What the new iPhone means for marketers

Summer is here and that can only mean one thing in the mobile arena: a new iPhone has come on to the scene. Apple beat all expectations last weekend and sold more than one million units of the third-generation of its game-changing mobile phone. Hundreds of thousands more will surely be sold in the coming days and weeks. With a vastly improved operating system launched just days before the iPhone 3G S hit store shelves, marketers have an array of new opportunities to consider for future targeting campaigns. Apple says the “S” stands for speed, and it couldn’t be more on the mark.

The iPhone 3G S is built for wireless network speeds up to 7.2 megabits per second, but perhaps even more important for marketers is the fact that its processing power and storage capacity have both been doubled. The leap in processing power alone has been compared to the jolt the PC world was handed when the first gigahertz processors began selling in droves at more affordable prices. The improved performance of the iPhone along with AT&T’s plans to upgrade its data network this year will enable marketers to add more video and multimedia to their campaigns. What iPhone 3.0 brings to the table In addition to increased processing power, the new iPhone features a 3.2 megapixel camera, a compass (to orient the direction of the device), and voice activation. The new camera features video recording and simple on-device video editing, which has already created an influx of fresh mobile-captured video on YouTube. “The hallmark of the new iPhone device is the video capability,” John Swords, partner at Circ.us, tells iMedia. “I think people are going to use that feature a lot.” The compass also opens up an important new channel for marketers, particularly in regards to location-based targeting and virtual overlays. Content overlays and augmented reality are both made possible with the new compass – emerging niche platforms, to be sure, but still full of promise and future opportunity. Virtual graffiti applications and live video feed overlays are also both closer than ever with the improved mapping technology Apple opened up in the new software. “We’re very interested in technologies like augmented reality. In order to do augmented reality, you need to know what direction the device is facing,” Swords says. “With the compass, you bring about the next level of detail.” The marketing push Apple has also finally delivered on a yearlong promise of push notification. Adam Broitman, partner at Circ.us, says the feature opens up a tremendous amount of new opportunities for marketers. “I think the push notification service is very interesting in that you can download an app from a retailer, and you can push out sales and offers,” he tells iMedia. Sure, some developers will take things too far and turn people off to their apps, but for huge fans of particular brands, there should be some enthusiasm to stay even more engaged. In-application purchases With the updated software also comes the ability for developers to integrate in-application purchases and subscription-based content through third-party channels. Game developers are working around the clock to add special levels to games, and virtual goods purchases are beginning to crop up on existing applications. Some publishers will be able to use the subscription opportunity to charge for digital versions of their content, thereby unlocking interesting possibilities for brand engagement. “Coming from the virtual worlds in gaming, I think there’s a lot of potential for micro-transactions in games,” Swords says. Going beyond the improvements in the iPhone 3.0 OS and newest iPhone, Apple has opened the door wider to third-party development outside its domain. “There are a couple of things in the software development kit that seem like they would allow marketers to do more,” Broitman says. By opening up to outside monetization models, Apple has paved the way for marketing in and out of the home. Calls-to-action can encourage iPhone users to download or engage with something on the fly. Unlocking the port Another big change Apple handed marketers with the new OS is the port that resides on the bottom of every iPhone device. Apple has opened up the port to allow third-party manufacturers and developers to create accessories for use on the device as an add-on. The iPhone can now essentially control anything that plugs into that port – something Broitman calls a “goldmine for marketing value.” Apple has already demonstrated the functionality for pharmaceutical and medical benefits. Broitman expects numerous marketing functions to follow in kind. The iPhone ad networks One group that was ready the instant Apple released the new iPhone and OS were the ad networks that have grown like wildfire, stoked by the insatiable appetite for applications and user engagement on the device. Entire ad networks and mobile ad businesses have been built around the iPhone platform, even as nearly every major competitor in the wireless space has readied and released so-called iPhone killers. A pair of those networks – Quattro Wireless and AdMob – has released a variety of new ad types and formats that take better advantage of the iPhone’s new capabilities. Advertisers are beginning to leverage the iPhone’s touch screen and its ability to support features such as custom maps within an ad, says Eswar Priyadarshan, CTO for Quattro Wireless. By creating a more website-like experience directly within an ad, marketers are able to maintain engagement with consumers without requiring them to exit the application in use. In the end, it’s all about reaching and engaging the consumer, and the new capabilities give brands a bigger sandbox, Priyadarshan adds. Another simple update is the landscape keyboard, which is now available in every application on the iPhone. Priyardarshan points out that the seemingly basic update makes fill-in more accessible and opens the door further for direct response advertisers. Unfortunately, Flash is still nowhere to be found on the iPhone operating system, but ad networks are creating plenty of marketing opportunity outside the popular online platform. Scale and reach The iPhone is not the most popular mobile phone by any stretch – it’s not even the most popular smartphone in use today – but the avid use of the device and the general excitement of its followers can’t be beat. Follow the money and you’ll be hard pressed to find any mobile operating system that has generated as much venture capital for marketing and advertising purposes. The iPhone resides in a sea of devices that lack a unifying standard. The PC world has converged around only a select few standards, while the mobile scene – although increasingly consolidated – is still littered with competing standards from BlackBerry, Symbian, Windows Mobile, Palm, Google, and others. Indeed, when one operating system gets shuttered, another seemingly crops up in its place. Apple joined the party two years ago when it released the first iPhone, but its high price and relative newcomer status watered down most of the excitement. About 73 days passed before Apple sold its first million units in 2007. “The greater the penetration of not only the device but the standardized OS makes it easier for marketers to feel they are planning for a larger audience (and an expanding one at that),” Broitman says. “Furthermore, given that it is a standardized platform, and seemingly not a fad, marketers can have more confidence that their experiments with iPhone apps are more than just experiments – they are investments in what are most likely long-term, optimizable marketing initiatives.” For all the excitement about new features and capabilities, one thing remains the same: Marketers flock to platforms that deliver reach. Almost every campaign is measured by how many highly targeted consumers are introduced to it. The reach Apple brings to the table with the iPhone is more than 23 million people worldwide, the vast majority of whom are in the U.S. “Apple has proven this is a model that is here to stay,” Broitman says. “The barriers to entry have been brought down, and people should be looking at not just who has it today, but who is going to have it six months from now.” At last count, Apple held third-place in worldwide smartphone sales at 9 percent, according to Garnter. Compare that number to Nokia’s 44 percent share, and BlackBerry-maker Research In Motion’s 17 percent share. The iPhone is now widely expected to gain much greater share after dropping the price of the second-generation iPhone to $99. Leading the pack While BlackBerry and Nokia rightfully claim a greater share of smartphone users worldwide, Circ.us’ John Swords says it really doesn’t matter how many of those devices are in use today. “Despite their efforts to close the gap, BlackBerry and other smartphone devices are less consumer friendly,” Swords adds. “They are not lifestyle devices, and I think that’s the biggest difference,” he says. “If you want to reach the mass market, you have to tap into that.”