iRadio's hidden masterpiece: Getting iAd into the mainstream
We know enough about iRadio already to believe that it's some kind of Spotify or Pandora-like service: offering streaming music to the masses.
What we don't know is exactly how it's going to be monetized. That said, a Bloomberg report may have the key. iAds, or Apple's own advertising platform, could be reinvigorated and recharged for iRadio in order to support the service's licensing costs.
Whatever Apple makes on top of that could turn a healthy profit. What could come next, though, is an aggressive push towards expanding its range of mobile advertising to spin off into a lucrative business that has, up until now, failed to gain much traction in the advertising space.
The streaming service, set to be announced at Apple's WWDC 2013 conference next week, will likely include advertisements on screen. Many applications already use visual ads to offer free apps but generate additional revenue when ads are clicked. Some offer an ad-supported app that can be free to download but be ridden of display ads through an in-app purchase.
According to the publication, Apple may diversify its advertising line-up to include audible ads, à la Spotify. The report suggests Omnicom Group has been in talks with Apple to secure brands that will run advertising "campaigns" on the radio service.
It makes sense. Apple has years selling products, services, but above nearly all else: music. Advertising remains big business. For Google, it's about 90 percent of its overall business.
iAd was initially brought out in 2010 for app developers, but has been relatively lackluster in the past through years — mostly due to Google's advertising onslaught. Things only got worse after Apple encouraged iAd use in 2011 by allowing companies to buy smaller batches of adverts, and a year later changed its pricing strategy to accommodate further growth.
U.S. mobile advertising reached $4.1 billion in 2012, and is expected to grow by almost three-quarters to $7.3 billion this year. Google will likely grab at least half that figure. Apple will make a meager slice under current projections of a mere couple of hundred million dollars.
And Apple's missing out on a section of a market it's barely scraping the surface of.
With close to 400 million iPhones sold alone, Apple has the reach to grab a vastly untapped sector of this user base in advertising. Even if iRadio covers half that base, it's still two-thirds the population of the U.S. And that's not counting iPad users.
What this could become the beginning of is iAds 2.0. If Apple can sufficiently convince the advertising market that it has a strong, steady platform of already guaranteed tens of millions — if not more — of customers on the go, it could become take a hearty chunk out of Google's own mobile-focused business.
Expect iRadio at WWDC. It may be a hit for the consumer, but on the business back-end for advertising and marketing campaigns, all eyes should be on how it generates money.
iRadio is expected to launch at the same time as the next iPhone, typically around August or September in time for the holiday season. In the meantime, Apple will continue to plow through its licensing deal negotiations. It'll also give businesses the chance to strategize on how they can tap into the hundreds of millions of iPhone and iPad users.