"It's almost like going into a room and them putting a gun to
your head and showing you your future," said Norm Johnston of
GroupM's Mindshare, describing Amazon's sales-pitch
swagger during a closed-door meeting in January.
Apple's and Amazon's arrogance in mobile and e-commerce,
respectively, is earned. But neither has developed a strong b-to-b
sales or service culture. Another media-agency exec contrasted
Amazon's style during quarterly sales meetings with the more
energetic pitches from Twitter and Facebook. "Amazon is very
professional. They get straight to the point; there's not a lot of
personal chit-chat going on," he said. This despite that even in a
digital age, advertising is a relationship-driven business.
Perhaps the biggest issue hindering their ad growth is that
advertising is an afterthought, a blip on the balance sheet. It's
still viewed by some as immaterial and potentially detrimental to
the cash cows -- an ad is an impediment if it distracts a consumer
from the "buy" button or mucks up a beautiful mobile app.
One exec told Ad Age that Apple doesn't even have official sales
targets for its ad business.
Cary Tilds, chief innovation officer for GroupM, said that Apple
doesn't have a big sales team. "It's not their main focus to tell
everyone in the world how amazing advertising in iAd is," she said.
"It's just not as loud." Indeed, there are few successful examples
of companies becoming players in the ad business when the majority
of their revenue comes from outside of it. Microsoft gave it a
valiant effort throughout the past two decades and got middling
results. Major video-game publishers that sought to goose bottom
lines with ads in games made little progress.
Advertising 'sucks'
Ad Age interviewed a dozen people close to the companies, including
high-level executives at Apple and Amazon and eight agency and
marketing services execs who work closely with both firms. Apple
and Amazon struggled with the concept of selling ads in the first
place. When introducing iAds in 2010, Apple founder Steve Jobs said
most mobile advertising "sucks." At Amazon, "there was a lot of
internal debate about advertising, and we actually viewed
advertising as disruptive to our business. We worried it was
disruptive to the consumer experience," said the e-commerce giant's
advertising chief, Lisa Utzschneider, during the company's
coming-out party at Advertising Week in 2012.
So why get into the ad business when both companies make so much
money outside it? And are they doomed to fail?
Amazon and Apple had different reasons: Amazon to protect and
expand its retail business; Apple to foster a revenue stream for
its App Store ecosystem. Amazon started slowly, effectively taking
its ad business out of beta at a packed session at New York's
Advertising Week confab in 2012. Apple launched with a splash,
announcing big-money brand deals and a $1 million minimum for
mobile-ad campaigns.
Since launch, both have rebooted their ad-selling efforts
several times. Apple added iTunes Radio to its arsenal. And the two
have also loosened up a bit on the data, though it's nothing like
what advertisers have come to expect from, say, Yahoo, which
provides lots more data and metrics.
Denied data
The lack of data both companies deliver is frustrating for
marketers because these notoriously opaque giants sit atop
incredible troves of information about what consumers actually buy
and like, as well as who they are and where they live. One person
familiar with the situation exec said Apple's refusal to share data
makes it the best-looking girl at the party, forced to wear a bag
over her head.
Through its flagship site and other owned properties, including
IMDb and Soap.com, Amazon has the data that marketers truly prize.
Besides names and addresses, it has tons of actual transactional
data representing real purchases of books, films, music, and
anything from room humidifiers to moisturizer. Its unwillingness to
share that sales data is particularly irksome to
consumer-product-goods advertisers, which are accustomed to getting
this kind of information from bricks-and-mortar retailers. One
agency exec who leads a large CPG account wants Amazon to divulge
data about what's in shoppers' carts to inform ads promoting
collections of goods. But that hasn't materialized.
"Amazon could make its media platform work very hard at actually
selling product," said the executive, who asked to remain
anonymous.
Added Serge Del Grosso, form media director, North America, at
SapientNitro: "There's an opportunity for
Amazon to probably be even more proactive in reaching out to media
buyers with case studies that are specifically relevant to
[advertiser requests]."
While scale and effectiveness are paramount, ad dollars tend to
point to transparency on audiences and campaign measurement. In
exchange for investment, advertisers want a partnership as well as
a view into the product road map, something they say they don't get
enough of from Apple and Amazon. Google and Facebook have made
huge strides in agency relations. No surprise, then, they also lead
in U.S. digital-ad revenues. In 2013 eMarketer reported that Google grabbed
$17 billion. The younger Facebook came in at a distant second with
$3.2 billion and Amazon a relatively meager $614 million in U.S.
digital ad-dollars.
Measuring U.S. mobile ad revenues only, Google and Facebook
tower over Apple. Top dog Google garnered $3.98 billion in mobile
in the U.S. in 2013 while second-ranking Facebook generated $1.53
billion, according to eMarketer. Apple collected $258 million in
U.S. mobile-ad revenue last year. It mainly sells ads in mobile
apps, and introduced its iTunes Radio streaming ads in September
2013. The company does not sell online display advertising or
search ads.
What Apple knows
Apple knows names and addresses, geographic locations and app and
music-purchase histories, and can show ad buyers that a group with
specific characteristics also likes certain types of apps or music.
However, its user tracking and ad targeting are not cookie-based,
meaning agencies can't do automated buys via their cookie-centric
trading desks, which allow them to mesh lots of data from different
sources. Instead, they have to go to Apple, ask to reach a given
audience and, well, trust Apple that it will deliver it.
Apple might come out ahead of its competitors on data, if it
would share. "It's one of the best in terms of data quality and
accuracy … but I think Google is a little more open," said
Dan Grigorovici, co-founder of mobile-ad firm AdMobius, who was a
software manager at Apple until 2012 and a principal developer of
iAd's measurement and analytics capabilities.
Advertisers want to use Amazon and Apple's information --
whatever little of it they can get -- so they've been willing to
play ball, even if it means doing so with an abridged playbook.
Macy's, McDonald's, Nissan and Procter &
Gamble were among the first iTunes Radio advertisers, and
Pepsi launched a branded radio
station -- a rare privilege in a universe that typically forbids
logos other than the one depicting bitten fruit. The soda brand's
custom work with Apple represents the gradual shift Apple is taking
toward better accommodating advertisers.
Taking Amazon seriously
Meanwhile, what came of that closed-door January meeting where
Amazon pitched Mindshare's Mr. Johnston and his client
Nescafé? A decision to take Amazon seriously despite
misgivings about its sales style.
"I really do get the feeling they want to form tighter
partnerships," he said.
One example: Nissan bet big with Amazon recently on a campaign
in which the e-commerce giant built a custom page promoting the
Nissan's Versa Note. Would-be drivers could sign up to connect with
a local dealer and those who bought the sub-compact or small SUV
through Amazon got a $1,000 gift certificate. One of the buyers was
even chosen to have the new ride delivered in an enormous Amazon
box.
For marketers, it was a far cry from Amazon's standard display
ads, a promising sign that Amazon is just starting its engine.
