Digital Marketing and a Free iPhone Part 2

If purchased directly from Apple or AT&T, the new iPhone 4 costs 9 for the sixteen gigabyte version, and 9 for the thirty two gigabyte. With this purchase comes a commitment to a monthly service fee for accessing the telephony and data capabilities of the device. These data plans are not required to reach the Apple App store (access to the app store can be made through the iPhone’s built in Wi-Fi capability), which currently holds over 200,000 apps, many of them coming at no charge. These free apps are made economically possible due to the fact that they are ad supported, meaning that the app is free, but advertisements sporadically appear on the screen while the app is being used. For music based apps, these ads are delivered in the form of commercials that play after a few songs have been heard. For the app setting, free delivery has proven to be an effective way of getting the app in the hands of users at no cost, while still allowing a revenue stream to flow into the pockets of the developers. In examining this successful and proven methodology, one wonders if the same practice could be applied to the iPhone hardware. Certainly, Internet Marketing experts would have no shortage of methods for delivering content to these types of customers.In this article we will examine some ways in which Apple could financially justify distributing free, ad supported iPhones to an eager public.

Text Messages – At the end of our first installment, we touched briefly on the ability for Apple to make text messaging a part of their revenue gathering methods for this ad supported iPhone. In considering text messages, they would have to be heavily ad supported. In order to both write and read a text message, users would first have to either read or view an advertisement. These ads would be best served remaining consistent in length. Being subjected to a quick 5 second video ad before sending or receiving a text may get tiresome if the user texts very often, but the hope is that the iPhone experience will be strong enough that in the case of the user tiring of the ads, they would convert to an actual purchase of the hardware.

More Access to Usage Habits: Another aspect of this ad supported iPhone would be user agreeing to allow their usage to be monitored, so more targeted ads could be delivered to them. Downloaded apps, keywords in texts and emails and visited websites could be culled for information that would result in more relevant ad delivery. While most users might reject such usage monitoring, many would happily trade that bit of privacy in exchange for a free iPhone.

Other revenue streams – This type of ad supported iPhone could also offer up entirely new types of revenue streams by introducing one time fees for goods or services that come for free with an iPhone purchase. For example, the iPhone 4 currently ships with a free pair of headphones, a wall charger and a charger cable. The headphones could become a paid item, as could the other accessories. Going a bit deeper, we can examine the pre-loaded software that comes with the iPhone. Free apps such as Camera, Safari and the various utilities could remain free, but others could come with conditional charges. For example, the Contacts app could be initially free, but adding over 50 contacts could come with a one-time charge of five dollars.  Search Engine Marketing could be amped up on this free iPhone, as the user could be subjected to a larger amount of ads than the typical user when performing a search. The iPhone could also be delivered with certain features shut off, giving the user the ability to activate them for a fee. Let’s say the user is given the ad-supported iPhone, but it lacks the motion sensing abilities of the typical iPhone. The user could then be motivated to pay to unlock features. These types of charges would have to remain few and far between, however, in order to keep the value of the free iPhone from becoming redundant through all the secondary purchases. Users could even be given the option of purchasing ‘ad free blocks.’ In this situation the user could pay a fee in order to guarantee an ad free experience for a certain amount of time.

While an ad supported iPhone is unlikely to become a reality anytime soon, we see here that it may just be an option worth considering.