The future of ad sales (2)

Till today, Google has the advertising clout with major brands all over the world thanks to its desktop search empire. Google wants to buy itself into the mobile advertising business by taking over mobile ad firm AdMob (late 2009 and currently being investigated), which will provide the same type of in-app ads like Apple. Despite the lack of track record in digital advertising, Apple on the other hand, has a strong mobile cachet thanks to the iPhone, which has sold more than 50 million units in three years, and the iPad, which sold over 500,000 units in the first week (1 mln after 1 month!). iAd already has analysts rethinking their predictions for advertising on the mobile Web. Steve Jobs clearly believes that ads in the context of apps make more sense and have more effect than the generic mobile search.

Creative agencies who have been presented to by Apple on using iAd and could only reveal bits of the presentation, such as this: each published advertisement will carry the iAd logo to differentiate it from other advertising content, that there will be only one advertising banner per screen and that the ads “look and behave a lot like apps”. Unlike browser-based ads, iAd ads can tap into all major OS features of the phone, from compass and accelerometer to the multitouch interface.

Mediabuyers’ view:  Apple is going to sell 100% of the ads. Apple doesn’t do cheap, they do premium. So I’d expect buyers to become trained very quickly that this is expensive inventory.

Another view (blog by Henry Copeland): Apple thinks it can divide the market as it does with app developers: the creator and the buyer, mediated by Apple. The market for advertising is far more complex. First there are the end clients, or: brands, with the money. There are various types of agencies: creative, ad buying, planning, strategic. Then there are the publishers and other content creators. There are ad networks. There are tech companies running around trying to sell any and all of the other players their latest innovation. And of course there are sales teams larded throughout, each selling to the next level in the pipeline. Everyone talks with everyone, covertly trying to eat their partners’ lunches and win an upper hand.

Copeland goes on: “Maybe Apple doesn’t know this, but most of advertising innovation isn’t instigated by agencies, but by publishers and ad networks and tech vendors competing tooth and nail to win business from agencies and their clients.”  I partly agree with Copeland, but this new medium called a ‘tablet’ is taking the market by storm. The numbers of iPads sold within 28 days are staggering.

Key issues for print publishers these days:

1)      How to stay relevant for readers and brands using their platform.

2)      What publishing format will prevail in the next 10 years – print, internet or mobile apps?

3)      How to protect your expensive content?

4)      How to deal with new dominant players like Apple?

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.

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).

1. 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.
2. 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).
3. 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.
4. 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.
5. 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.
6. 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.
7. 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.