Apple uses customer profiles to target mobile phone adverts

SAN FRANCISCO - Apple, with a storehouse of billions of music, movie and software downloads, is studying the buying habits of many of its 150 million iTunes users to show more appealing mobile ads and fuel competition with Google.

Through the iAd programme that began last week, Apple started placing ads in iPhone applications for the first time. Early iAd clients include Nissan Motor, Unilever, JC Penney, Best Buy and AT&T.

At stake is leadership in mobile ads, forecast by EMarketer to almost triple to US$1.56 billion ($2.26 billion) in 2013.

Google, which gained the biggest share of online advertising by placing ads based on PC-web surfing habits, may use that tack to widen a lead on handheld devices. Examining consumers' entertainment and software purchases may give Apple an advantage, says Rachel Pasqua of marketing firm ICrossing.

"Apple knows what you've downloaded, how much time you spend interacting with applications and knows even what you've downloaded, don't like and deleted," said Pasqua, whose clients include Toyota and Mazda. She is not currently working with Apple on iAd campaigns.

Relying on the music, videos and apps that customers are downloading from its iTunes, App Store and iBooks helps Apple sketch a behavioural profile that can be paired with appropriate promotional messages.

On its website, Apple says its "standard targeting options" include demographics, application preferences, music passions, movie genre interests, television genre interests and location.

Unilever, which began working with Apple in May on a campaign for its Dove Men+Care soap, is using iAd to zero in on married men in their late 30s with children.

"Apple then overlays that with the iTunes information and targets ... quite surgically," said Rob Candelino, Unilever marketing director.

Apple does not share information on individuals, according to Candelino. Instead, Unilever can choose to advertise in certain "buckets" of applications, such as those on news or entertainment, based on characteristics of its users.

"The leading global brands we're working with are developing iAds timed with their seasonal marketing campaigns, such as back to school and the holiday shopping season," said Apple spokeswoman Trudy Miller.

"We're just taking our first few steps. We'll work our way up to walking and running as this year progresses."

United States mobile advertising spending will grow 43 per cent this year to US$593 million, according to EMarketer, and will grow almost threefold more by 2013, reaching US$1.56 billion.

The ads are being integrated into some of the 225,000 applications created for Apple's online App Store. Users have downloaded more than five billion of them, according to Apple. The iAd system will be rolled out this year to the iPad, which sold more than three million units in its first 80 days.

Apple chief executive Steve Jobs said at a conference last month that the company had sold more than US$60 million in advertising since the iAd platform was introduced in April. That is about half the mobile display-ad market, according to JPMorgan Chase.

Google, which this year bought mobile-ad network AdMob, does not report what portion of sales comes from mobile.

From early on, Google has honed an ability to make ads relevant to users.

As it rolls out mobile-ad strategies, the company could tap a wealth of information on how people use web search, email and software available via the Android mobile operating system, said Michael Collins, chief executive officer of mobile-ad agency Joule.

"The question that many of us in the industry are very curious about is how much of that data will Google be making available to target," said Collins, whose agency is a part of WPP Plc. "The more available data, the better the targeting."

Apple appeals to a "premium" audience because of the cost of its products, while Google can reach a broader market because its Android operating system is on more devices, according to Noah Elkin, an analyst at EMarketer.

"It boils down to the exclusivity of Apple and the customer you can target that way, versus the breadth that you have with Google."

- BLOOMBERG