publication took. By getting separated from these data (Apple doesn’t have a habit of sharing consumer data with partners) publishers claim not to be able to make a good publication in future. Other like Conde Nast are more positive and consider the iPad as a ‘digital newsstand’. Listen to Sarah Chubb, president of Condé Nast Digital: “We also don’t get the consumer information in a typical newsstand sale, so part of why I’ve been thinking conceptually about this is, out of the gate, we think of it as a newsstand buyer.”
The companies will also pull in revenue from advertisers through the iPad. Condé Nast has gotten its GQ iPhone app approved by the Audit Bureau of Circulations. That means each copy sold digitally counts in the same way as a newsstand copy, and is included in its guaranteed circulation. It plans to do the same with iPad copies. That means if the iPad and iPhone apps take off, Condé Nast could charge advertisers more for each ad page. Smart!
Another interesting thought I read goes like this: media is segmented by format, vehicle and purpose. Books, newspapers, magazines, radio, television and movies stand alone as distinct entities. However, the iPad presents new possibilities for blurring the lines between these various media types. Unlike the iPhone, the iPad mimics the size and portability of traditional printed material such as books and magazines. In the example of the New York Times, the design of the page is easy on the eyes and demonstrates how typography and page design can be preserved in digital media.
And this one: good news for advertisers, too. The creative ads we are accustomed to seeing in printed publications can be incorporated into page layouts for the iPad app, eliminating ineffective and irritating banner and pop-up ads that plague browser-based versions.
Finally this reassuring one: it is once the dust settles and a preferred tablet OS is established or two (next blog), competing for that space, that we should begin to get nervous about a possible dominant role of Apple in publishing land. For now, I think they deserve a big hug and thumbs up!
“There’s no iMagazines and there’s no iNews,” said Sara Ohrvall, senior vice president, of research and development for Swedish media company Bonnier. “Either we have to package our products much differently, or we just lost the paid content game.” The simple answer is that magazines should offer their own apps to control the distribution.
Apple Publishing Inc. (1)
Threat or Opportunity? – We sometimes wonder how much Google can be allowed to be dominant in the sector of web search, but what about Apple? Some people are warning the industry – like at last week’s Ad Age digital conference. Apple has just launched a device that has the potential of changing the world of portable computing, just as it did with the iPod and portable music. But with the iPad – basically a big iPod Touch – it’s not just offering another smart, shiny new consumer device, but it’s also tightening its grip on its platforms as it transforms into a media company. It’s complicating relationships in media, to say the least! Somebody, on the other hand, called it “standard (US) symbiotic oligarchy” (or: nothing has changed).
The NYT recently opened an article on the iPad saying: “the print world welcomed Apple’s new iPad on Wednesday, eager to tap into the 125 million customers who already have iTunes accounts and are predisposed to buying more content from Apple”. A very optimistic view. Think about it: Apple has control on the hardware (the iPad), how publishers create content (the software-development kit), how consumers access media (the App Store) and, since its announcement last week, also advertising (iAd).
And don’t forget the 30% share Apple is forcing on traditional publishers taking their off-line publication on the iPad. Apple chose which publishers would be on the iPad launch platform and hand-picked his favorite papers and magazines. Some welcomed Steve Jobs as the new messiah. Tables were turned. A new digital magazine format inviting publishers to offer their content on it! To put it even clearer: can or will Apple Publishing Inc. decide which media will be available on iPad? Or are they just a media retailer and not a publisher? Kindle from Amazon didn´t create a problem in book publishing either (apart from book price pressure).
Originally, the iPad was an answer just to Amazon’s Kindle and Sony’s Reader, purely aimed at digital book publishing. In negotiations with Apple, publishers agreed to a business model that gives them more power over the price that customers pay for e-books. Publishers had all but lost that power on Amazon.com’s Kindle e-reader. In a newly set price range, Apple will keep 30% of each sale, and publishers will take 70%. This fixed agreement with Apple gives publishers leverage to negotiate with Amazon on future pricing. Apple’s strategy could bring significant changes to the e-book market, where Amazon has so far captured more than 90 percent of the market. Apple just brought back competition in a market dominated by Amazon.
Five of the six largest publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster— had signed on to provide e-book content for the new tablet. Only one book publisher did not sign (yet) on to the iPad: Random House, the world’s largest publisher of trade books.
Silver Bullet for Publishing?
Publishers in various forms and shapes are still at the core of our day-to-day content supply. Some digital natives working at media agencies these days are wondering whether they should continue investing in publishing dinosaurs. Everything on mobile! It’s the iPad!
Well, I agree some may look like dinosaurs in their (broadsheet) print formats, but they know how to process content and how to present it the best way. They are just struggling to find out how to make money with the various channels available. Some developments are taking place fast and a century old industry just seems to lack time to adapt.
Maybe the introduction of iPhone and iPad will change things to the better. The future of books, magazines and newspapers seems brighter, thanks to Apple. I read a great quote on one of the iPad blogs recently: “….. it creates a whole new channel for sharing content with consumers, and it also begins to define a new creative medium that can become part of a communications strategy.”
I’m listing for you 10 challenging thoughts on the iPad I found in relation to publishing. Bits taken from a debate initiated by a recent column on AdAge.
- The iPad could be the turning point – are consumers willing to subscribe for regularly delivered content again? New models are to be developed for billing, revenue sharing and advertising.
- The web has proven to be a lousy platform for branding. It used to be owned by magazines and newspapers and they could become king of the hill again if applied smartly.
- The new generation-Y wants constant streams of info, but their iPhone is too small to show real compelling pictures and video. The content is available, a new suitable channel is borne?
- Distribution of content has skipped another big hurdle. Is this the best of TV (video), radio (sound) and magazine/paper (print) combined? Electronic publishing is now really upon us.
- But, you can read books and listen to music on your laptop too. There is no work software on the iPad, so an extra gadget to carry along.
- Interactivity with books is news. The idea of “augmented content” or “augmented literature” is a new category created. It’s about the user’s EXPERIENCE with the devices that really matter. Not getting WORK done.
- The iPad has major hardware issues. It is the software (iTunes store) and marketplace that makes Apple worth mentioning in this context. You are NOT going to need an iPad to access content. I.e, listen to iTunes on a Window’s machine.
- (comparing to iPod and iTunes) in the case of the iPad, the revolution may be the Apple bookstore, not the device.
- The iPad isn’t a pill publishers can take and, presto, become attractive. It’s going to take WORK. Lots of it — the painful, sacrificing, work-up-a-sweat kind.
- Because magazines are created for targeted communities their advertisements in print magazines are just as much a part of the reader’s experience as the editorial content. This is also why print is still extremely effective. In regards to the iPad, if publishers and agencies can carry that experience over to the iPad you’ll continue to have a win-win-win situation with the reader, publisher, and advertiser.
Who’s publishing with iPad?
The Apple wireless tablet publication, or iPad, (or XL-size iPhone if you wish), is entering the publishing market by storm. It offers publishers a full color and interactive e-reader platform. The question whether the storm is just caused by the Apple tribe can’t be taken too lightly. Whatever happens with iPad, publishers know they got to act quickly not to miss the boat ready to leave the digital port. Some of those publishers have built really new apps for the tablet, while others are kicking off with converted versions of existing iPhone apps.
I’m listing all the first seven US print publishers joining iPad (with help of Advertising Age).
- Conde Nast: Wired, Vanity Fair, Glamour and The New Yorker are expected later this year. Kick- off on the iPad is with its GQ app, (i-Phone optimized version). Each issue of the GQ app costs $2.99/issue.
- Rodal: publisher of Men’s Health offers an iPad edition for $4.99/issue. Each issue will include all the editorial content of the print edition plus extras such as video. Gillette secured sponsorship of the April and May issues of the Men’s Health iPad edition by increasing its other ad spending with Men’s Health (hence the print+ model).
- The New York Times: NYT’s “Editors’ Choice” app is offering a selection of news, opinion and features, available free to consumers and relying on advertiser support. The Chase Sapphire card is sponsoring the app at the start.
- Bonnier: Popular Science is the first iPad app by the Swedish publisher. The app will feature content from the magazine’s April issue and touts flow navigation “more like a panning camera than a flipping page.” Future issues will sync with the print publishing schedule and will be on sale within the app.
- Time Inc.: this iPad app will include all the magazine’s weekly content plus additional slide shows and video, costing consumers $4.99/issue. Initial advertisers include Fidelity, Korean Air, Liberty Mutual, Lexus, Toyota and Unilever.
- USA Today: this app will include much of the editorial content from each morning’s paper and will update around the clock. It’s free to consumers for the next three months, courtesy of a sponsorship from Courtyard by Marriott, but will require a paid subscription after that. USA Today has not yet set the subscription price.
- The Wall Street Journal: WsJ for iPad is a free download with some free content, but complete access will require a subscription that runs $3.99/wk. The subscription will include news throughout the day, top picks from editors and access to the last seven days’ worth of print content. Initial advertisers include Buick, Capital One, Coca-Cola, iShares, FedEx and Oracle, with full-screen ad units that appear between article and section pages.
is iPad just ‘print plus’?
An interesting publishing debate is going on since Apple launched the iPad. All major publishers, media agencies and advertisers are closely studying how consumers are using this new tool. Trying to figure out how they can benefit from they way content is consumed and how interaction takes place in that process.
How will this new pattern of content consumption influence their buying and selling of magazine and newspaper ads on this new device? Is it a threat or opportunity? Are ads worth more or just less? Are you selling or buying ads in fixed combination with print or just separate?
The first sponsors didn’t wait for the outcome and just jumped on the iPad publishing bandwagon. Like Marriott’s Courtyard Hotels joining USA Today. USA Today, is selling iPad ads completely separately. Its iPad edition, which is already available, will be free to consumers for three months, courtesy of a sponsorship sold on its own to Courtyard by Marriott. The paper is free for hotel visitors, so it will be interesting to see if they can get them pay for it after the three months are over.
“These (print and iPad) effectively are going to be very different media,” argued David Hunke, president and publisher of USA Today. ”
“For us it probably makes sense to have some flexibility with that,” said Gini Gladstone, senior director for Courtyard marketing. “Because we’re buying less print and more digital over time, it would be difficult for us to say ‘Let’s bundle those together.'”