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Apple fires up iOS ecosystem with social push

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Apple has taken a much-anticipated step toward social media with its purchase of Topsy, opening the door to more relevant user experiences that could help it sell more ads.

The deal, reportedly valued at more than $200 million, is the latest sign of the significant opportunities companies see in the convergence of mobile and social. While Apple has been slow to embrace social, its Topsy purchase has potential to boost the iOS ecosystem.

“The importance is moving into the social space, which they have done very little about,” said Sheryl Kingstone, Toronto-based research director at Yankee Group. “And everyone is wondering what is going on with their mobile advertising side, they have done nothing there also."

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“They are such a force to be reckoned when you are talking about completely vertically integrated solutions,” she said. “It is perfect for them to do something here.

“They are not coming at it just as an ad play, they are coming at it by powering their ecosystem. If they keep developers happy and are able to offer more opportunities for developers to make more money, they will be less likely to abandon ship.”

Mobile social convergence
Apple has lost some of its previously significant influence in the mobile space because of a perceived lack of innovation from the company over the past 18 months. At the same time, sales growth is slowing, and competition is increasing.

A dose of social could infuse Apple with some new energy. While Apple confirmed this week that it has acquired social analytics firm Topsy, which analyzes Twitter conversations to uncover key trends and insights, the company did not reveal what its intentions are. 

While Topsy is a certified Twitter partner, the San Francisco-based company’s products are also used to search, analyze and draw insights from conversations on other social sites such as Google+.

The majority of social media use comes from mobile devices on the big platforms such as Facebook, Twitter and Instagram, pointing to the importance of integrating mobile and social for companies. 

The importance of data
While social media continues to grow, Apple has noticeably been lacking in this area.

For example, Apple launched Ping, a music social networking and recommendation service in the fall of 2010 and shut it down two years later after it failed to gain much steam. The service was replaced with Twitter and Facebook integration in iTunes. 

Additionally, it was reportedly not until September of this year that Apple CEO Tim Cook opened a Twitter account and started tweeting.

While handset manufacturers, in general, have not been big players in social, the difference for Apple is that it offers a tightly integrated ecosystem that includes a variety of user experiences that could benefit from the enhanced real-time relevancy that social analytics can provide.

“What they can do with it today is really embedding it more effectively in iTunes, in their App Store,  iTunes radio and also iAd,” Ms. Kingstone said.

“When it comes back to the future, data is the new oil,” she said. “That is what is most important.

“If they can do something with this, then maybe they can revitalize what’s going on with iAd.”

Revitalizing iAd
Apple has seen a number of its big advertisers integrate social media into their campaigns.

For example, Procter & Gamble’s Olay and Herbal Essences lines recently rolled out new mobile campaigns featuring audio ads running between songs within the built-in iTunes Radio application for iOS devices that focus on propelling Twitter interactions (see story).

Apple’s mobile advertising business iAd is far from the success story the company had hoped for. After launching with a minimum $1 million spend, that number has dropped down to $100,000 in the face of low demand.

Advertising is crucial to the vitality of any mobile ecosystem these days, something that Apple, Google, Facebook, Twitter and others are very aware of.

While it is not clear what Apple will do with Topsy, the ability to integrate the latest trending information from social media sites has significant potential to, for example, provide accurate recommendations for apps and on iTunes.

“We’ve talked about the business model being advertising based, but it is even going to be shifting more because consumers are much more willing to embrace some of that,” Ms. Kingstone said.

“[If Apple gets this right, it has potential for them] in two ways,” she said. “First, it will improve the accuracy of their own ability to cross-sell, up sell.

“But also they can empower their ecosystem to be more effective which then means companies will spend more dollars on iAds. They’ll be able to justify more revenue in the App Store.”

The fact that Apple felt it necessary to purchase Topsy rather than partner with it or one of the other many social analytics companies out there suggests the company is looking to do more than simply gain insight into its users.   

“This has to be a first step,” Ms. Kingstone said. “They have to be able to take this and really embed it into their platform to make it effective and to put tools on top of it for their ecosystem.”

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: Strategy, mobile, mobile marketing, Apple, Topsy, Sheryl Kingstone, Yankee Group

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