ARCHIVES: This is legacy content from before Marketing Dive acquired Mobile Marketer in early 2017. Some information, such as publication dates, may not have migrated over. Check out the new Marketing Dive site for the latest marketing news.

Why did Apple buy Quattro in the first place?

Apple?s decision to phase out cross-platform mobile ad network Quattro Wireless, which it acquired for $275 million in January, to focus on iAd provides an opening to competing players. My, how generous.

Rather than serve ads on feature phones and competing smartphone platforms such as Google?s Android, Research In Motion?s BlackBerry and Nokia, Apple is putting all of its eggs into iAd?s basket to monetize inventory across its own mobile products, currently the iPhone and iPod touch and eventually also the iPad.

?Considering Apple?s propensity to concentrate its resources on its own products, it was inevitable that Apple would drop Quattro?s cross-platform network,? said Boris Fridman, CEO of Crisp Wireless, New York. ?The mobile advertising industry, however, does not need more fragmentation.

?I believe that the entire mobile industry will benefit when there is less fragmentation and when one creative can run across the entire set of sites and apps in the media plan?one creative, one set of reports,? he said.

?This will result in more satisfied agencies and advertisers and ultimately in larger repeat buys.?

Apple?s spin
Apple posted the following message at the Quattro Wireless Web site:

IAd is helping advertisers reach millions of iPhone and iPod touch users around the world with dynamic, engaging ads right in their favorite apps, and is creating a new revenue stream for developers.

The iAd Network combines the emotion of TV advertising with the interactivity of the web, giving advertisers a powerful new way to reach mobile users.

We believe iAd is the best mobile ad network in the world, and starting next month we're going to focus all of our resources on the iAd advertising platform.

We are no longer accepting new campaigns for the Quattro Wireless Network, and we will soon begin winding down existing campaigns.

As of September 30, we will support ads exclusively for the iAd Network.

?Advertisers and developers have seen dramatic results since the iAd network launched July 1, and starting next month we're going to focus all of our resources on the iAd advertising platform,? said Tom Neumayr, spokesman for Apple, Cupertino, CA.

How will the ecosystem change?
While no one is shocked by the news, it is interesting that Apple acquired a cross-platform network only to slough off all of the non-Apple inventory into which Quattro had been serving ads via its publisher and developer relationships.

?I have to say I?m not that surprised by the announcement,? said Patrick Moorhead, vice president and management director of mobile platforms at Draftfcb, Chicago. ?Apple, for better or for worse, has a manic obsession with building, and controlling, its own proprietary end-to-end technology ecosystems.

?Quattro?s existing network I?m sure looks to Apple?s leaders like a messy, open-ended pipeline of mass-market noise into the well-manicured walled garden they have painstakingly designed,? he said.

?I think there is a certain risk here, as I don?t think iAd has enough legs under it yet to unilaterally bet on it as the advertising solution on the Apple platform?but obviously they feel differently.?

Maybe the acquisition of Quattro was more of a defensive move, removing one player in advance of Apple entering the mobile ad network game itself.

Perhaps, since mobile advertising is not Apple?s core competency, it wanted a team in place with experience in the space and a track record of working well together, rather than build up its iAd team piece by piece.

At any rate, competitors such as Google/AdMob, Millennial Media, Jumptap, InMobi and Mojiva probably are not too broken up over the news.

?This will create new opportunities for other ad networks, especially for inventory Apple represented on Android devices,? Crisp Wireless? Mr. Fridman said. ?Quattro has been losing credibility as a cross-platform ad network since the acquisition, so while we may see some publishers looking to move to a new ad network partner, it has already been shifting in that direction.

?The problem with what Apple has done is that it is a siloed approach, whereas brands are looking for cross-platform multichannel solutions with the most reach,? he said.

?Agencies complain that iAd has no transparency, they have no control over where their ads appear and it takes too long to deploy iAd campaigns.?

At least one competitor believes that an exclusive focus on a single platform does not suit the needs of brands and publishers.

"Quattro?s decision to drop support for major audience segments on non-Apple platforms is ultimately bad for their advertisers and developers," said Michael Chang, San Francisco-based CEO of Greystripe, an independent mobile ad network. "Advertisers care about audiences, reach and user engagement, not specific platforms.

"As the Android audience catches up to iPhone and BlackBerry continues to improve the potential for user engagement, these smartphone platforms will become increasingly important for advertisers," he said.

One step back, two steps forward?
In April, Apple officially announced iAd and was able to create a great deal of buzz, as it always seems to do for new launches (see story).

JCPenney and Nissan were among the initial brands that paid a minimum of $10 million to run iAd launch campaigns (see story).

Apple has definitely done the mobile advertising industry a service by getting brands and agencies to think bigger in terms of creative execution and budgets, and it always seems to bring the sexy factor (see story).

However, many iAd campaigns failed to launch on schedule due to production delays in finalized insertion order agreements, among other bumps in the road (see story).

In addition, Apple has frustrated some clients using its iAd advertising platform with a lack of transparency about campaign metrics (see story).

And while rich media mobile advertising is all the rage, iAd is not the only game in town. Independent players such as Medialets, Rhythm NewMedia, iVdopia and Crisp could benefit from

?As mobile advertising matures, publishers and agencies will ultimately benefit from running third-party rich media,? Mr. Fridman said. ?It might cost an extra, but it will result in more frequent and larger buys.

?Online is a reasonable facsimile,? he said. ?Agencies are not using ad networks? own rich media, whereas iAd is both an ad network and a rich media platform.

?This is not how the online industry is working.?

How much brand interest Apple is able to generate long-term remains to be seen.

"Apple is clearly focusing on the ultra premium segment of advertisers who can spend several million dollars against one platform or handset," Paran Johar, Los Angeles-based chief marketing officer of Jumptap.

"This is great news for Jumptap as our premium ad network has rich media comparable to iAd and we offer performance advertisers a marketplace to achieve their direct response goals," he said.

Whether or not this decision is the best way to optimize its resources and position itself in the mobile advertising industry, Apple is selling enough devices that it should not be catastrophic for its bottom line.

?It makes sense, especially now that Google has its own ad network that it has integrated, that Apple is very focused on selling its own inventory,? said Julie Ask, San Francisco-based principal analyst at Forrester Research. ?It seems like a natural part of the process of any acquisition.

?Apple only has so many resources so it has to focus,? she said. ?Apple is not in the business of have the widest-reaching ad network?it?s in the business of providing a great experience on its own devices.?