Commentary

iPad Disconnect Could Prove Costly For Media, Advertisers

The major disconnect between the explosive adoption of Apple's iPad by consumers and businesses and the fumbled, reticent response from so many media and advertising players could quickly become a lost cause -- literally.

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Companies that fail to keep pace with consumer habits and demands will miss interactive opportunities and new revenues triggered by the integration of the iPad and other e-tablets into routine, corporate and educational activities.

Apple reports that it sold 1 million iPads in the first month, compared to the 20 months it took to sell its first 1 million iPhones. The sale of more than 3 million iPads and 13,000 apps -- generating $2.2 billion revenues in the June quarter and making it Apple's third-largest business behind iPhones and Macs -- promises audience reach and experience that exceeds conventional print and analog media.

Wildly popular apps -- which have generated nearly $1.43 billion in sales, or 1% of Apple's overall profits since they were launched in June 2008 -- present tremendous potential for anyone seeking paid, sustainable connections to key consumers. The new iPad app FlipBoard, a magazine-styled aggregation and management of social media content, is the latest reminder of the creative, albeit controversial boundless prospects.

Even the iPhone 4 is proving to be a catalyst for change. Despite the consternation and costs associated with its flawed antennae, the new 4G model boosted overall iPhone sales that were 61% last quarter over the prior year, outpacing industry smartphone growth forecasts of 38%.

Apple says iPad and iPhone sales are driven by rigorous enterprise and educational adoption as practical, effective enablers of interactivity

80% of Fortune 100 and 60% of Fortune 500 companies are deploying or piloting the iPhone. Within its first 90 days on the market, half of Fortune 100 companies are deploying or testing the iPad for service, sales and other enterprise functions, according to Apple COO Tim Cook. More than 400 schools have officially adopted iPhone use for their faculty, staff and students, he said.

Likewise, Google is in the process of building a comprehensive mobile presence that will put it alongside Apple at the center of the evolving mobile Internet ecosystem, where platforms and operating systems, advertising monetization and apps collide. Credit Suisse analysts estimate the two companies will emerge as the dominant platforms with more than a combined 40% global share by 2015.

All of this begs the question: Are content providers and advertisers proactively responding to these cues fast enough with innovative formats and applications to reinvent themselves?

Although some notable strides are being made, media and Madison Avenue generally are moving slowly and cautiously to creatively mine the iPad or other platforms they don't control for fear of compromising their crumbling legacy silos.

Many remain skeptical about turning over content and advertising on Apple's revenue-sharing iTunes and AppStore, even as they recognize the pressing need to reach consumers cross-platform.

This damaging disconnect could be partially a matter of perspective.

Moving beyond familiar and comfortable content and advertising forms to wade through the unknown to create potentially more lucrative endeavors can be as liberating as it is intimidating. The potential represented by the iPad, iPhone and other interactive mobile devices is not about rocking television's video dominance or saving newspapers. It is about discovering and capitalizing on new content, commerce and communications trends exploding across multiple platforms.

With Apple's iTunes ranked third in top premium online video service behind Hulu and Netflix across all devices (TV, PC, and game console smartphones), entertainment and news producers have at least made their standard fare available to the Apple faithful, according to Parks Associates.

Ultimately, Apple also must learn to play nice with others as its content and advertising partners opt for one-time payment collection, access, commerce, security and measurement from other "digital lockers" in the clouds. Just this week, 21 content, consumer electronic and tech players announced UltraViolet service consortium , the latest example of a gateway, anywhere solution.

The one thing all video and text creators and marketers have to do is take the courageous, smart plunge to make the iPad and other dazzling interactive mobile devices their own.

5 comments about "iPad Disconnect Could Prove Costly For Media, Advertisers ".
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  1. Dan Euritt from Ocean Street Video, July 26, 2010 at 9:34 p.m.

    This article seriously needs some perspective.

    Microsoft has sold 175 million copies of Windows 7, vs. 3 million Ipads... Overall, Apple has less than 10% of the operating systems on the internet, and that figure includes all of the iPads that it's sold so far.

    Since when does 10% market share dictate standards? Just about never. Webmasters and marketers need to evaluate where their traffic is actually coming from.

    Don't let the mindless iHype derail your business.

  2. Ivan Zerilli from CLA, July 27, 2010 at 11:41 a.m.

    good point Dan Euritt

  3. Howie Goldfarb from Blue Star Strategic Marketing, July 27, 2010 at 12:26 p.m.

    Yes I agree with Dan. Too often we blanket something with the high end leader assuming that holds true for everyone. The IPad will never be a market leader. Just like the IPhone won't. Plenty of people will accept less expensive choices for various reasons.

    Like the 15% conversion rate for the Chase offer to early IPad buyers. So a vanity product being sold on a vanity product. They sure are not going to get 15% click through for Campbell's soup...unless its a gold plated can with your name etched on it that you can put on a chain around your neck.

  4. Daniel Ambrose from ambro.com, corp., July 27, 2010 at 1:53 p.m.

    I agree with Dan from Ocean Street too. As I wrote in April here: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=126249, Apple is not a mass marketer, so media companies may make tactical decisions to make their content available on the niche platforms presented by Apple, but the more important question is what software solution will emerge to distribute content to multiple platforms. Take for example the Kindle software; Kindle books can be read on the iPad. And the magazine 'page flipper' softwar companies like Nxtbook,and Zinio will adapt to delivering media to the new portable-slate type platforms. Which of these will be the winner?

  5. Kevin Horne from Lairig Marketing, July 28, 2010 at 3:22 p.m.

    agree with first commenter Dan about lack of data rigor here. you need to understand what the numbers are telling you.

    example: the iPhone in enterprise # of 80% is a nice but misleading stat, has no bearing on overall penetration which is less than half that

    example: the number of companies testing iPads...who cares as it relates to the point of this article? enterprises are testing iPads for business apps, NOT so they can be subjected to "marketing messages"

    example: millions of iPads sold blah blah....would it mean as much if you knew 2/3 of these buyers are already iPhone users?

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