Publishers are willing to give Apple their articles but are reluctant to disclose plans on how they will monetise them, particularly through the iAd mobile advertising platform.
The technology giant’s Flipboard-style News app comes as part of the new iOS 9 update later this year and will present articles from major media outlets such as ESPN, Wired and The New York Times in a consistent look and feel. Much like other reader apps, News will track reading habits to better personalise content over time.
It means publishers will be able to reach readers with a service that’s native to hundreds of millions of iPhones and iPads. But in order to carve sustainable revenue from it they will need to decide how best to sell their inventory within the app; is it easier to sell their own display ads and keep 100 per cent of the revenue or get Apple to shift the ads through its advertising platform iAd in return for 30 per cent of the earnings.
The Guardian, Conde Nast, Hearst and Vox were all tightlipped about their revenue deals when quizzed by The Drum and opted instead to talk up News’ potential to take their articles to a broader audience. It suggests a wait and see approach to its popularity as publishers wrestle with how much control they cede to third parties in their charges for reach.
The Economist gave the clearest indication that extracting ad revenues from the service is not in its immediate plans. Tom Standage, deputy editor of The Economist, said Apple News is a “good way to get our journalism in front of people who might otherwise not see it”. “For us it’s not primarily an advertising play,” he continued. “We may put some ads on it but I expect we’ll mostly use house ads and calls to action to encourage people to download our apps and visit our website. In short, News is an extension of our sampling strategy.”
It is indicative of the lukewarm reception publishers gave Facebook’s Instant Articles CMS last month. An Ad Age report at the time revealed that several of those media owners using the service will not let the social network sell their ads for now, a decision emblematic of the wider tussle over ad revenues between publishers and the likes of Facebook and Apple.
For Apple, getting publishers and consequently advertisers on-board with iAd would enhance its advertising hand against Facebook and Google, who have been allowed to make money from ads served to iOS devices. Industry experts believe the bigger publishers could be tempted to turn to iAd if Apple can convince people to consume news from its app and then effectively showcase the value of that engagement to media planners.
Jakob Kofoed, chief technology officer at analytics firm Data2Decisions, said Apple needs to balance three key ingredients to monetise its News service; access to a large and affluent audience, superior targeting capabilities to improve conversions and competitive cost per impression or click.
“iAd has the potential to deliver all three and be very successful but first of all Apple must succeed in making publishers and consumers use the News application and in this space they will face strong competition from other news platforms such as Facebook Instant Article, Snapchat Discover and Flipboard,” said Kofoed.
Users are fickle and the places they spend their time are still fractured. Apple has nailed content before with iTunes, however, it will need to offer readers a good enough reason to change the way they currently consume news.
Jon Williams, marketing director for the EMEA region at Opera Mediaworks, said: “The launch of Apple News is a clear attempt by the Cupertino company to divert revenues into iAd and take a larger bite of the advertising pie. However, if Apple is to rival players such as Facebook and Google in this space, it will need to ensure that Apple News actually captures eyeballs.”
While Apple Music, Apple Pay and Apple Watch take the limelight, iAd could be a future revenue growth driver for the technology business. It has toiled away to bolster the proposition of the advertising format and most recently moved it into the programmatic space to attract more budget-conscious advertisers alongside the roll-out of retargeted ads that automatically change in response to a user’s in-app behaviour. Combined with rumours that the service will integrate with Apple Pay and its radio offering, the investments shows that Apple’s tiny ad business is ready to grow up.
iAd only made $487m last year, just 0.3 per cent of Apple’s revenue in 2014, according to eMarketer. By comparison Google and Facebook generated $59.6bn and $11.5bn respectively in ad revenue last year. The rewards up for grabs are made all the more clear with eMarketer’s prediction that global mobile ad spend will hit $100bn and account for more than 50 per cent of all digital ad spend for the first time in 2016.
Apple’s charge into News could foster more love for iAd that allows it to finally benefit from the massive global success of the iPhone and iPad.