Apple revamps mobile ads with retargeting options

Apple’s release of its new mobile operating system last month came with an overlooked gift for marketers: the ability to retarget ads based on users’ in-app browsing behaviors.

According to ad agencies, Apple is actively pitching the new capability as a way to effectively solve the mobile cookie problem.

Say, for example, a visitor to a retailer’s iPhone app adds a pair of shoes to his cart but ultimately decide not to buy it. In this scenario, the retailer will now be able to retarget that user with an ad for that exact pair — even in another app on his iPad. When tapped, the ad would direct him back to his abandoned checkout page and automatically add the shoes to his online shopping cart.

“One of the big limitations of not just iAd, but the entire iOS ecosystem, is that cookies don’t work,” said Eric Franchi, co-founder of cross-device ad network Undertone. IOS is the operating system on which Apple devices run. “If Apple can bring very advanced targeting combined with e-commerce, it will be incredibly powerful.”

E-commerce companies are a particular focus for the new feature as it enables them to retarget users across Apple devices based on items they have previously expressed interest in. E-commerce apps can also track the items shoppers add to their digital wishlists and send ads for those items when they go on sale, and target ads based upon a person’s shopping history.

Cross-device retargeting should help iAd. With just a 2.6 percent share of the U.S. mobile ad market, Apple lags behind Google (37.7 percent), Facebook (17.9 percent), Twitter (3.5 percent), Pandora (2.9 percent) and YP (2.7 percent), according to research firm eMarketer. The iAd business, rolled out in 2010, has not exactly set the ad world ablaze. Mobile ads remain a sidelight for the company.

Apple’s primary motivation for maintaining iAd is to entice app publishers into developing apps for its devices, as advertising is tangential to Apple’s business. Apple shares a majority (70 percent) of iAd revenue with app publishers using the network, and its projected mobile ad revenue for all of 2014 — $487.1 million, per eMarketer — is just 1.3 percent of the revenue Apple earned in the third quarter alone.

Still, with retargeting capability, Apple is wading into one of the hottest areas of digital advertising. Standalone retargeters like Criteo have done well, and much of Facebook’s programmatic ad business is premised on retargeting. In its early stumbles with iAd, Apple based most of its pitch on iAd being a premium brand advertising product — with a matching price point. The addition of retargeting will allow it to cater to performance advertising goals.

Apple declined a request to comment for this piece.

The iAd development is alluring for marketers looking to retarget users on mobile devices where cookies are functionally irrelevant. Plenty of companies — most notably Facebook, Google and Twitter — are looking to solve this problem by turning their users’ profiles into universal advertising identifiers for targeting and attribution purposes.

Jeremy Lockhorn, mobile lead at digital agency Razorfish, said iAd retargeting is also useful for mobile game developers. Games will be able to serve ads to users who haven’t played in a given period of time, or to entice active users to make in-app purchases for special features.

“This is huge for any app developer that’s monetizing off of iAd,” Lockhorn said.

Retargeting became available when Apple rolled out iOS 8, the latest version of its mobile operating system, in early September, but the iAd sales team has more proactively pitched it only recently, presumably to cash in on the deluge of e-commerce marketing spend that comes with each holiday season.

While ad agency execs are excited about the new possibilities, Apple has shown little desire to make advertising a core part of its business. What’s more, Apple CEO Tim Cook wrote the following in September in an open letter to customers: “Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or Web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud.”

Apple does let iPhone users reset the advertising identifier used to serve them targeted ads via iAd, thus erasing all previously held information. Users interested in doing so can find the option by selecting “Settings,” then “Privacy” and then “Advertising” on their phones.

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