Where to Find the Marketer Opportunities in the New iPhone 3GS

Ed: 

• $99 for old 3G
• $199 for faster, better camera, more location integration 3GS
• Repeat of 1990's ideas for mobile marketing

How Apple's New Device Changes Mobile Behavior

by Rita Chang 
Published: June 08, 2009

SAN FRANCISCO (AdAge.com) -- Apple executives didn't throw any curve balls at the Apple Worldwide Developers Conference today in San Francisco. But the iterative changes hidden within a new, faster iPhone -- and the previously announced software upgrade -- could change not just consumer but also advertiser behavior. Here's a run-down of what's new and what it means to marketers.

The iPhone 3GS is being billed by Apple as the 'fastest, most powerful iPhone.'

Photo Credit: Apple

What's new: Apple introduced the new iPhone 3GS, which includes an updated operating system. It will hit AT&T stores, its exclusive carrier, for $199 with a contract.

Why it matters for marketers: Speed (yes, that's what the "S" stands for) is the key. Billed by Apple as the "fastest, most powerful iPhone," the new handset from the Cupertino, Calif.-based company will provide faster downloads, while the phone's greater memory and processing speed will allow advertisers to dial up more rich-media ad units. The news coincides with AT&T's recent announcement that it is upgrading its 3G network to deliver data faster.

"People are already using their phones as mini-computers," said Tina Unterlaender, account director at digital agency AKQA. "But the faster speeds will change user behavior even more. It's going to change the way whole new generations access the internet, and it's going to mean that brands will have to redistribute their marketing mix if they want to reach a young group."

Krish Arvapally, chief technology officer of mobile ad platform provider Mojiva, said since Apple announced its new iPhone software in March, it has seen a 20% increase in the number of advertisers who say they want to target iPhone users.

What's new: Apple said it would lower the price of its current 3G iPhone to $99 (with a contract) to make room for the iPhone 3GS.

Why it matters for marketers: This should mean greater reach for a smartphone that has generated a lot of gadget envy but is still only used by about 5% of all U.S. wireless users. And, according to Chetan Sharma Consulting, a drop in AT&T's service plan pricing could yield the carrier an additional 20%-25% subscribers per quarter. But if AT&T doesn't budge on its service pricing, then about 5% of AT&T users would likely opt for the 3G iPhone.

Ms. Unterlaender noted if AT&T were to offer more attractive pricing, it could add younger demographic including teenagers to the mix of iPhone users, who until now have been mostly an affluent older set.

What's new: The new Safari web browser will have built-in location-based technology.

Why it matters for marketers: Until now, marketers had to count on users to enter their ZIP codes in a browser to geo-target offers via the mobile web. But this isn't optimal when a retailer wants to know when someone is within 100 feet of its front door. Now, with the Safari web browser pulling the users' location data into the browser experience, marketers could serve geo-targeted ads to any iPhone user with an open browser -- assuming the user has allowed the website operator to track his location.

On a related note, the iPhone 3GS will also sport a digital compass that tells users which direction they're facing, with integrated mapping applications to automatically orient the map in the corresponding direction. Jamie Wells, director of mobile at OMD's Ignition Factory, said he could see advertisers using the compass feature to make their creative more engaging -- for example, a vendor selling merchandise at a sporting event could serve ads that instruct users to point their iPhone at the nearest concession stand to get a coupon.

What's new: The iPhone 3GS allows users to record and edit video, then upload the clips directly to YouTube or share them via e-mail or multimedia messaging directly from the phone.

Why it matters for marketers: As advertisers wait in the wings for mobile video viewing to take off, some say Apple's introduction of video features could jump-start people's habit to view and interact with video on their phones. John SanGiovanni, VP of product design at Zumobi, an app developer and network, said the company is now talking to two brands about creating apps that lets users capture images of themselves doing green, eco-conscious things for the environment, and Michael Chang of Greystripe notes that the "better camera plus the faster network bandwidth could be the start of mobile video renaissance."

What's new: Currently, iPhone users have to punch in each character of their passwords, names, addresses, phone numbers, but a new "auto-fill" function, part of the new iPhone operating system, can remember that data.

Why it matters for marketers: For brands trying to expand their mobile-marketing database or acquire new users, the iPhone's new auto-fill feature could remove a barrier in getting users to sign on. "This means less friction to acquire users; it should lower acquisition costs for lead-gen advertisers like Netflix," noted Jason Spero, VP-general manager, North America, at mobile ad network AdMob.