We didn’t need Sir Martin Sorrell telling us that the Apple (NSDQ: AAPL) iPad will not be the savior of the beleaguered publishing industry, but for the record, the influential CEO of WPP has laid it out: “[The iPad's] not regarded as being the thing that’s going to save us, the panacea to the problems of converting to a digital world. It’s going to be more difficult.”
The remarks, made in a video interview with the Financial Times, come days before Apple is due to debut its newest iPad; and two weeks after Apple formally unveiled new in-app payment rules that appear to require publishers to use Apple’s own payment system, in which Apple takes a 30 percent cut. (You can watch the video here.)
Sorrell joins the ranks of content publishers and other media companies that are getting increasingly frustrated by Apple’s “closed” policy on content that runs on products like the iPad and iPhone. On top of question marks over how much revenue they may get to keep out of subscriptions for apps on Apple devices — the FT itself might see $1 million sucked from its coffers as a result of the rules — publishers still have to face the age-old problems that they always have: they have bought into the idea of investing in and developing products for new mediums like the iPad tablet, but they still need a critical mass of users on those platforms to make that investment pay off.
For companies like WPP, that would extend also to marketing and advertising business models on Apple’s platform — although recent moves by Apple show that it might be amenable in the long run to working with large third parties rather than against them: Apple last week confirmed that it would be halving the mandatory ad spend for brands wishing to use its iAd platform: campaigns now formally need to buy in with a minimum of $500,000 spend, rather than the $1 million it required at launch earlier last year.
Ultimately, it’s a rock and a hard place for companies that have been seeing diminishing returns on more traditional platforms such as print media. Apple may be twisting their arms, but products like the iPad present new opportunities, and Apple’s success and winning place in the mindshare stakes with high-value consumers are hard to ignore.
Sorrell doesn’t go all-out an add Apple to his “frenemy” graylist, but he does seem to indicate Apple is inching in that direction. Meanwhile, Sorrell’s most famous addition to the frenemy list, Google (NSDQ: GOOG), has the dubious distinction of getting upgraded:
The search giant has simply become a “plain enemy” to media companies; but to WPP it is now a “friendlier frenemy”, since it is now Google’s biggest search advertising customer, buying some $1 billion of ads from Google annually.
For companies like WPP, there may be more battlegrounds to come in the mobile space.
At a speech at the Mobile World Congress in Barcelona in February, Sorrell described location as the “Holy Grail” for mobile advertising, an indication that it would like to extend more into this area, which will inevitably bring it closer to where companies like Apple (which last week appeared to file mysterious patents for “Places” services in Europe and China) and Google also want to be in control.