The Apple Watch is set to hit the shelves soon, and that means an entirely new online space ripe for advertising, apps, and monetization. This smart watch brings a smaller screen than an iPhone, but does that mean fewer opportunities for advertisers? Let’s look at some of the factors that will impact advertisers.

Market Impact 

The market impact won’t be nearly as severe as the iPhone or the smartphone in general. After all, who will pay $350 for a smart watch that does the same thing your iPhone does?

Whoever can afford it. And that’s the first clue to how this watch will impact the marketplace. Apple already caters to the “upper class” of smartphone users – iPhone users tend to be more educated and have higher incomes than Android users.

So having an Apple Watch will target an even smaller, more affluent demographic. And since the Apple Watch is designed to complement your iPhone, non-Apple users probably won’t make the purchase.

On top of this, the Apple Watch comes only after several other watches have failed. The likelihood that the Apple Watch will take the world by storm is slim – especially given the small target audience.

The conclusion?

  • Small Watch, Small Impact – For now, anyways. The Apple Watch will garner a fraction of iPhone users, which means the impact on smartphone markets will be barely negligible. Unlike the smartphone, which decimated the previous cell phone markets, smart watches aren’t designed to supplant smartphones. Mobile advertising will still dominate.​
  • Affluent Target Audience As mentioned, the vast majority people who purchase an Apple Watch will be affluent iPhone users. Advertisers who would benefit from the Apple Watch advertising channel would need to have a target audience that overlaps with this demographic.

 

Opportunities and Limitations

For those advertisers who feel they may have an overlapping audience, they will have a few things going for them. Here are potential advantages to advertising on wearable technology such as the Apple Watch:

  • Users are More Focused – In-app advertisements are effective because app users are more engaged with the content. The same will hold true for smart watch users.
  • The Technology is More Intimate – This technology is something you literally wear on your body, so users will have a greater attachment to it than to smartphones. By association, attachment to the technology could increase the engagement and attention placed on apps and display ads.
  • Limited Screen Real Estate – Smaller screens means less space for everything. Interstitial ads would be the logical choice for in-app ads. This can be a double-edged sword: users would be faced to pay more attention to ads that are unavoidable, but this type of advertising could also detract from the app experience.

And this brings up a potential limitation, not of the watch itself, but one potentially imposed by Apple.

  • App Regulations – The company has historically been very strict on app quality control. With the Apple Watch, they are designing a high-end product which places top priority on the user’s experience. Ads may come under strict quality control regulations, which could limit the number of developers that choose to create apps for the watch.
  • Pricing – A smaller app store with a smaller, high-end customer base would likely mean higher ad prices. Yes, the audience may be more engaged, but only time will tell if the conversion rates would be worth the prices.

The Biggest Opportunity of All

Due to the reasons mentioned, this watch may not explode in popularity, but it will offer new technology that hasn’t yet hit the mainstream – physiology monitors. The Apple Watch is specifically designed to collect and store information about the wearer’s physical activity.

It works in conjunction with iPhone technology to track everything from heart rate to how much you walk, stand, or work out. This data has clear implications for advertisers, since it can be used to improve targeting and even infer emotional states or moods.

Regardless of how much display advertising will be channeled through the watch face, advertisers with access to this information can still use it to tailor ads that appear on other devices owned by the same user.

Conclusion

The Apple Watch represents a new opportunity for advertisers, developers, and software publishers. But it will not shift the foundations of the mobile world as the smartphone did. If successful, the Apple Watch will most likely become a small addition to the Apple family.

If Apple isn’t too harsh on in-Watch advertising, there will certainly be new advertising opportunities within the Watch customer base. However, given the small size of the audience, it may not be best to put all your eggs in this basket.

While advertisers are certainly advised to test the waters, they should probably view the Apple Watch less as a milestone and more as a pebble that precedes the wearable revolution. With more smartwatches and smart glasses on the way, the Apple Watch will probably become the first in a long line of wearables that track physiological indicators. If advertisers have access to this information, they will be able to personalize and target their campaigns like never before.

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Credit: Apple.com
Advertising Apple Watch: What It Means for Advertisers