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Four On The Floor: iPhone Upgrade Doesn't Disappoint, Feeds Mounting iAd Hype

By Mark Walsh, June 7, 2010

Apple didn't disappoint its legions of fans Monday, unveiling a new, sleeker version of the iPhone complete with a raft of new features including a front-facing camera for video-chatting, a higher-resolution screen and longer battery life.

The highly anticipated iPhone 4, which will go on sale June 24, was showcased Monday by Apple CEO Steve Jobs at the company's annual Worldwide Developers Conference in San Francisco, where new products are often rolled out. Never one to avoid hyperbole, Jobs called the latest edition of its signature device "the biggest leap we've taken since the original iPhone."

With mounting competition from phones running on Google's Android platform, including Sprint's newly launched Evo 4G phone from HTC, Apple is under more pressure than ever to maintain its advantage in the rapidly growing smartphone category. Later this month, Jobs said Apple would surpass 100 million devices sold on the iPhone operating system -- now called iOS -- across the iPhone, iPod touch and iPad.

With the introduction of its iAd platform in April, Apple will also go head-to-head with Google in mobile advertising. To that end, the company said it will roll out its new ad unit July 1, with initial advertisers including Nissan, Citigroup, Unilever and AT&T pledging a total of $60 million so far, committing a total of $60 million to be among the first brands to use iAds.

And while it was rumored that Apple might replace Google as the default search engine on the new iPhone with Microsoft's Bing, Jobs said Google would remain the main search option, but with Bing added as an alternative along with Yahoo Search.

From the standpoint of most consumers and Apple loyalists, however, among the most eagerly awaited features delivered in the latest iPhone was a front-facing camera for video calls. And at 24% lighter than the current phone and sporting a boxier glass front and back wrapped in a stainless steel band, Jobs called it the "thinnest smartphone on the planet."

Other features that the Apple boss highlighted in his presentation included a new high-resolution "retina display" that can pack four times as many pixels in the same space. Looking at the old and new displays side by side, the retina display looked noticeably sharper.

Other new additions included a built-in 3-axis gyroscope for enabling enhanced game play and an LED flash for the new 5-megapixel camera. The upgraded camera also includes high-definition video capture and the ability to edit videos using the new iMovie program for the iPhone.

Jobs said the new A4 chip and a larger battery in the iPhone 4 would allow 40% more talk time, 10 hours of Wi-Fi surfing or watching video and 40 hours of music. The new phone in the U.S. will cost $199 for the 16GB model and $299 for the 32GB model with a new 2-year contract. The 8GB version of the iPhone 3GS will be bumped down to $99, allowing Apple to continue to offer a lower-cost smartphone.

Taken together, the new features in the iPhone 4 add up to a substantial advance for the Apple device, according to Noah Elkin, a senior analyst at eMarketer. "This seems to be a more significant step forward than the 3GS was to the 3G," he said. "As always, Apple has looked at what its core audience does with the iPhone and made improvements that expand the appeal and utility for the device."

In that vein, the company is counting on the new phone, along with the recently released iPad, to provide a growing user base for its forthcoming iAd units. The hefty $60 million total in upfront buys so far for the format underscores the interest iAd has generated among brands and agencies.

Jobs estimated that amount would be nearly half of projected mobile display advertising in the second half of 2010.

He cited a group of roughly 20 launch advertisers featuring big names across the auto, retail, media and insurance categories including Sears, Target, TBS, Disney and Geico. Apple reportedly has been seeking up to $10 million for marketers to be part of the initial batch of iAd advertisers, and $1 million otherwise.

Jobs demonstrated the iAd with a full-screen, animated ad from Nissan that allows users to enter a contest to win its fully electric Leaf model. He showed how a user could tap on the ad to expand it or tap a button in the corner to close it and go back to an app.

Aside from the creative options afforded by the iAd, Phuc Truong, head of Mobext, Havas Digital's mobile marketing arm, said a key draw was Apple's ability to offer anonymous iTunes purchase behavior to target iAds. "We feel we're buying true audiences here based on media consumption," said Truong, whose firm is working with Sears on its upcoming iAd effort.

With 2 million sold units sold in the last two months, the iPad is becoming a legitimate ad platform in its own right. In his keynote, Jobs said the 8,500 native apps on the Apple tablet have been downloaded 35 million times so far, which he called a "great number."

When it comes to Apple's iBooks e-reader app, 5 million books have been sold to date. He added that five of the six top U.S. publishers said iBooks already accounts for 22% of e-book sales, a figure Jobs expects to increase with further iPad sales. The iBooks app will also be extended to the new iPhone.

With 225,000 apps overall now available in the App Store, you'd think Apple might soon shut the door to new titles. But don't bet on it. High-profile new additions on the way this summer include new apps from Netflix and for popular social game FarmVille from Zynga this summer.

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Your New Spokesperson: The Tech-Savvy Fashionista

Retailers have always been drawn to celebrities as vehicles for luring in teens and fashion minded consumers through their doors. This week Kmart announced a new line with Selena Gomez and Macy's release plans for a fashion line with Madonna and her teen daughter Lourdes.

But most of the mass retailers have been slow to pick up and embrace the new breed of micro-celebrities and tech-savvy fashionistas. From teen fashion bloggers to YouTube "haul" stars to girls taking camera phone pics of outfits from the dressing rooms and sending to friends, technology is playing a huge role in fashion, and retailers need to start tuning in.

Retailers often fall victim to the "insert celebrity here"-type of mentality to spark up a conversation with teens during the back to school season. Buy a bunch of print and TV spots with the celebrity shilling their wares and hope teens take notice. But with teen magazines going out of business left and right, and TV ad consumption on the decline, retailers need to re-think their strategies to engage teens during key retailer seasons.

A tremendous amount of teen shopping consideration is happening across content and community sites. An excellent example of fashion blending with social content is a site called Polyvore, which allows people to create their own fashion "sets" and share them with others online.

The Gap and other brands have been early collaborators on the site, allowing consumers to assemble looks from the retailer and have other community members like and comment on the looks.

A few years back we came across a rising YouTube comedian named Liam Sullivan, whose Kelly character was widely popular amongst the teen crowd. You may have seen his widely popular music video, "Shoes," which to date has over 40 million views.

Our insight was to engage the star's online audience by producing a custom music video sponsored by a major retailer to promote its new store. A "prequel" video was produced and debuted on YouTube, featuring the Kelly character and shooting footage in-store to display the line in a fun, relatable way.

Fast-forward to 2010 and "haul videos" have allowed a new crop of young teen celebs to enter the YouTube-sphere. The videos highlight teen girls touting their latest purchases from the likes of Abercrombie, Hollister, Target and other teen retailers.

The video hosts show off their latest purchases and essentially become small promotional ads for the retailers, detailing the item, price and the retailer. Videos range in views from a few hundred up to more popular ones from bloggers such as the Fowler sisters, who can command up to a million views on a single video.

With virtually every cell phone having a camera, teens are taking tech to the dressing rooms, snapping pictures of their fashionable finds and texting to their friends for instant advice. For teens unsure of their next fashion purchase, it's easy to post a quick photo via Facebook mobile and upload it to your wall for your friends to comment on. Understanding these habits and the ways teens are sharing fashion through technology is key for retailers.

So what does this mean for retailers this upcoming back-to-school season? Celebrity collaborations will generate PR, but what's generating online chatter across the social channels amongst the teen crowds?

Forget about hitting teens with circulars and brochures, and start thinking about ways to engage teens through leveraging content channels and embracing technology to make your products stand out. Creating a dialogue with teens is essential, and the last time I checked, you still can't talk to a print ad and get a response back.

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Ex-Google and DoubleClick employees Jason Kalish and Jorge Zapata have launched a coupon aggregator that serves up daily offers and discounts from Groupon, YouSwoop and others across more than 50 cities. The local offers are combined and delivered to people either in email, RSS Feed, Twitter tweets, or Facebook Fan page.

LocalOfferLounge.com quietly launched about two weeks ago. Cofounders Kalish and Zapata met during their time at Google and DoubleClick, and reconnected later to discuss the potential to launch a new site based on affiliate and performance-based marketing.

Kalish left Google in April, and shortly after began putting together the business model and a team of programmers who began building the platform in December. The idea to make the service simple came from his days at Google and Performics, which DoubleClick bought.

Visit LocalOfferLounge.com and it's easy to see Google's influence. The two didn't want a complicated site where the technology would stop people from using the service. "We link the titles of the offers directly to the offers," Kalish says. "We're not making consumers stop and read something on our Web site first. We believe that's the responsibility of the destination Web site, such as Groupon."

The traffic from the offer may start with LocalOfferLounge.com, but the company sends the consumer directly to the destination Web site, making the interface very "Google-like." The clean and easy-to-user interface lets you choose the city from a menu at the top right of the Web page. There are more than 40 major U.S. cities to start, along with Toronto, as well as the United Kingdom. New cities take about three minutes to add.

The product roadmap includes aggregating the offers from the more than 50 coupons specialty Web sites, and potential deals are on the table with businesses to forward and place an aggregate feed on their Web site, too. "We plan to build a large distribution network," Kalish says. "Nothing's left off the table. We're having conversations on both sides of the house to develop distribution opportunities and deals with individual Web sites."

The coupon sites, such as Adility, Groupon and SwoopOff, sell discount coupons. LocalOfferLounge aggregates the special deals and presents them to consumers. Let's say a consumer sees an interesting special in an email alert. Clicking on the link might take her to Groupon.com, where she could buy the $20 off coupon for $5. For each sale, LocalOfferLounge takes a percentage.

The service went live two weeks ago, and the development team has been busy checking the algorithms that automatically categorize the deals. Kalish says the company has been pulling in about 160 offers daily since January. As the business builds and more offers become available, it will become increasingly important to put snacks in the food category and hotel rooms in hospitality and travel. This will allow people to easily scan down the list.

Aggregating the specials offered on all the the Web sites, 31% fell into the Food and Beverage category, followed by Beauty & Spas, 22.0%; Sports & Recreation, 11.1%; Fitness & Nutrition, 6.4%; Arts & Entertainment, 5.4%; Health & Medical, 3.1%; Clothing & Accessories, 2.7%; Automotive, 2.2%; Photography & Photo Services, 2.1%; and Travel & Hospitality, 2.0%.

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