Apple Opens Up Its Mobile Ad Network To Programmatic Buying

Last week, Apple announced that it is opening up its mobile ad network, iAd, to programmatic buying through partnerships with leading ad tech firms. This news inspired marketers and industry experts to reconsider the potential of the relatively minor ad platform, with new talk about the possibility of Apple becoming a much bigger player in the mobile advertising world.

It was announced that Accordant Media, Adelphic, AdRoll, GET IT Mobile, MediaMath, Ruicon, Tapsense and The Trade Desk have joined as launch partners. The companies will be able to automate ad buys as well as reporting across more than 250,000 iOS apps via Apple APIs.

It has been clear, up until now, that iAd has not been able to gain significant market share since its launch in 2012. According to eMarketer estimates, iAd will only account for 3.3 percent of the U.S. mobile ad market this year, in comparison to Google’s share of almost 50 percent and Facebook’s share of just over 15 percent of the market. However, with the move by Apple to programmatic buying, perhaps the time is coming for the company to become a serious competitor for mobile ad revenue.

Programmatic buying provides access to data to ensure increasingly effective ad targeting, which is commonly known to be an extremely important tool. Facebook, Twitter and Google all offer programmatic and all offer unique data sets to advertisers, as well as enabling retargeting, which is the focus of AdRoll. It is clear Apple has a massive amount of user data from iTunes and its App Store, and this information could allow the company to gain significant momentum in the realm of mobile advertising if the right moves are made. AdRoll’s head of mobile growth, Ben Witte, explained the power of Apple’s position. “What makes Apple distinctive is that they know what types of apps and in-app content users engage with most,” said Witte. “If Apple can harness that data and combine it with the data that its ad tech partners have, the company could be in a powerful position to appeal to advertisers and app marketers.”

Apple also has the newly launched Apple Pay, which could prove to be an important aspect of the company’s future growth in mobile advertising. As the payment program evolves over the coming period, it will be very interesting to see what types of attribution and analytics will be accessible to retailers who choose to use Apple Pay. Witte explained that the launch of Apple Pay has brought wider consumer and retail awareness to the potential of mobile payment capabilities, with Google also capitalizing on this increased understanding to drive growth for Google Wallet. In general, Witte feels that these developments will prove to be positive for mobile ad tech overall.

Many industry experts claim that Apple’s initial budget requirements for iAd advertisers were too large, which hurt the company’s success. “The focus should have been on developers–the people who were going to build out this ecosystem–and their interest in monetizing their apps, acquiring and engaging users,” said Witte. “Those tactics require direct response and programmatic buying capabilities to drive app installs at scale.”

Clearly, Apple has realized that a new approach is in order. In April, it opened up the platform to anyone with an Apple ID. By adding programmatic, Apple has placed iAd in line with Google, Facebook and Twitter. Additionally, the move to partner with third-party ad tech firms rather than to facilitate programmatic through its own channels illustrates a change of concept for Apple.

“This move unlocks the user data sets that Apple has, which are on par with Facebook,” said Witte. Third-parties are able to bring in their own data to increase the value. “Advertisers can mesh that third-party data with Apple’s consumer data sets to get really granular targeting,” Witte explained.

With a new programmatic strategy, is iAd poised to rival Facebook? Witte thinks that the possibility is there. “The launch of programmatic on iAd signifies the potential for another huge market for app developers to acquire and engage customers,” he said.

However, if marketers choose to add iAd to their strategies, will they reduce their budgets from Facebook, AdMob (Google), MoPub (Twitter) or other networks, or will it simply become another part of the growing mobile advertising sphere?

At this point, it’s still unclear whether or not Apple’s ad units will be able to significantly compete with Facebook and Twitter’s successful native ad units. It is commonly understood that native has proven to be a big pull for bringing advertisers into mobile. While an interstitial ad that appears between game levels can be effective for driving installs and upsells, it’s possible that brands and merchants will not consider them to be as powerful as Facebook’s offerings, even with the data targeting and scale that Apple is adding. It’s very likely that Apple will need to evolve beyond its current offerings, although it’s unclear exactly what will occur in the coming period and what the company may already have in the works. However, it does seem that there is great potential, and iAd is certainly proving to be important to watch in the future.

“This is a big reset, the first inning, if you think about all the assets they have – scale, data, Apple Pay–they have the potential to build a mobile ad platform that rivals the others,” said Witte. “Apple is making a huge reinvestment in mobile advertising. Given the scale and unique data they have, this is only the beginning. We think we are going to see a lot more capabilities coming in the near future.”