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December 17, 2013

Apple To Put New Focus on Advertising: iTunes Radio, Backed By Real-Time Bidding

Apple appears to be putting a new focus on for the upcoming new year, and what's left of this year as well: specifically, a focus on advertising. Not only is the iAds team putting a new focus on moving inventory for Apple's radio arm, iTunes Radio, the wider Apple is also taking a closer look at iTunes Radio by bringing in a new means to sell ads within applications thanks to a new kind of real-time bidding (RTB) system to help slip these little slices of commerce directly within the apps.

A staff meeting just ahead of the holidays featuring Apple's head of software Eddy Cue made it rather starkly clear, according to one report from within Apple: “The message that came across was basically if you're not working on iTunes Radio, you're irrelevant.” But while iAds has been hard at work since 2010 helping developers to make money from app development by offering up those little slices of commerce that can make all the difference—sufficiently so that most of iAds' revenue comes from in-app advertising—the new focus at Apple seems to be getting more revenue out of iTunes Radio.

With a lot of competition going on in the streaming music space—Pandora was recently making a push for more advertising, bringing in hundreds of new sales reps to staff local-based sales efforts, and Spotify brought out its own mobile radio service backed up by ads—it's clear that iTunes Radio really had to follow suit, making an effort to claim not only sales dollars formerly dominated by local radio, but also sales dollars for those who want to hit the Web and need a platform with a lot of listeners.

Meanwhile, over at iAds, the RTB concept is being played somewhat close to the vest, and has left many questioning how Apple is going to move into a new kind of sales model, away from earlier efforts that targeted the deepest pockets, those who could afford iAd prices starting at $1 million. But some have noticed that iAds could easily be used with things like Apple TV, as well as across the various devices that make up Apple's overall platform. But with a RTB platform, Apple could likely open up a wider platform of buyers by dropping prices, presenting more options overall.

This also explains, at least somewhat, the perception:  “If you're not working on iTunes Radio, you're irrelevant.” Apple wants to automate that system, to turn it over to the machines, so to speak, and that's why Apple may be looking to swing the focus on iTunes Radio. Consider also Apple's recent acquisition of social media analytics firm Topsy, which may help the company put more power into targeting advertisements. Apple may be out to make iTunes Radio top dog, not just in terms of music played but also in terms of apps delivered.

While the idea of people potentially losing jobs to automated systems is distressing, it could be that Apple's just making a change in focus, allowing more people to put effort behind a system that could be more profitable for all concerned. It's a development that bears watching, make no mistake about that, and could well show us all just where the future is going.

Edited by Cassandra Tucker

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