Facebook Ads Generate Staggering Profits on iOS, Loss on Android

| Analysis

Nanigans, one of the companies that advertises most on Facebook has revealed that mobile ads on iOS generate 17 times the investment in profits. Mobile ads on Android actually cost more to create than the revenue generated.

VentureBeat  who spoke with Nanigans SVP Dan Slagen, reported that the company was, at first, hesitant to publish the data. In their report, it was noted that, “For the first three quarters of 2013, RPC [revenue per click] on iOS averaged 6.1 times higher than Android and ROI [return on investment] on iOS averaged 17.9 times higher than Android.”

Notable was the fact they they were losing money on Android ads and making considerable profits with iOS advertising.

The reason for this wasn't speculated on, and the report simply reported the facts. However, VentureBeat did, suggesting, "Brutally put, iPhone owners simply tend to both make more money and spend more money than Android owners."

However, this single observation doesn't tell the whole story. For the nuance, we can turn to what Apple's Tim Cook has been saying for some time. Android users aren't showing up on the Internet with the frequency of iOS users.

Speaking to Businessweek about the mobile industry, Mr. Cook said, "There’s always a large junk part of the market. We’re not in the junk business ... There's a segment of the market that really wants a product that does a lot for them, [emphasis added] and I want to compete like crazy for those customers. I’m not going to lose sleep over that other market, because it’s just not who we are."

This sounds like arrogance, but it's really shrewd business.

What Mr. Cook is telling us, in other words, is that Apple designs its products for people who aren't buying bottom of the barrel smartphones. Apple implicitly designs its phones for people who can and do spend money.

Apple does this by virtue of the product design, the confidence the user has in Apple, the ease of getting connected, the pleasure of using (thanks to J. Ive.) and the security of the devices. And the end result of that design process is exactly what Apple intends. Its customers spend more money online because they believe that the products they use and apps they buy and services they engage will serve them in some helpful way. They have a vision of what they want for themselves.

That mentality to use the whole Apple ecosystem to accomplish some good end is what seems to be missing in a big way in the Android community. The Nanigan data above is simply a real world manifestation of Apple's design process and the perspective of the customers they cultivate. It's smart business, and it works.

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4 Comments

mjtomlin

$10 Tim Cook brings this statistic up in his keynote next Tuesday! LOL

MacFrogger

$10??? 

I mean I realize you’re not Mitt Romney, but that doesn’t sound very confident!  wink

David Herd

John, your first sentence is incorrect. The linked article actually says “advertising on iOS brings retailer 162 percent more cash than they spend on the ads”. I interpret this as spend $1, earn $2.62 (you could interpret this as spend $1 earn $1.62 depending on how you define ‘more’). It is correct that in the original report Nanigans say “ROI on iOS averaged 17.9 times higher than Android”. When you look at the data they say the Android ROI is -10% and iOS ROI is 162%. Not sure how they get 17.9x from that and have emailed them.

Substance

Great observations again John.  Practically no one gives credit to Apple for creating a digital ecosystem that average mom and pops can use and feel confident enough to actually want to buy digital content for it, and then making it easy enough for them to actually do it without giving up in frustration. 

If it weren’t for iOS, would the entire smartphone market look like Android does today?  A great ecosystem for the tech-literate but one with limited participation from the majority of customers, most of whom either don’t play or those that do see it as a necessary nuisance but use it as little as they have to. Actually that describes the PC market pretty well too.

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