Apple Could Jump-Start Mobile Advertising, Challenge Old Media
07 Juni 2010 - 11:56PM
Dow Jones News
Apple Inc. (AAPL) Chief Executive Steve Jobs said Monday that
the company's iAd platform, its mobile advertising network, will go
live on July 1, introducing yet another disruptive force in the
media industry.
The rise of digital advertising already has weighed heavily on
traditional media businesses--such as publishing, radio and
television--and the nascent mobile market is expected to bring a
new wave of upheaval as devices like Apple's iPhone and iPad
proliferate.
Jobs told an audience at his company's annual World-wide
Developers Conference in San Francisco that the iAd platform will
pull in $60 million worth of advertising in the second half of this
year, with spending commitments made in recent weeks by major
advertisers such as Nissan Motor Co. (NSANY, 7201.TO), Citigroup
Inc. (C), Unilever PLC (UL, ULVR.LN), General Electric Corp. (GE),
AT&T Corp. (T), which is the exclusive service provider for the
iPhone, and Walt Disney Co. (DIS), where Jobs holds a board seat
and is a major shareholder.
"For something that hasn't been in the market and is unproven,
that's a lot of money," said Noah Elkin, senior analyst with
eMarketer. "By getting behind mobile advertising in this way, Apple
could create a rising-tide situation that will give the business a
lot of momentum."
Jobs said the iAd platform will be built into Apple's upcoming
new phone, the iPhone 4, which he introduced at the conference. The
platform, he said, will allow developers to incorporate
sophisticated, interactive advertising into the applications they
develop for Apple's App Store, which sells downloadable programs
that run on its devices. The App Store now has 225,000 applications
available that have been downloaded a total of five billion
times.
Apple will give 60% of the revenue generated from the ads to
developers. Jobs said the company doesn't aspire to be an
advertising agency; rather, it developed the platform "to help our
developers earn money so they can continue to create free and
low-cost apps for users."
The mobile advertising market will reach $593 million in 2010
before more than doubling to almost $1.6 billion in 2013, eMarketer
estimates. In January, Apple acquired Quattro Wireless, a mobile
advertising company, for an undisclosed sum, and used its platform
to create iAd. Google Inc. (GOOG) and a host of other firms are
also competing in the business.
"Apple has proven itself to be one of the most innovative
companies in our lifetime, and they will be a powerful player in
the advertising," said Bob Davis, a partner with Highland Capital,
which was a stakeholder in Quattro before it was sold to Apple.
"There's already a lot of tough competition out there though."
John Shelton, chief executive of Strata, an ad-software provider
that manages $50 billion worth of ad transactions, said that, while
mobile makes up a small portion of the total ad market, there is
pent-up demand from large advertisers and agencies to enter the
space, and Apple is poised to tap into it at an opportune time.
"I think you'll see a lot of agencies really pushing this,"
Shelton said. "These devices are just showing up in the market,
like televisions in the 1950s, and all of sudden, I think you're
going to see a watershed of advertising coming in here."
-By Nat Worden, Dow Jones Newswires; 212-416-2472;
nat.worden@dowjones.com
(Ian Scherr contributed to this article.)
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