Over the weekend Adweek reported that Apple's advertising unit is shifting focus from selling iOS app ads to selling ads for iTunes Radio. This switch was signaled by Apple's head of software, Eddy Cue, in a pre-holiday staff meeting. Apple developers are also working on a real-time bidding exchange for ads but whether or not that extends beyond mobile apps is unclear. However it's unlikely that they're simply automating one area and shifting human resources to another. Clearly iTunes Radio is going to be a huge focus for Apple in 2014.
Garrett Sloane, reporting for Adweek, broke news of Eddy Cue's recent talk to staff. As one "Apple insider" summed it up:
"The message that came across was basically if you’re not working on iTunes Radio, you’re irrelevant."
For the iAds division that means shifting focus from in-app advertising, where most of their revenue has been generated, to sales of iTunes Radio ad inventory.
iTunes Radio is competing with a variety of ad-supported music services including Pandora and Spotify. Given a glut of emerging and established services with new services on the way, 2014 should be a serious year of battling on the ad sales front which will be one of the deciding factors in the inevitable process of attrition.
Sloane also reports, again based on sources, that Apple is building a real-time bidding exchange for ads that will automate more of the sales process. Such an exchange should reduce ad costs while increasing the number of advertisers.
Initial iAds sales efforts were described as "aggressive" and starting with deals at $1 million. It's unclear how far the exchange will reach but it will definitely create a different environment for ad sales.
For the music industry the sales team shift to iTunes Radio is the bigger news indicating Apple's commitment to the service.
- iTunes Radio: 2 Billion Songs, 20 Million Users Since September Launch
- iTunes Radio Launching This Week, Can Apple Convince Mainstream Consumers To Switch?
- Apple's iTunes Radio Press Release
Hypebot Senior Contributor Clyde Smith (Twitter/Facebook) is building a writing hub at Flux Research. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.