Analysis: Apple Uses iTunes Data for Targeting iAds for Competitive Edge

| Analysis

Apple is leveraging iTunes user data — including app use, music and video downloads, and profile information — to target iAds. Bloomberg reported that Apple is able to offer advertisers targeted brackets based on the myriad of data the company has proprietary access to, all in an anonymous, aggregate fashion, and this gives the company an edge over its competition.

“Apple knows what you’ve downloaded, how much time you spend interacting with applications and knows even what you’ve downloaded, don’t like and deleted,” Rachel Pasqua, director of mobile at marketing firm iCrossing, told Bloomberg.

The company is able to put to put together a behavior profile based on all this information, which allows the company to target its iAds in a way the competition can’t directly match, at least not on the iPhone. Google’s AdMob and other networks simply don’t have access to the same data Apple has on its users.

Even on the Android platform, Google doesn’t have as much control over user data as Apple does. The company has access to data on the phones, but Apple uses iTunes to control its iOS devices, whereas Google doesn’t have a central managing software tool that is comparable. Google’s picture of user habits is, therefore, that much smaller than Apple’s when comparing AdMob/Android to iAd/iOS.

In addition, Apple blocks third party metric firms from collecting data on iPhone apps through the company’s developer license, which further strengthens Apple’s hand in the market for targeting ads. None of the smaller mobile advertising networks even have their own OS or hardware, meaning they are flying comparatively blind when delivering their ads.

Interestingly enough, Google built much of its financial success on the ability to offer targeted ads in its search business for desktop computer. For Apple to be able to out-target Google in the mobile space, at least the iPhone mobile space, is a significant achievement, especially for a newcomer.

That said, this achievement is part and parcel of Apple’s whole widget approach to every business it enters. By controlling the hardware and the software, Apple can then leverage these pieces to offer a better user experience.

This pertains even to ads, but bear with us while we put the pieces together there: Many find ads annoying, but they pay for a lot of what is otherwise perceived as “free” content. It’s not free, it’s paid for by ads. Many free iOS apps are not really free, but are rather offered as advertising-supported endeavors, the same as Web sites such as The Mac Observer (some free apps are also gateway apps to for-fee, paid apps).

While many find ads annoying, the reality is that targeted ads mean those ads to which you are exposed will have far more meaning and relevance to you, the user. By offering advertisers that targeting, they get more value for their ad dollars, while users are exposed to something they are more likely to be interested in. The higher fees Apple is then able to charge for this whole package means that an ad-supported app might even pay for itself for the developer, which could (should) mean better apps for the user.

Android will never be able to touch that because Google doesn’t control the whole widget. They don’t even control a lot of the widget. The same is true for Microsoft’s Windows Mobilewhatever platform. Research In Motion does control the whole widget, and the company still commands more market share than Apple, but with its user base rooted firmly in corporate America, it’s an apples to oranges comparison (pun intended).

In short, iTunes data being used for targeting ads is good for Apple’s ecosystem, and that it is done so without the advertiser getting direct access to user data means we, the users, are protected.

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Comments

Nemo

“Apples to Berries” would, I think, have been a better pun.

computerbandgeek

I smell an antitrust case on the data collection policies vs. third party allowances…

Christian

I question how valuable that information really is and how much advertisers are going to pay for it. The CPMs Apple is aiming for are already ambitious - this would just make them exorbitant.

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