Apple Tries to Break Online Advertising in Order to Save It

Owning the Product Stack Is a Winning Formula for Apple's Devices. Can It Apply to Advertising?

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Mrinal Desai
Mrinal Desai
Apple recently released Safari 5.0 with the Reader view which conveniently "removes annoying ads and other visual distractions from online articles." I have personally been zapping those annoying ads with Readability, which Apple used to power its reader, since last year.

Surprisingly, no one seems to have noticed how easy Apple has made it to remove ads from web pages just by double-tapping the browser on the iPhone, iPod Touch or iPad. This, while Apple is simultaneously attempting to re-invent interactive brand advertising with its new iAd format, rolling out July 1. What gives?

Apple CEO and device impresario Steve Jobs has seen online ads and thinks they're so bad they actually threaten the user experience of Apple products from the iPad to the web browser. Fortunately, he's also trying to do something about it.

The avoidance of advertising has become a cottage industry in the digital age, first through DVRs and now all manner of web tools and, as Apple has shown, devices themselves. The industry has brought this on itself. Brand advertising exists to evoke powerful emotions but instead, on the web, we re-wired our brains to develop "banner blindness." Consequently on the Internet, it comes as no surprise that the gap between search and display is widening.

If there is one company that can change that emotion about advertising, it is Apple. Why? Because whatever Apple creates, it creates for the end user - consumers like you and me. They are maniacal about providing a seamless (as far as possible) end to end beautiful experience as a package and they just do not compromise. That's a long way from the goal of 99% of the ads on the web today which exist to trigger a tiny percentage of click-throughs by any means necessary.

Apple has a history of not compromising that user experience - they build the hardware, the software and interaction and present it as a package to us, first with PCs, then with MP3 players and mobile phones. They came in to build the hardware, software and interaction to manage the entire user experience and the users loved it.

Now we are seeing it with iPads. Microsoft brought tablets to market first and then also along came cheap netbooks without an identity - they were neither laptops nor tablets nor smartphones. Everyone wanted a piece of that market. Apple on the other hand was comfortable saying no to netbooks. "We don't know how to build a sub-$500 computer that is not a piece of junk," said Steve Jobs in an earnings call in 2008. Instead they waited and built the hardware, built up the iPhone OS (now iOS) software and interaction to launch the iPad this year. It became the fastest product to reach $1 billion in sales, eating up netbook sales along the way. Suddenly, through a beautiful end-to-end user experience, they reinvigorated the tablet category and sent every hardware vendor into a frenzy.

Instead of spreading horizontally and being everything for everyone, Apple grows vertically to own the entire product stack where deemed necessary to control the user experience that plays to their strengths. Unlike other companies it competes with, namely Microsoft and Google, Apple builds very few products and none of them are in "beta." They do not acquire many companies; they do not run an investment arm like its competitors.

Owning the vertical product stack to consequently control the user experience is a winning formula for Apple--and now they're applying it to advertising. With over 150 apps on my iPhone (and many more tried and deleted), the majority of ads in them throw the user out of the app. The exceptions for me were Cooliris (which serves its own ad in their own app) and a few ads from Google. The experiences are nothing to write home about as you can see in the example below.

Now with iAds, Apple has entered mobile advertising with a significant commitment from a product package perspective - its tied to the iOS. iAds initially will be created, hosted and served by Apple to begin with. Why? Because they are maniacal about the end user experience and emotions evoked through them. I believe iAds will show up on (Apple) TV in the near future. Then, would Apple build its own display (interface) TV to own the entire stack? Yes, it will. Each ad is an app and each app is an ad.

Brand advertising is about eliciting emotions, not creating blindness, but group-think among marketers, agencies, ad networks and publishers has led online ads astray. Brand advertising is about creativity, not conformity. Once again, like 1984, Apple can end the Information Purification Directives and change advertising the way we know it.

Mrinal Desai is an adviser at CrossLoop, a company he co-founded and which is funded by El Dorado Ventures and Venrock. Prior to that, he was the first business development manager at LinkedIn. He has been recommended by Ad Age as one of "25 Media People to Follow on Twitter" and you can follow him here:
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