Apple may automate iAds, which spells trouble for Facebook, Google

You see them all the time, but probably don't really know how they get to you. Companies like Facebook and Google have ad networks, just like Apple, but there's one key difference: automation. Facebook and Google both do it, and it seems Apple is going to be getting involved as well. The currently-very-old-school iAd business may be going automated, as a now-pulled press release (still available via cache) from a self-proclaimed partner of Apple's describes full automation for 250,000-plus iOS Developers.

Rubicon Project is a company whose purpose is automating ads for companies. According to their website, "the company's pioneering technology created a new model for the advertising industry – similar to what NASDAQ did for stock trading. Rubicon Project's automated advertising platform is used by the world's leading publishers and applications to transact with top brands around the globe."

The process of ad automation is to take the human element out. Potential advertisers essentially bid for ad space aimed at their target demographic. If they successfully win a bid (or outright buy) for ad space, they send their ad along, and away it goes.

Apple's current process is nothing like this. The way Apple currently sells digital ad space is more akin to selling physical ad space in a telephone book circa 1995. There is a heavy layer of human interaction and ad review, which leaves a lot of cash on the table.

Apple's current iAd platform comprises about 2.5% of their quarterly earnings. Facebook's ad network brings in roughly 60% of their revenue, and Google is also heavily dependent on ad revenue via their various avenues like search and YouTube.

With automation, Apple is simply keeping pace with the rest of the crowd. The ad revenue pie is expanding all the time, and Apple currently takes a small sliver. If Developers can automate ad revenue via Apple, though, it's one less hurdle to jump through for monetization, and that's a big deal for everyone else.

Source: Business Insider