Apple Control of iPad and iPhone Ads Is Good for the Industry

Last Updated Jun 11, 2010 2:06 PM EDT

Apple (AAPL) clearly wants to lock down advertising on its iOS products: iPad, iPhone, and iPod touch. There are plenty of reasons why this could be a bad idea, including putting a stake through competition in a nascent industry and putting too much control of a market into one company's hands. And yet, there are also reasons why this could be overwhelmingly positive.

Online advertising has been in a funk for a number of reasons:

  • There is virtually unlimited ad inventory, driving down prices so low that most companies can't make reasonable revenue.
  • Ads are often obtrusive, dull, and irritating, so people ignore them.
  • There have been so many issues of phishing, malware, behavior tracking, and privacy that consumers often keep their distance.
  • Consumers have developed strong abilities to ignore online ads. For those that don't want to exert mental effort, there are ad blockers for browsers.
Advertisers use the negative issues to twist the arms of site owners, online publishers, and software vendors, further driving down the price of ads to their benefit and to the financial pain of the ad outlets.

Apple control over ads on iOS apps could help counter these trends. Although the number of available apps is massive, most users impressions will come off a more limited number. In effect, iAd has limited inventory, so Apple can push for higher prices. Because it wants to create a high level of user experience, you could also expect the company to demand quality creative, which will help increase response rates and overcome user antagonism (the ads will effectively leverage Apple's brand as well as that of the advertising company) in a positive feedback loop.

If Apple honors its requirement of others -â€" and that is an open question â€"- in terms of user data, then this could also become a way to introduce opt-in analytics and advertising while offering enough benefit to advertisers that they don't squawk overly. The result? The beginning of a more vibrant ad market that might be able to actually underwrite publishers' and software companies' real costs of doing business.

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Handcuff Image: Flickr user Mark Coggins, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.