The iScam (or why mobile ads don't make sense)


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Jan 27, 2010
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By Antonio Rodriguez

If you are running a giant lottery, the most important thing you can do is give people faith to keep buying tickets. You put up signs along the side of the road that say things like: "Wanda won!" and picture an average looking woman in a normal kitchen pumping fistfuls of hundreds into the air.

Equally important is having lots of little bits of evidence along the way: little payouts for people whose tickets end in the right digits. As the lottery runner, most of this money will come back in more ticket fees anyway but the real reason to do it is to give the rank-and-file hope.

This is exactly the game that Apple is playing with the AppStore. Very few people are making a living at it; and yet Steve got up on stage last week to tell us they've paid a billion dollars out. A few developers are often featured as the guys that can move millions of dollars of apps. Pure Wanda tactics at play.

But if you are in the bulk of the developers, making $10-100/day from your paid apps, you need those small rewards to keep you going. Which is exactly where this iAds nonsense comes in. Today the AppStore is such a novelty that people will download almost anything. And when it comes to most of the categories, all else being equal, folks will pick off the top of the "Free" top 20 more often than they will off the "Paid" list.

But no matter how much hype exists around the promise of location-based advertising, reality is setting in. There is a ton of inventory on the publisher side— which as with the web, is driving CPMs to the floor. More importantly, the recent bandwidth caps imposed by AT&T (and others will follow) are about to turn consumers into bandwidth pinching cheapskates which means that extra payload is going to be scrutinized much more aggressively (this BTW is also likely to affect games built on platforms that "stream" assets in at runtime).

This last point is a biggie: if Apple were really serious about the long-term prospects and scalability of in-app advertising, I doubt they'd be that happy about the end of the all-you-can-eat data phase of the smartphone. Especially as Steve takes the stage to display rich interactive ads based on HTML5 blobs sucking up precious bytes on the wire.

Finally though, at a gut level, it just doesn't make sense. The smartphone screen is very constrained real estate. Most of the usecases are for quick in-and-out activities, and for those that aren't (games), a rotating banner or immersive ad is like a stick in the eye of the overall user experience.

Location aware coupons delivered through an appropriate messaging channel? I can see that. But the web experience ported to a smaller form factor that is used completely differently? Come on.

Just because Google got hot and bothered and paid up for the promise of AdMob didn't make it all of the sudden a sensible strategy for building a big business.

Selling hardware based in part on the energy and work of hundreds of thousands of ticket buyers hoping to win the lottery? Now that is a good business

The iScam (or why mobile ads don't make sense)


Jun 12, 2010
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Haha all of these points make me smile because of all the contradictions Steve jobs tells the media. At & t pretty much screwed up ads that take a bunch of bandwidth. Overall I'm proud to support Google and own a Motorola Droid. Hopefully Verizon doesn't follow what At&t did with their data plans.

Sent from my Droid