Speculation is rampant on the heels of some surprising moves by Apple in recent months regarding a secret interest in mobile advertising.
A patent application filed by Apple a few months ago finally made its way into the public eye, and it’s contents signal a possible shift in the way Apple could monetize its hardware and software products in the future. The patent outlines what the company calls “enforcement routine” software, or in other words, a means for Apple to integrate advertising into its products that users couldn’t skip.
The patent even outlines the fact that consumers would have to verify that they’ve watched or listened to an advertisement before gaining access to the functionality of the hardware. For example, a user couldn’t access their iPod until they’ve successfully watched the required advertising and pushed a series of buttons to verify to the device that the ads have been watched in their entirety.
Beyond the ambiguity surrounding the patent application, it’s come out recently that Apple did indeed talk to AdMob about a possible acquisition before it was snapped up by Google. Sources close to the company have revealed that it wasn’t only AdMob that Apple had its sights set on, but that it’s “talking to everyone” in mobile advertising about potential deals.
The fact that Apple is gaining interest in mobile advertising, combined with its recent patent application, signal the possibility of Apple introducing ad-supported hardware in the future. If the company could subsidize its historically high-end products with advertising, drastically reduced prices or even free hardware could easily be a possibility.
The iPhone is a prime example. It’s no secret that iPhone users prefer free apps to paid apps – around 9-to-1 to be exact – and a majority of those apps are monetized via in-app advertising. Apple has undoubtedly taken notice of the success and revenue being generated by this model, and could be taking steps to get in on the action itself. Since AdMob is the undisputed leader in iPhone app monetization, it makes perfect sense that Apple had a key interest in the company and its technology.
If Apple were to introduce integrated advertising into the iPhone, and make the ads un-skippable and verifiable, it could potentially offer a very-low priced iPhone alternative, or even a completely free iPhone. Instead of generating revenue via one-time hardware sales, Apple could potentially make recurring revenue from each user via on-going advertising that would equate to much more than the original $200-$400 per device they sell today.
It doesn’t stop there, Apple could use this model to subsidize the cost of iPods, OSs and even the highly anticipated Apple Tablet that’s due out in the near future. While this is all still speculation, it would make a lot of sense, and give Apple a completely different business model to build upon- one that has proved very successful for other certain (Google) companies.
I hope you’re right in your speculation. It’s amazing how much mobile marketing has improved the marketing industry and given companies an edge. Good article.
Love your experience.Yup I am with you.
mobile marketing is set to be the next big thing- it is more effective than any other type of marketing because it is so personal, ie if you receive a text message, you are bound to read it, even if just out of curiosity. However, it is only effective (and legal) if you have opted in to receive these messages (otherwise it is spam
not much of a secret now…
this model’s made sense for a long time and i suspect google is thinking along the same lines, hence it’s big move into the mobile space with android, etc.
opt-in, targeted, 1-to-1 marketing/advertising seems like a great way to subsidize or eliminate the cost of hardware/service in the mobile space.
So if I have a free iPhone, I can’t make or receive a voice call, take a photo, send an SMS/MMS or anything unless I’ve paid close attention to an ad that may or may not be relevant to me? I think this kind of device would either appeal to a very small segment of people, be a PR nightmare for Apple, or both. I guess it depends on the targeting accuracy and specifics of the conditions, but could hurt hurt consumer opinion of mobile marketing more than help it.
No one likes to be told what to do, even if they want to do it anyway.
I sincerely hope this isn’t accurate.. Advertising before access to a device I’ve bought! I don’t think so.
ITGO – Interval Trainer GO Featured in US App Store Staff Favourites
Great just we need more advertisements.
“a means for Apple to integrate advertising into its products that users couldn’t skip.”
This is a strategy used by several “free” porn sites.
There is a difference between the two–sms marketing and advertising. Some of the comments seem to confuse this.
Serving as an essential part of a balanced marketing plan, mobile advertising offers a medium whereby brands can achieve constant communication with consumers as and when they want to. nice information.