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Why Apple’s iAd is Bad for You and Your Favorite Coffee Shop

For those of you who do not know what iAd is, here’s a brief overview: it’s Apple’s proprietary mobile ad service that can be easily added to any iDevice app. It was introduced by Steve Jobs on June 7 to a conference center filled with happy developers. The developers were happy because those who add iAd to their apps will receive an industry standard 60 percent of the advertising revenues; the other 40 percent goes to Apple (one developer made almost $1,400 in a single day from iAd revenues alone). Like the App Store, Apple strictly controls the content that iAd displays, and at this point, Apple is the only entity sanctioned to produce content for the service. Steve Jobs boasts that iAd is about “emotion meeting interactivity” and promises a more successful mobile ad campaign while generating a better user experience overall.
This all sounds great, right? Maybe not.

Why iAd is bad for you:

  • iAd is a location and behavior-aware ad platform. This means that you are sharing ALL of your location and most of your behavioral data with Apple. Apple now tracks where you are, what Web sites you visit, what you search, what apps you use, and pretty much anything else you use your iDevice to do.
  • Apple has made it very clear that it WILL sell and share ALL of this information with their partners and marketing clients.
  • Although you can opt out of iAd by visiting this link on your iDevice, this only prevents iAds from using location data to determine which ads to display, it does not stop Apple from collecting and selling/sharing all of your behavioral data mentioned above. Apple has recently responded to Congressional concerns about how Apple collects and distributes your data with a 13-page letter that explains that all of the data they collect is stripped of your personal identifiers, but I, for one, am still fearful of how secure and anonymous the system really is.

Why iAd is bad for your favorite local coffee shop (and every other “Mom and Pop” shop):

  • Mom or Pop now needs an ad agency. Apple completely controls the iAd platform and must approve all iAd content. Right now, content for iAd can only be produced by Apple.
  • Only huge companies can afford to advertise on this location-based ad platform. iAd marketing budgets start at $1 million.
  • Your local coffee shop may be able afford to advertise on other mobile ad platforms like Google-owned AdMob by placing a simple text-based banner, but once iAd is open to outside developers and ad agencies, the cost to develop the “emotional and interactive ads” will be comparable to that of developing an app (which averages about $10,000).
  • If Mom and Pop want to advertise locally in-app on iDevices, they will have to figure out a way to do all of these things, as Apple has effectively eliminated its competition on their devices. If a developer uses a location-based ad platform in an app other than iAd, Apple will reject the app because it’s against its developers’ agreement.

In a world where we are losing our best boutiques, local hardware stores, coffee shops and delis, this is just one more huge advantage to the Starbucks of the world. iAd has not taken into account those local shops that stand to gain the most from location-based advertising. After all, anyone can find a Starbucks; they’re everywhere… but what about the little-known gem and that “Mom and Pop” shop that’s been pressing its own espresso since the 1940s and bakes biscotti fresh every morning?

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