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Why Apple is Bailing on the Ad Business

While it seems like Apple is getting involved in every possible business, from video to audio to everything tech, there is one industry that the company seems to have given up on. According to multiple media reports, Apple is planning to get out of the advertising business, dealing all of its iAd management to various publishers.

The plan is for Apple to turn the program into an automated service, giving current iAd sales team members their walking papers. In what they are calling a “strategic shift” the responsibility for ad creation, sales and management will be handled by the publishers. In addition, Apple will stop charging publishers a 30 percent fee, passing all revenues through directly to publishers who opt to manage their own ads.

The program ran for six years, record time for a line of business Apple isn’t exactly high on. That makes you wonder what went wrong. When it launched, Apple lauded the program as a potential billion-dollar idea, but profits failed to materialize as expected. To be fair, the internet, and how people use it, has completely changed in the past six years. Social media has taken over, and advertising is being handled in vastly different ways.

The lesson here for managers is how to respond when your outside infrastructure disappears or falls apart. If you depend at all on contractors, that will happen at some point. The teams or companies you depend on to run some aspect of your business will either change their protocol or simply close up shop. Suddenly, you are left with one of two decisions: either take on all the work yourself or farm it out to another company.

The decision here is one of worth. Would it be worth it to you to continue that line of business based on the cost, time and aggravation it would entail making that happen? If the answer is “no,” then you have another set of decisions to make. Either you can keep that line open essentially on life support and without depending on that as an income stream, or you can pre-plan, determining either an exit strategy or a transition strategy before the decision is forced on you.

Remember, decisions made before you “must” make them, tend to be wiser than those rendered under duress.

Roman Temkin is a real estate developer and a businessman from NYC.

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