In North America, mobile advertising revenues grew 111% from 2011 to 2012, while at the same time netting 83% growth globally. Growth in Asia just slightly outpaced North America during the same period. Contributing factors to the growth are easy to identify – widespread smartphone adoption and more time spent on mobile devices, along with increasingly better monetization of mobile ad services.
Mobile ad services are figuring out better ways to optimize the advertising experience for advertisers. This is obviously the key to growing revenue. Something that Apple understands, as they are about to launch iTunes Radio as an ad supported platform. So here’s what I would do if I were in charge of monetizing that platform.
- iTunes has 500 million users across the globe. Those users are mobile, and they like to consume content, mostly music. But over the past few years they have decided that they don’t have to own that music, they’re happy to stream it instead.
- iTunes also has lots of information on those users – who they are, where they live, what devices they use, how old they are, and what they like to watch and listen to. That’s the stuff that advertisers really want. But that’s not the holy grail.
- iTunes has a credit card on file for all those users. Because they buy songs, video and apps from the ITunes store already. So if you are an advertiser, and you are selling something online, how would you like to sell it in Apple’s store, where users can purchase it with just one click? Sure, you’ll pay them something for that, but it’ll be worth it because it makes it so easy for the customer.
That’s how I think Apple could revolutionize mobile ad monetization…
As iTunes announces their streaming radio service to launch this fall, Pandora continues to make deals that put their service in the dashboard, where they can continue to expand audience. According to wsj.com yesterday, Pandora will be available and installed in one-third of new cars sold in the US this year.
That impressive stat brings the streaming service a lot of new listeners – Pandora says they have seen more than 2.5 million unique activations through integrations from the 23 major automotive brands and eight aftermarket manufacturers they are installed with.
Meanwhile, the popularity of streaming and the connected dashboard is not being overlooked by Sirius XM. Despite deals that already have their satellite service installed in a long list of vehicles. Sirius XM has been improving its streaming offering of late, and just announced a deal with Ford that will pair both its satellite and online radio offerings in new Ford cars with Sync AppLink.
Meanwhile, tuner platforms like TuneIn and Aha Radio both have integration deals with auto manufacturers as well, and folks like me connect just using their smartphones. Audio options in the car are expanding, and the big services have taken note. Is the next new thing an iTunes radio in your dashboard? If so, it will likely be one that will sync with your iPhone…
I’ve been away on vacation for the past week and a half or so – a vacation where I barely got online and didn’t check my email at all. After the first few days, it was surprisingly easy to do, and very relaxing. It turns out, last week was a big news week for Internet radio, with Apple giving the first preview of it’s nicknamed iradio product, and Pandora purchasing an FM station in Rapid City, South Dakota. I spent my first day back reading a lot and trying to get some perspective on both announcements.
iTunes Radio, it appears, will simply be Apple’s entry into the space, long awaited. After reading about it and talking to a few developers who have seen the interface, I guess it’s an Apple-esque, graphically interesting web radio interface that does the same things that Pandora does. Not a lot of innovation, but a well done product – possibly less than I would have expected from Apple, since I’m aware they have been actively working on this entry into the markeplace for at least a year and a half, when they contacted me.
Don’t get me wrong, I think there will be innovation with this product, and I’m hopeful that it will expand the marketplace for everyone. According to one thing that I read, Apple is planning to sell ads on its streaming radio platform using iAd, its mobile ad business. Consider that Apple knows about its users, which provides for effective targeting, and has a credit card on file for each one of them, which most of them are accustomed to using already to purchase songs and apps. That’s a system that could translate to expansive online revenues for lots of advertisers.
I don’t think Apple will mean a lot of trouble for Pandora, although certainly they will begin to share audience. Pandora’s got a large user base and a lot of happy customers. They may lose some share, but the number of people using Internet radio will continue to grow, and they’ll still gain listeners. Meanwhile, they’ll benefit from another major player in the marketplace who will help build advertiser investment. Look at it this way: it would appear that Apple’s game is to solve the conundrum of how to monetize the mobile audience, in particular the streaming audio mobile audience. I’d say that’s good news for the industry.
Nearly 40% of smartphone owners have used their device to listen to a streaming music service while in their car, according to new research by NPD Group on automotive connectivity. Devices and ways to connect them have become a serious focus for the auto industry. 79% of car owners are using a digital device in their cars.
It appears at this point that streaming in the car is used to supplement listening to traditional radio – according to NPD’s Ben Arnold, seventy three percent of drivers report still using their FM radio “always” or “most of the time” during car trips while more than half (57 percent) of vehicle owners say a CD player is vital in their decision to buy a car stereo or entertainment system.
The desire to consume connected content is a challenge for the auto industry as well – as they focus on best ways to integrate mobile connectivity into the car with minimal driver distraction. Apple’s voice controlled Siri and Microsoft’s motion controlled product found in Kinect are technologies that automakers are looking to integrate into the equation.
Meanwhile, in place of smooth integration, consumers are finding ways to connect their mobile devices using auxillary inputs (18%), USB ports (11%), and Bluetooth technology (56%). This fact – that consumers are so interested in developing workaround ways to use their connected devices in their cars, is a huge indicator of the desirability for a more connected dashboard.
“The key is for auto makers and traditional audio manufacturers to facilitate consumer use of connected devices in the vehicle, allowing content from the smartphone, tablet, or digital media player to easily stream or be controlled through the deck mounted in the dashboard,” Arnold said. “We’re only going to see greater consumer attachment to social media, streaming audio and video, and other services as content options grow.”
Mary Meeker is widely considered to be an expert when it comes to spotting trends online. A partner at venture capitallist firm KPCB, she was named one of the ten smartest people in tech last year by Fortune magazine. She’s a popular speaker and analyst who has a knack for spotting the next big trend in technology. Lately Ms Meeker’s specialty has been mobile and the way it is revolutionizing the way we do everything, from shopping to consuming media.
This week, speaking at Web 2.0, Meeker gave a fast talking presentation about Internet trends. In it, she predicts that the next big thing is online audio. Lots of new technologies are contributing to this emerging trend. For example, she points out that while twitter and facebook have enjoyed enormous success with their mobile apps, it’s Pandora that has the largest percentage of their audience on mobile devices.
Meeker went on to mention new technologies that are driving the new trend, including Bluetooth enabled wireless devices which permit hands free access, higher quality, more compact wireless audio speakers, connected car audio, sound recognition and understanding apps such as Apple’s new Siri, and sound creation and sharing platforms like SoundCloud and Spotify.
The presentation is chock full of great info and perspective on the promise of mobile. There’s plenty of room left for growth for smartphones, mobile ad dollars are ramping up just fine, cpms are ramping too.
What’s more, the US has taken a leadership position in new mobile technology – thanks largely to Apple and Google. Innovation in Silicon Valley has never been more rapid.
And in case you missed this point a few paragraphs ago, Mary Meeker, one of my personal favorites in the biz, said that Online Audio is the next big thing…
You can watch her presentation online here.
The Securities and Exchange Commission has subpoenaed Pandora as part of an investigation into the way that certain popular applications that run on Apple and Android platforms share information about users. According to the Wall Street Journal, the investigation is centered on the question of whether certain popular smartphone applications used information about their applications’ users, without disclosing the uses properly.
This information follows a report by WSJ in December that Pandora and other popular applications were transmitting information obtained about user locations and preferences to third parties such as advertising platforms without permission. Pandora’s app reportedly fed info about the user’s age, gender, and location.
The news of the subpeona came to light when Pandora filed an amendment to its plans for an IPO. Supposedly other popular applications are included in the investigation – Pandora has said it is not the specific or sole target of the investigation.
Sometimes it’s not all roses when it comes to being the leader of the pack – in this case Pandora’s highly popular mobile apps are causing some higher profile scrutiny. And again, the industry will have Pandora to thank for pushing the envelope and finding the line in the sand. While advertisers demand more targetability, these functions can only be delivered with this kind of user data.
You can hear more about this topic at RAIN Summit West in Las Vegas on April 11th, especially on the Legal Issues panel hosted by David Oxenford and joined by experts from Rhapsody, Live365, SESAC, and EMF Broadcasting. You can register for that event here.
Amazon has launched a cloud based music service that allows users to store their own music in music lockers and then listen to it on computers and other streaming devices. It’s been rumored that both Google and Apple are readying similar services, so this move by Amazon puts them ahead of the pack. They’re hardly the first – services like MP3Tunes have been offering a similar service for over a year.
But moving early gave them the nifty name – they’re calling it Amazon Cloud, making it difficult for Apple or Google to use the word Cloud in their branding. I’m sure part of their thinking in launching early is to capture the word Cloud and associate it with their product.
Perhaps the most interesting thing about this new service is the legal stand that Amazon took in launching it. While rumors of Apple and Google’s cloud based music streaming platforms have been brewing, supposedly delayed by tedious negotiations with the record labels, Amazon just went ahead and did it, taking the position that the music loaded in the lockers is owned by the user and no further licensing is needed.
Michael Robertson, Founder of MP3Tunes, has been in a legal battle over such issues with the record companies. His post about Amazon’s new service on his blog cheers Amazon’s entry into the space. “I must admit, it’s great to have a giant corporate ally in the battle against the record labels that are fighting against user’s storing their personal music libraries online.”
Amazon Cloud is definitely intended to increase sales from the AmazonMP3 store. Songs purchased through the store are automatically loaded into your personal music locker in Amazon Cloud. The service is well integrated with Android, and not integrated with iPhone. It does sync with iTunes. Several reviews point out that it seems to be pretty basic, look for further developments and improvements.
Last month Apple announced that the ten billionth app had been downloaded from the app store. Apple’s app store is a huge success that has revolutionized the way people use mobile devices, and the way online companies do business. Now every major mobile OS manufacturer has an app store, and Gartner recently predicted that 17.7 apps will be downloaded this year alone.
So it’s hardly a surprise that Apple wants a slice of the pie. They’ve announced big changes with regard to their app store that include, as the most controversial, their taking a 30% cut of all subscriptions that they drive to a company through their app store. Along with that, they are implementing changes in the platform that will make it much easier for mobile app customers to purchase apps from the store with one click. So, enhancements for the seller, enhancements for the buyer, and a cut for Apple.
Of course, the companies that had been enjoying lots and lots of app sales through the Apple app store without any rev share are not at all pleased. Rhapsody, as a subscription based on demand platform, was downright pissed off, calling Apple’s 30% share “untenable”, and adding that Google’s rumored-to-be-coming-soon 10% rev share was more reasonable.
So, the app party is kind of over, or at least the open bar has closed. I’m just not sure that it’s unreasonable that Apple wants a cut, a pretty big cut, of the money everyone is making off of their platform. If the improvements are so good that it’s as easy to subscribe as it is to download a free app I think companies will benefit. The problem now is that disappearing from the app store would be like cutting off a lifeline. Which may be the indication that Apple has earned a slice..
Emmis has implemented technology on all of its stations that enables visual song ID and tagging on mobile Apple devices. The system, called TagStation, was developed by Emmis Interactive, the innovative online division of Emmis, and Broadcast Electronics. Basically, it enables iPod, iTouch, iPhone and iTunes listeners to Emmis’ FM and HD stations to get artist and title on the radio display info and iTunes tagging.
What is iTunes tagging you might ask… According to info on the Apple website, it’s an easy way to hear a song on a station and click to tag that song – on a connected iPod device. Then when you sync the device with iTunes on a computer, a playlist of songs that you have tagged will show up, complete with handy links to download those songs on iTunes. Stations earn commissions on the songs sold through iTunes.
No doubt, stations also earn points with listeners for enabling this nifty technology that creates a much more interactive experience for FM and HD listeners. It is available to non-Emmis stations through either BE or Emmis Interactive.
Amazon is growing its share of the digital music download market but not at the expense of ITunes. According to NPD Group research data, ITunes has 66% of that market and Amazon has 13%. Growth may be coming instead from album sales, which dropped by 12% for 2010, according to WSJ.com. CD sales dropped by 20%, but digital album sales grew 13%.
A few artists have decided to forego selling individual songs on ITunes and insist on album sales instead. Billboard says this formula just might be working out for Kid Rock. He’s not selling his new album “Born Free” or the songs on it on ITunes. Billboard thinks he may have sold more, by a lot, by sticking to his guns, generating an estimated $3.3 million more by only selling his album in its entirety.
AC/DC and Garth Brooks are two other artists/groups that have refused to play the single song download sales game with iTunes, opting instead to only sell albums. No word on how it is working out for them.
Meanwhile, Amazon continues to try to put a dent in ITunes share of market by offering deep discounts of albums, something that may actually endear them to artists and labels by placing emphasis on album rather than song sales. They are known to absorb the price difference between the sale price and wholesale price, so it doesn’t harm actual revenues and it helps unit sales. It’s a strategy that worked for Kid Rock…