splendid iSolation By Norm Johnston @ntjohnston
In a far off corner of the of $508 billion, making it the world’s biggestworld called Silicon Valley there is a land company. In short, Apple could easily snap upthat lives in a perpetual state of bliss. It’s a the likes of RIM, Twitter, and T-Mobile...andplace seemingly oblivious and unbothered by still have a hefty cash balance.the constant warfare of its neighbours. Eachharvest is more successful than the last one. Who lives in this delightful digital kingdom?Even the death of its founder and spiritual As you might expect it’s slightly more maleleader hasn’t curtailed its good fortune. This than female (55% to 45%) and dominated byland is called Apple, and it seems to live in those 25-55 year olds working hard enough toSplendid Isolation from the rest of the world; a draw enough income to pay Apple’s big priceparadise island with a closed ecosystem that tags. However, an increasingly vast swaththrives while its neighbours continue to poke of society has opted-in to Apple’s expensiveeach other in the eye. alternative digital universe, where USB sticks are frowned upon and applications rather Apples annual sales income ’ than the old fashioned open Web rule theis greater than the GDP of 160 roost. In fact, in the US, tablets, dominated by the iPad, are now outselling clunky oldcountries. PC’s, which most punters predict will soon happen throughout the world. One in twoIn Apple’s case we probably should call it US households now own an Apple device.Splendid iSolation. Against all odds Apple No longer just for geeks and fashionistas,has become one of the world’s wealthiest everyone from truckers to flight attendantscompanies and most recognized and use Apple kit. Infants now swipe beforerespected brands. Apple’s business has gone they walk. Apple’s broad appeal is partlyfrom $20b in sales in 2005 to over $128b in explained by their ability to control and2011; many estimate it will hit over $200b in perfect the entire user experience via theirrevenues by 2013. To put that in perspective, ownership over hardware and software andApple’s annual sales income is greater than a largely closed and controlled ecosystem.the GDP of 160 countries around the world, Unlike their competitors, Apple doesn’tincluding Poland and Belgium. have to compromise to meet the lowest common denominator throughout the valueThis growth has confounded investors waiting chain; this generally equates to superiorfor them to trip-up over a botched product and differentiated innovation on a timelineor the on-going global economic maelstrom. largely based on their judgement rather thanNone of this has happened. Granted, not every multiple dependencies.new product has been as earth shattering asthe previous one (hello iPad 3), but people Infants now swipestill flock to their local Apple store willingto pay hefty prices; Apple makes a $368 before they walk.profit for each iPhone while Google makesroughly $10 per phone. If that isn’t enough, So what can brands do in this blissfulbake in the 30% Apple makes from sales of ecosystem? To date Apple has mainly limitediTunes applications compared to Google’s brand opportunities to ads and applications,measly 5%. It all adds up to some really big their version of milk and honey. Apple’snumbers: as of writing this Apple has $110.2 iAd advertising network is part of their iOSbillion in cash and a market capitalization operating system, and allows brands to create
content that can be displayed within iPhone, mobile assets, including Apple friendlyiPad and iPod touch applications. iAd’s are content.designed to combine the emotive impact ofTV with the interactivity of the Internet, all on Nike+ has grown to over sixa portable device. Naturally done in HTML5,iAds not surprisingly keep users in their million dedicated and very fitapplications, conveniently not disrupting users.their user experience. The second most discussed brand opportunity is around applications. The industry has moved beyond the initial knee-jerk “let’s make an app” stage and is now collectively taking a much wiser view on whether and how to successfully develop and launch an application; fundamental given that consumers have over 600,000 apps to choose from in the iTunes store. In fact there are over 800 new apps added every day, and nearly 50% of them are free. So getting your target audience’s attention with a new application isiAds have now been around for nearly two not easy. Recent research from Deloitte foundyears, and Apple has wisely eliminated the that nearly 80% of branded apps get less thanconfusing media pricing model, minimized 1,000 downloads. So how you do launch anthe upfront commitment to $100k from app and ensure users can find it, download$1m, and dialled down the hype and dialled it, and use it? Clearly iAd’s play a key role viaup the data to lure more marketers into the their ability to both reach consumers at scaleiAd program. Mindshare data indicates that as well as enabling those users to quicklywell-developed iAd’s can deliver results. download the app in the actual ad unit .For example, our Range Rover Evoque iAd Think of iAds as the communications tool,campaign featured an eye-popping 360° while the app is the on-going brand platformvirtual tour of the car complete with a for consumer engagement, which can beconfigurator tool all built into the actual sustained and significant. Take Nike. Theyadvertising unit. It was an incredibly rich teamed up with Apple to create arguably theand award-winning experience. However, industry’s best example of a branded utilitymarketers need to keep in mind that and application. Nike+ has grown to over sixsuch a unique creative asset requires million dedicated and very fit users.more production to match Apple’s unique What other digital delights exist in Applespecifications and quality expectations. land? Many brands have been enviouslyConsequently, any ROI needs to factor in sizing up Siri, Apple’s intelligent assistant.development budgets as well as media costs. Siri’s seductive voice has persuaded 87% ofTo reduce such expenses, Apple has launchedtheir iAd Production support program,which eases production time and costs viadrag and drop tools. Furthermore, groupslike Mindshare’s Mumbai Mobile Center ofExcellence have been established as one-stop shops to cost-effectively scale multiple Nike+
iPhone users to talk to her at least once a Travel site Orbitz has discovered that Macmonth. Granted, nearly a third of those users users tend to spend 30% more a night onnever make it beyond basic commands like hotel rooms. Consequently, Orbitz is nowmaking a phone call. Nonetheless, Siri will showing Mac users costlier premium hotels insurely mature and spread her wings over the their search results.coming years. Steve Job’s successor Tim Cook The last point regarding targeting acrosshas made it clear she’s a core ingredient to devices is particularly important as Appletheir future success. Apple has so far fended potentially expands into the living room.off any significant paid brand opportunities The long rumoured Apple iTV may finally bewith Siri; the lady is apparently not for sale. the device that revolutionizes the televisionHowever, surely Apple is contemplating experience, and acts as a catalyst forsome useful commercial applications for the entire IPTV industry, including earlySiri, particularly as she’s lined up to rival and pioneers like LG and Samsung. Soundsusurp Google’s ubiquitous search engine. ambitious until you think about what AppleImagine Siri delivering brand-sponsored has already done to turn the music, mobile,cooking assistance or health and fitness and PC industry upside down and rapidlytraining? Siri may even go through a gender scale next-generation device and businessor species change and reappear as Mr. Clean model adoption. If Apple iTV really doesor Tony the Tiger. exist, marketers may finally have a chance to innovate on the good old television, an opportunity that has thus far eluded them due to industry fragmentation, lack of scale, and inferior experiences. Apple iTV may finally be the device that revolutionizes Apple Siri the television experience.Finally, Apple has an absolute gold-mineof data of from its iTunes store. Over 400 While Apple engineers possibly experimentmillion users have left not only demographic with TV, the iPhone and iPad experiencesinformation but also behavioural data and will continue to evolve. Graphene chipscredit card purchase history, not to mention will dramatically increase the memory onwhether they are Justin Beiber or Deep Purple these devices while making them lighter,fans. Over 125 million have also uploaded maybe even transparent. NFC technologytheir content and data directly into the will turn your iPhone into a wallet guidediCloud. Apple has been very coy about how and informed by Siri and your iTunes data,they use and protect this data, but over time which of course will enable Apple to deliverthey may enable marketers to ethically tap a seamless experience, including highly-into this information to improve targeting targeted branded content and utilities, acrossand experiences across the Apple ecosystem, all of their devices and ecosystem. Splendidand maybe beyond. Some companies are iSolation indeed for both consumer andindirectly leveraging Apple proxy data. advertiser. Even Siri must be smiling.