Srini Dharmaji, CEO and Founder of GoldSpot Media, considers Apple's recent decision to block apps that use location-based ads
Since launching the iPhone, Apple has made several positive contributions to the mobile advertising industry, but its attempt to block any app that uses location-based ads may curtail growth of mobile app explosion. The following note from Apple blog post recently made the rounds in the tech and media blogosphere:
If you build your application with features based on a user's location, make sure these features provide beneficial information. If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store."
After reading this note, a couple of things immediately came to mind. The first concerns the user experience of the app; the second, the overall health of the mobile marketing ecosystem, which has taken off last year, thanks in part to Apple and the iPhone. Lets look at each more closely.
The app user experience
Lets assume for a minute that Apple has the best intentions to provide a superior location ad-free experience for the iPhone user, by eliminating location-based ads that pop up many times while an app is used. The moral ground for Apple being the good police is definitely questionable. If the user is constantly bombarded with ads that offer location-based purchases, he or she will probably stop using the app anyway. Thee one who suffers the most from the ad deluge is the content publisher or app developer, who has offered the app for free, hoping to make money from advertising.
Why would an app developer risk subjecting the user to an ad deluge if the app is performing well and is being extensively consumed? For the case of apps with a short shelflife, it doesnt matter anyway, as very few downloads would have taken place, and more importantly, the app wouldnt have matched the requisite criteria for any sane advertiser or agency to run a campaign.
Mobile advertising ecosystem
The mobile advertising ecosystem is taking off, thanks again to Apple and the iPhone. Media buyers are still struggling to figure out the inventory types that are effective within mobile apps, and how to buy this inventory from the so-called long tail of applications. These apps are not necessarily branded in the sense of a TV ad buy, but have the potential to reach the desirable audience for a forward-thinking advertiser.
Apples decision to lock out every app that uses location information for advertising will take the industry backwards, as media buyers are not sure if this applies to long tail apps only, or whether big-branded apps from companies like ESPN and CBS, will be subjected to the same policy. The ad sales folks on the mobile side of premium publishers will have a hard time convincing their agency and advertiser customers to invest in mobile apps, even though the iPhone market share is small compared to the other Smartphones in the industry. What good is Apple achieving by enforcing location ad locks within apps?
As a business owner, I understand the big opportunity Apple is seeing through their Quattro acquisition, and have no problem with them integrating the Quattro technology into the iPhone/iPad OS and exposing them through the SDK. Apple stands to gain a lot more from being open to other ad networks, while introducing precise location ad technology with excellent experience to the iPhone/iPad user. It can take mobile advertising to newer heights by adopting an open strategy, rather than being seen as a negative influence on mobile marketing.
So whats next? Apps cannot take demographic information, even if the user willingly opted in? A block on sending the contextual information of the content being accessed to the ad server? A block on sending send day-part information?
If Apple believes that the app ecosystem is a vital part of iPhone sales, what is it achieving by slapping the developers who take the risk to publish free apps and monetize with ads? If developers cannot make money from the iPhone, they will stop building the apps for that platform and go somewhere else. Im sure the folks at Google are happily chuckling away at the naivety of Apple, as it can only increase Android adoption, and lead to more dollars for AdSense.
Sorry, Mr. Jobs. As much as I admire you and the Apple commitment to excellence, I think your guys got this one seriously wrong!