New Models for Digital Advertising

In the last couple of weeks we have seen two new models for digital advertising proposed. First Steve Jobs announced iAds as part of the introduction for iPhone O/S 4.0. Second, Twitter announced their new concept of Promoted Tweets which have begun to be rolled out from major brands such as Starbucks, Red Bull and Virgin America. The Apple ads will be ‘rich media’ ads, using HTML5 (of course not Flash) but they will not be web-based, they will be app-based, and their announcement keyed in with the development that will allow apps to be nested within each other in the O/S 4.0. They also look as though they may be require quite complex and high-end design and animation skills. In his presentation Steve Jobs estimates that Apple could be generating 1 Billion iAd slots per day in six months time. That is a big opportunity.

What interests me about these new proposals for streams of digital advertising is that they promise to be quite distinct and different models for digital advertising. Sure they will be competing with Google in the advertising space but they will be competing by offering a completely different form of digital advertising. They are quintessentially forms of advertising which piggy-back on the environment of their hosts: Apple and Twitter. Apple have proposed an app-based form of advertising, and perhaps to no one’s surprise Twitter have proposed a form of Tweet-based advertising. Whereas Google of course has its strongest suite in search-based advertising. Apple and Twitter are both, in their different ways, targeting the type of brand-based advertising which is where Google is least effective and dominant. They are targeting the big-budget, high impact advertising which has been the strong point of magazine and TV advertising for decades. Use of the Twitter and Apple eco-systems may be helpful to digital magazine publishers in the medium term. All publishers and advertisers will hope for more competition for Google in the distribution of digital ad-spending, but the print and TV publishers are losing control. There will be significant cuts for Apple and Twitter.

Notice also, that the Apple system is significantly less web-based than we have come to expect. The ads that are delivered are not web pages. Although the ads are built with HTML5 (big chuckle from the audience when Steve Jobs said that, sensing another jab at Flash) the advertisements are entirely based on inApp deployment. They are seen on the iPhone, the iPad etc within applications. Not on web pages. It would be no big deal to deliver these HTML5 also on the open web, but Apple have not yet said whether they will do that (nor have Apple said whether or not they will deliver iBooks on open web pages. My guess is that they will not). Apple is clearly building an Apple-only, Apple-closed system for advertising (see Frédéric Filoux and Peter Kafka). There is no point in blaming Apple for this closed approach. Google also is pretty closed when it comes to the workings of its advertising system. But the choice of ‘digital advertising’ as the topic headline for this blog is deliberate. Digital advertising systems are increasingly using the web and open web standards only to the extent that it really helps the technology platform to gain acceptance. We will see more proprietary advertising systems developed in the years to come (watch out for Facebook).

Could the same thing happen to books, magazines and newspapers that is now happening to advertising? Could we be moving towards a world in which there are multiple versions of mostly incompatible digital books, targeted or delivered at different types of digital distribution: ebooks for Kindle, Nook, Kobo and Sony, appbooks for Apple, slightly different Flash appbooks for Android, Google Books for Google Editions, Hulu-magazines for digital TV, Nintendo books and comics for game consols? Or will publishers, authors and readers be looking for a distribution model in which the same book, magazines and newspapers can be offered through all these platforms? Fragmentation and differentiation look to be the stronger tendency at the moment, but a move towards interoperability would be good. That should come if delivery via the web remains at the core of the service provided.

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