Advertising: Apple’s Move Into TV Relies on Cooperation With Industry Leaders

Now, as Apple tries to reimagine television, it is taking the partnership route again, collaborating with distributors like Time Warner Cable and programmers like the Walt Disney Company on apps that might
eliminate the unpleasant parts of TV watching, like bothersome set-top boxes or clunky remote controls.

Apple’s broader strategy — what its chief executive, Timothy D. Cook, recently called its “grand vision” for television — remains shrouded in secrecy, as everything Apple-related tends to be. Some analysts continue to predict, as they have for years, that the company will someday come out with a full-blown television set.

Whether or not an iTV ever materializes, the company’s more modest steps, like improving the $100 Apple TV box that 13 million households now have and adding access to cable channels through the box, suggest that its strategy stands in stark contrast to Google’s, which is contemplating an Internet cable service that would compete directly with distributors like Comcast and Time Warner Cable.


Reports emerged earlier this week that Google has held talks with several channel owners about licensing channels for such a service, but no content deals are within reach.


Apple weighed something similar years ago, but its executives concluded that it should work with the industry’s powerful incumbents, rather than against them.


“Apple’s probably going to have greater access to content by deciding to cooperate,” said Natalie Clayton, who oversees digital video research for Frank N. Magid Associates.


Case in point, Apple last month turned on HBO and ESPN apps for Apple TV owners, much to the delight of all involved. But those work only for people who have an existing cable or satellite subscription.

Coming next is an app from Time Warner Cable, allowing some of the company’s 12 million subscribers to watch live and on-demand shows without a separate set-top box. The app will effectively add an Apple layer on top of the TV screen, providing what its proponents say is a programming guide that is far superior to anything offered by Time Warner.


Apple has talked in-depth with other big distributors about similar apps, according to people involved in the talks. Its intent is to collect a fee from distributors in exchange for enhancing their television service and in that way, theoretically, make subscribers more likely to keep paying for cable.

“They’re trying to apply their software expertise, their user interface expertise,” one of the people said. (The people, both at distributors and programmers, insisted on anonymity because they said public comments would interfere with the private talks with Apple.)


Apple has sought support from programmers as well. It has proposed, for instance, an ad-skipping technology that would compensate networks for the skipped ads by charging users. While the idea is far-fetched, it intrigued some of the channel owners who were briefed about it and excited Apple followers when it was first reported by the technology writer Jessica Lessin earlier this week.


For Apple, further moves into television could neutralize some of the skepticism about the company’s future since the death of Steve Jobs in 2011. Investor concerns that the company might not have another iPhone- or iPad-level innovation on the way have dragged down its stock price, which topped $700 for the first time last September, but has recently hovered closer to $400.


For the time being, Apple TV is a small part of its business — something best suited to “hobbyists,” as Mr. Cook put it at the D: All Things Digital conference in May. At that time, he hinted at the opportunity Apple saw in the living room, calling traditional TV watching “not an experience that I think many people love” and “too much like 10 or 20 years ago.”


It is easy to see how Apple could help. Products like Apple TV and Roku, which connect TVs to the Internet’s wealth of streaming content, have proliferated because the set-top boxes that cable companies supply have not kept up with shifts in consumer behavior. But the streaming boxes remain a somewhat niche technology.


Apple could choose to market its box more heavily, especially as competition heats up from Amazon and other companies. Or it could eliminate the need for any box at all by building its own TV set. Reports this week that Apple may acquire PrimeSense, a maker of motion-sensing technology that could be used to control a TV without a physical remote, prompted a new round of guessing about that.


In Apple’s partnership approach, some see the company placing a multitude of bets, recognizing that television could evolve in any number of ways.


Through Apple TV, it is simultaneously supporting established distributors and programmers as well as a parallel universe of streaming TV, as represented by Netflix, Hulu and Amazon.


Last month, in a little-noticed move, the company approved an app for Sky News, the British-based cable news channel. Sky could already be streamed live free on the Web, but by creating an app for Apple TV, the channel gained access to the television sets in 13 million homes without the need for complex negotiations with cable companies.


The Sky News app is free, but the software that powers it, from a company called 1 Mainstream, also allows for à la carte subscriptions.


Asked about the implications of the app, Rajeev Raman, the chief executive of 1 Mainstream, said: “It’s a learning year for Apple. And it’s a learning year for all of us, to say, O.K., what really does work?”

In effect the app is a more direct route to consumers for Sky News. Bloomberg TV, already available on cable, tried something similar earlier this year by cutting a carriage deal with Aereo, the streaming service backed by Barry Diller. But Aereo is antagonistic toward networks and existing distributors; Apple, at least for now, is positioning itself as a friend. 

Aggressive game advertising to children prohibited by German Federal Court

Aggressive advertising messages aimed at children urging them to purchase goods for the game “Runes of Magic” are not permitted, the German Federal Court ruled.

The Federation of German Consumer Organizations (VZBV) sued game maker Gameforge because it tried to sell armor and weaponry directly to children, the VZBV said in a news release on Thursday. The offer was made on the Runes of Magic website. After a link was clicked, a Web page offering various products was opened, the VZBV said.

Direct exhortation to children in this way is prohibited, ruled the German Federal Court on Wednesday, said court spokeswoman Dietlind Weinland in an email on Thursday. Therefore, Gameforge should refrain from using terms like “grab the opportunity to...” while advertising paid in-game items to children, Weinland said.
Runes of Magic is a game that can be downloaded for free. Gamers can then purchase upgrades and accessories in the game to advance, the VZBV said.

By marketing paid items in a game that make the participation more attractive, game makers exploit the inexperience of children, said the VZBV. But the ruling means that advertising messages aimed at children with a link to paid accessories for the computer game “Runes of Magic” is not permitted, the VZBV added.
The virtual goods have to be paid for with real money, the federation said. In 2009 for instance, purchasing 3,000 diamonds for Runes of Magic cost the player almost €100 ($130), while a riding animal could be bought for 199 diamonds, it said.

Buy more stuff! The decision of the court is not yet final, Weinland said. Since the defendant was not represented by counsel before the Federal Court, a “default judgment” was given, she said. The company can oppose the decision within two weeks, after which the matter would be considered further by the Federal Court, she said. If the verdict is not opposed it will enter into force.

Gameforge on Thursday did not immediately comment on the verdict.

People in the game industry have been discussing the marketing of game items to children for a while.
“Children in some cases are being monetized MUCH more aggressively with in-app purchases than adults are, because developers understand that children are more vulnerable and wish to profit on this. There is nothing illegal about this in any country that I am aware of,” said Ramin Shokrizade, an Applied Virtual Economist and Monetization Designer who consults game makers, in an email on Thursday.

Game maker Zynga for instance uses a technique that is called “fun pain” to entice gamers to purchase items. Shokrizade currently consults to companies with a combined market capitalization of over $300 billion worldwide, according to his LinkedIn profile.

Game maker Zynga for instance uses a technique that is called “fun pain” to entice gamers to purchase items, he wrote in a recent blog post titled Monetizing Children.

“The idea is to inflict some very uncomfortable situation on a player in their game, and then offer to remove that situation in return for money. While the vast majority of adults will make the assessment that it is in their best interest to not spend the money and to just exit the application that is designed to hurt them, it is biologically harder to come to this conclusion if the decision maker is a child,” Shokrizade wrote in the blog post.

Therefore, the use of real money or its equivalent should be removed as an option in games without the explicit informed consent of parents, Shokrizade said in his blog, adding that children are not in a good position to judge the value of purchases in virtual currencies.

“I don’t think in app purchases (IAPs) belong anywhere in games marketed to minors. If your response is ‘oh that is going to make it a lot harder to sell microtransactions’, then I’m going to suspect this is an admission that you know children are more vulnerable to suspect monetization methodologies,” he added in his blog.

It is inevitable that some companies will move toward even more aggressive exploitation of children in games, wrote Shokrizade. “To solve the problem governments and people need to first understand the problem,” he said in his email. The ultimate result will be national regulation, which is already happening in some parts of Asia, he added.

Yahoo buys Admovate to ramp up its mobile advertising

Yahoo has bought ad tech startup Admovate to grow its mobile advertising sales and provide a stronger channel for personalized display advertising.
Terms of the deal, yet another in a major buying spree for Yahoo this year, were not disclosed.
Four employees at Admovate, which has been headquartered in Mountain View, California, will be joining Yahoo’s display advertising team at Yahoo’s headquarters in Sunnyvale, California, a Yahoo spokeswoman said in an email.
Through its technology, Admovate claims to enable advertisers to create and deliver personalized, hyper-local targeted offers through the mobile channel. “This is especially important for mobile ad experiences that engage consumers on smaller screens,” said Scott Burke, senior VP of display advertising and advertising technology at Yahoo, in a Wednesday blog post.
Admovate’s services would provide a much-needed boost to Yahoo’s display ad revenue, which fell by 11 percent for the quarter ended June 30, Yahoo reported Tuesday.
Following Marissa Mayer’s appointment last July as CEO of Yahoo, the company has gobbled up more than a dozen small tech startups, but Admovate stands out as an advertising purchase, and one that is not focused on consumer products.
Yahoo, which has struggled to compete against Google and Facebook’s mammoth advertising operations in recent years, introduced two new ad formats in April: stream ads, a form of sponsored advertising incorporated into the company’s newly launched news stream; and the Yahoo.com Billboard, providing richer content like movie trailers that let users buy tickets from within the ad.
In February, Yahoo reached a global advertising deal with Google to place more ads across its Web properties like Yahoo Sports and Yahoo News.
The company also operates its Right Media Exchange, an ad-buying platform for digital advertising companies, which includes differentiated ad networks, direct advertisers, data providers and global agencies.
The acquisition is part of the company’s efforts to invest further in these types of ad tech platforms, Yahoo said, to “make buying easier for advertisers and agencies.” The deal could yield new ad products for Yahoo’s global advertisers and partners in the coming months, the company said.

“We are investing more deeply in programmatic buying and mobile advertising,” Yahoo’s Burke said, adding, “Admovate’s personalization technology accelerates our capabilities in mobile advertising, and we gain an exceptionally talented technical team.”

Yahoo’s smaller acquisitions this year, which also include Xobni, GoPollGo and Astrid, may indeed be geared more toward acquiring talent than the products themselves, Mayer and CFO Ken Goldman signaled Tuesday during the company’s second-quarter earnings call.

“In lieu of hiring, we’ve acquired these companies ... for talent and expertise,” Goldman said. And, “We’re going to continue the pace of doing these smaller deals,” Mayer said, which she referred to as tuck-in acquisitions.

In the past 12 months, Yahoo has grown its dedicated mobile team by a factor of six, Mayer said, going from dozens of engineers to hundreds of engineers.

Beefing up its ad technologies, particularly in display, will be a focus at Yahoo during the remainder of the year, Mayer also said during Tuesday’s call.

Few additional details about Admovate’s products or services, which may not even have launched yet, are given on the company’s website.

“We’d like to thank everyone who supported us along the way: Our partners, our advisors and our investors,” the landing page reads. Admovate was founded just last year. 

Advertising: A Contest From Target With a High-Tech Twist

The retailer, Target, part of the Target Corporation, and the new Co.Labs technology blog published by Fast Company magazine, owned by Mansueto Ventures, sought out developers to take part in a competition they called the Retail Accelerator contest. The goal was to encourage the development of mobile apps with shopping purposes; the grand prize winners would receive $75,000 and a chance to have their entry brought to life by Target for customers to use.

The contest began in March at the South by Southwest Music and Media Conference in Austin, Tex. On Wednesday, Target and Co.Labs plan to announce the winners of the grand prize: a group of seven people who work at TBWA/Chiat/Day and TBWA Worldwide in New York, part of the Omnicom Group, and competed on their own, separate from the agencies, under the name Team Pilot.

Team Pilot’s winning entry, called Divvy, is meant to improve digital experiences in the realm of group shopping or social shopping by, for instance, enabling several people to update a shopping list in real time and making it easier to divide a bill among numerous shoppers and distribute copies of receipts among them.

The idea from Team Pilot — led by Christopher Reardon, team leader and head of user experience — was one of seven finalists in what was formally called the Co.Labs and Target Retail Accelerator contest. Each finalist received $10,000 and a chance to present to judges, including Jeffrey J. Jones, executive vice president and chief marketing officer at Target in Minneapolis.

There were initially about 350 individuals and teams who registered for the contest, Mr. Jones said, of whom about 75 submitted completed entries. The 75 were winnowed to the seven finalists and then to the grand prize winner.

The genesis of the contest was a question Mr. Jones asked as follows: “How do we continue to find ideas to accelerate our multichannel agenda?” By that, he meant ways of engaging with customers that include “target.com, our in-store experience, our Target app and the mobile Web.”

“As a reader of Fast Company, someone who is passionate about design and technology, I felt we were going to what I believe is the best media source that understands what’s going on and has access to the right people Target has to know, the best minds in the R.& D. community,” Mr. Jones said.

The contest is another example of a popular trend on Madison Avenue known as content marketing, which provides consumers with articles, video clips, charts and other materials that are sponsored by marketers. The purpose of content marketing, also known as branded content, custom content or sponsored content, is to surmount the increasing skepticism among the public for traditional advertising.

“I wanted to create some different models of how we can work with advertising partners,” said Christine Osekoski, publisher of Fast Company in New York.

“If you’re going to work with them on custom content, the question becomes how you make sure it’s content readers really want to read,” she added. “You have to be selective.”

Matthew Smith, integrated advertising director at Fast Company, agreed, saying that in this instance “the interests of church and state and the client and the community all aligned” because “we were speaking to them in an authentic way.”

That was echoed by Chris Dannen, the editor of Co.Labs. A way to achieve compelling content is to be transparent with readers, Mr. Dannen said, because “if they can’t see what’s going on behind the scenes, they won’t trust you.”

As a result, “we let it happen as it happened,” he said of the contest, adding: “There was the chance that no one would submit anything good. We were biting our nails.”

Mr. Dannen also shared some shortcomings, principally that because “we did not give people stringent guidelines on what their submissions should look like, some people put all their energy into the idea, some did highly detailed mock-ups and some submitted sketches on graph paper.”

The contest concept was first brought up a year ago, Ms. Osekoski recalled, when she met Mr. Jones in Los Angeles at the introduction of another Fast Company blog, Co.Create.

Although “Target is not a traditional advertiser for Fast Company,” she said, the retailer was keenly interested in reaching out to developers through the magazine. “Fast Company could be the conduit, the connector, the consultant,” she added.

Target is running ads on the Co.Labs blog to promote the contest.

Target is involved in other content marketing efforts, including the publication of its own online magazine-cum-blog, A Bullseye View. Mr. Jones said he and other Target executives “love what’s come out of” the collaboration with Co.Labs. But he added, laughing, “don’t let Christine tell you I promised to do this again.”

Ms. Osekoski, when told of Mr. Jones’s remark, said, “He reads my mind,” and laughed.

Although Fast Company is happy with how the partnership has turned out, she added: “This is not a contest to name a shade of lipstick or a nail color. This was a huge experiment for everybody. It takes a lot of work.”