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Can Apple loosen reins enough for RTB play to succeed?

iPhone 5C

Mobile data unlocks a wealth of opportunities

Apple continues to cast around for a meaningful mobile advertising strategy, with recent reports suggesting it will give up some of its tightly-held control over the iOS ecosystem by introducing a real-time bidding platform while also pushing iTunes Radio ads.

While Apple yields significant sway with marketers because of how successful its devices and software are, advertising has been a tough nut for the company to crack as evidenced by iAds’ small role. By automating bidding on mobile ad inventory, Apple hopes to better monetize the significant amount of time iPhone and iPad users spend on their devices.

“The biggest challenge for Apple will be letting go of control,” said Dave Martin, senior vice president of media at Ignited, El Segundo, CA. “By nature, RTB allows a lot more advertisers, big and small, to begin showing up on Apple’s ad network.

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“Historically, Apple has been reluctant to allow this kind of freedom within their platform,” he said. “They’re very protective of their brand and this decision had to be a scary one for them.

“The biggest benefit to getting into RTB will be that they’ll finally be able to monetize a large portion of their inventory that has until now gone unsold.”

ITunes Radio focus
Apple’s biggest push for ad sales going forward will iTunes Radio, the music streaming service it launched several months ago. These marching orders came directly from Apple’s head of software Eddy Cue, according to Adweek.

Mobile music streaming is one of the success stories in mobile advertising, with Pandora’s mobile offerings attracting many big brand advertisers.

Both Apple and Spotify want to grab away some of Pandora’s mobile ad business.

For example, Spotify recently introduced an ad-supported mobile radio service that is free to users (see story).

“RTB isn’t new to mobile,” Mr. Martin said. “So the news isn’t revolutionary from a mobile advertising standpoint.

“What this really indicates is that Apple sees a much brighter future with iTunes Radio than they do with iAds,” he said.

“Banner ads, in general, are destined to be purchased programmatically across every screen – including TV. Apple is just now waking up to that fact.”

RTB heats up
For Apple, the new focus on iTunes Radio and real-time bidding makes sense since iAds have not made a significant impact on the market, forcing the company to repeatedly lower the price for ads.

The news comes at a time when programmatic buying of mobile advertising is rapidly growing. For example, Nexage recently reported that bid volume on its RTB platform has grown more than 500 percent so far this year and that RTB’s share of spend on the Nexage Exchange reached more than 60 percent in October, up from 26 percent in January.

Competition in RTB is also quickly growing, with a number of companies have jumped in with their own offerings.

For example, Twitter acquired MoPub not too long ago so it could automate ad buying as it quickly ramps up its mobile advertising strategy.

The success of Apple, Twitter and others in RTB will be determined by the demand and price they are able to command.

“Apple has the opportunity to join the established players in RTB who have been developing their marketplaces, data assets and targeting solutions for several years,” said Grady Burnett, chief operating officer at Flurry, San Francisco.

“Ultimately the developers will put their inventory in the marketplace where there is plenty of demand and they can command the highest prices,” he said.

Targeting to improve
An RTB platform could help Apple attract a wider variety of advertisers and bring prices down on its ads even further.

However, one of the company’s biggest challenges will be letting go of control so that the marketplace can develop enough to attract advertisers.

“RTB for mobile banners is going to see hockey-stick growth,” Ignited’s Mr. Martin said. “RTB is really the best way to take advantage of big data; and no platform comes close to mobile in its ability to deliver better relevance to consumers and better value to advertisers through data.

“It will be exciting to see just how targeted mobile ads can get in the next 18 months,” he said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York

Associate Editor Chantal Tode covers advertising, messaging, legal/privacy and database/CRM. Reach her at chantal@mobilemarketer.com.

 
Related content: Advertising, Apple. real time bidding, iTunes Radio, Ignited, Dave Martin, Flurry, Grady Burnett, mobile marketing, mobile

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