Apple rewrote its developer’s agreement, limiting ad-serving on the iPhone and iPad to “an independent advertising service provider.”
In other words, Google’s Admob or any ad-service provider affiliated with a mobile phone manufacturer or distributor had better focus on Android, BlackBerry and other devices because they won’t be serving ads through iPhone apps.
The Financial Times reported that the U.S. Dept. of Justice or Federal Trade Commission may proceed to investigate Apple’s mobile advertising policies out of anticompetitive concerns.
The mobile advertising market today is tiny, but in the future Apple’s stance could have far-reaching impacts on travel advertisers — that is, if Apple can maintain its walled-garden approach for the iPhone and iPad.
Scott Cherkin, senior vice president of business and product development for the Travel Ad Network, says he’s not surprised by Apple’s move.
“It’s very much in line with Apple and having a closed system,” Cherkin says. “They’ve always been very protective of their user experience and how people can engage with them.”
Apple’s decision to limit ad-serving to independents has “near-zero impact” today, given the nascent state of the mobile advertising market, Cherkin says.
Travel Ad Network, which has exclusive deals with some 300 online travel website publishers, currently is running some mobile advertising tests
like this one in the FlightView Flight Tracking App for iPhone.
For travel-apps developers, Cherkin argues that Apple’s decision to restrict ad-service providers to independents could stifle innovation if it limits the ability of free-apps providers to attract advertising revenue.
While Travel Ad Network, ad agencies and other independents could benefit from Apple’s decision, for travel advertisers, particularly smaller ones, the move may bring new complications, he says.
For example, if a small hotel or a destination marketing organization counts on Google or another mobile phone distributor or mobile operating system provider to handle all of its advertising in a one-stop shop scenario, then Apple’s new language would force these advertisers to develop new relationships with independent advertising networks or ad reps to get their travel ads on iPhones.
“If a travel advertiser is counting [solely] on Google, that’s over,” Cherkin says. “You’ll need to find another channel.”
On the other hand, given Google’s dominance of online advertising, Apple’s attempt to take Google down a peg — ironically — might spur more competition by making Apple and others greater forces in advertising.
Meanwhile, Apple’s stance may turn out to be a double-edged sword for startup-media companies looking for an exit strategy, Cherkin points out.
If the media company has a certain amount of revenue from advertising services provided through Apple devices, then a large player like Google or a mobile phone provider looking to acquire the media company might give it a lower valuation because the media company’s revenue through Apple would disappear.
These admittedly are the very early days in mobile advertising and there will be countless moves and counter-moves.
But, clearly, Apple has opened with a powerful — and from the looks of it, regrettable — opening shot.
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Note: There are varied interpretations — see John Battelle’s Search Blog and Mashable, for instance —  as to the significance of Apple’s policy changes so we’ll have to see how Apple implements its new stance.
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Both developers and advertisers will have to adapt to this reality. From what I’ve seen so far in terms of quality of iAds, I don’t think this is entirely regrettable for the consumer. Competition for Google can be a good thing.
The nature of this piece is somewhat misleading. Apple’s restrictions are isolated to native iOS applications and not HTML5 apps, which means that HTML5 app developers are welcome to advertise using Google/DoubleClick should they choose to do so.
It’s not clear to me how this is “regrettable,” though. Developers can target one of two platforms for the iPhone: HTML5 or iOS, and there are ad systems available for each.
Paul: You seem to short-change the vast market power of the app store and iOS. If Admob is barred from serving ads to apps downloaded through the apps store, that’s no small development. After all, what is the breakdown of iOS versus html 5 apps on the iPhone?
Federal authorities apparently are taking Apple’s moves more seriously than you are.
“You seem to short-change the vast market power of the app store and iOS. If Admob is barred from serving ads to apps downloaded through the apps store, that’s no small development. After all, what is the breakdown of iOS versus html 5 apps on the iPhone?”
As Stephen notes, while HTML5 apps are in their infancy, HTML apps – web apps – are most certainly not. However, I’m not aware of any one source to get statistics on the number of people using web apps. Google accounts for a chunk, Facebook is arguably one, and so on.
I’m not suggesting that the Apple App Store is small potatoes. Rather, I’m suggesting that there *are* alternatives available on the very same platform. Stating that disallowing other ad systems within native apps is true, but it also misses the bigger picture.
“Federal authorities apparently are taking Apple’s moves more seriously than you are.”
A foolhardy move, in my opinion, for the reasons stated above. The App Store is not a monopoly – even on its own platform! – so I feel there’s no tree to even bark up here.
Let’s be clear on one thing here, there are no HTML 5 apps yet, so it’s a bit of a theoretical situation. Until there is wide range adoption of HTML across the various browsers and devices, the app store is still going to be the primary source for apps on the iPhone. Once HTML 5 gets more adoption, then we might see more HTML 5 apps being developed specifically for mobile, but they are still not going to have the same access to OS specific API features that are available to native applications. IMO, the App store belongs to and is curated by Apple, so if you want to play in the App store you play by their rules. Although I’m not altogether in favour of a walled garden environment, I recognize that Apple likes to have very tight control over the user experience on their devices. Until more open environments like Android start hurting Apple’s marketshare and marketing power, I doubt there will be much change. In this case, I would argue that a better experience for the consumer trumps openness of the marketplace.
There is no denying that this can be spun as a crap move by Apple, but I don’t really have a problem with it. For the following reasons:
Firstly, I think Cherkin is a bit off the mark in seemingly suggesting this is going to adversely affect travel advertisers currently pushing their wares via Adsense. Adsense doesn’t get built into apps. If you’ve got a mobile website running Adsense you’ll have no issues — business as usual (for now). If he is talking about travel advertisers who were using Admob, well they’ll just have to go find a new partner. (I wonder just how many travel publishers Admob currently has on their books)
Second, as soon as Google purchased it, Admob stopped being “just another mobile ad provider”. Any data that Google now garners from Admob’s stats is effectively a look into inside development at Apple. Sure other advertising providers get that too — but importantly they’re not flogging competing phones. I’d assume if Nokia was to launch an advertising platform, they’d get similar treatment.
Thirdly, from the view of a parent with young kids. Apple has been clear on their view of porn etc. Admob hasn’t — and if ditching Admob means my kids will see less ads for porn sites in their “Admob supported free apps for kids” then that is 100% ok with me.
Lastly, and a bit more generally, at least from a travel publishers POV, I’m not yet convinced that the “advertising-supported app” as it currently stands is quite as attractive as some think. Lets say you can garner $5CPM ads for your free app, or you can sell it for $1 — and lets say you give away 100 for every one you sell. To earn a comparable amount with the free app your users are going to need to (on average) view 200 pages running ads. What is the last (non-game) app that you used that you viewed 200 pages on? My numbers are arbitrary, but my point is I think making an ad-supported app is more challenging than an ad-supported website.
Final point — lets see what iAds brings to the table.
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