Why APIs are big business for brands

We look at how application programming interfaces and an open approach to data and functionality are creating new sales and marketing opportunities for Australian brands

No one ever got rich from giving something away for nothing. Except perhaps, Amazon.

In 2002 Amazon’s CEO, Jeff Bezos, issued an edict that all teams in his company were to expose their data and functionality through service interfaces. This was accompanied by other directives aimed to promote openness and interoperation.

Bezos signed off: “Anyone who doesn’t do this will be fired. Thank you; have a nice day!”

The edict gave rise to the creation of a service-oriented architecture within Amazon, with all interactions managed through application programming interfaces (APIs).

It also gave birth to a phenomenon which Forbes dubbed ‘the API economy’, in an article in August 2012, describing how many of the leading online companies such as eBay, Twitter, Facebook, Salesforce, Netflix – and of course, Amazon – publish APIs for the easy exchange of information between their systems and those belonging to third parties.

An API is a means of expressing the functionalities of a component of software, such as its operations, inputs and outputs, to provide a simplified and standardised way of integrating it with external systems. Unlike older integration methods, such as direct integration, changing aspects of the software does not immediately break the integration.

APIs have become a key element of the Internet, allowing organisations to link together different processes and datasets to boost the functionality of their own systems.

Although often considered as part of the ‘plumbing’ of the Internet, APIs are big business, with Forbes reporting that Salesforce was generating more than half of its US$2.3 billion in revenue through them in 2012, rather than through its user interfaces.

But is it a concept Australia’s largest online players are willing to embrace?

APIs in the field

Examples of APIs in common usage are growing rapidly. It is now estimated by API integration technology specialist, MuleSoft, that there are more than 13,000 APIs in existence.

Regional vice-president for Australia and New Zealand at MuleSoft, Jonathan Stern, describes APIs as a great way to tap into the “digital exhaust” produced by companies such as Facebook, eBay and Amazon.

“More and more organisations are going to subscribe to applications or functions or processes that may be outside their walls,” he says. “These components of functionality are of some value on their own, but they are only really of business value once you get it all connected. And that’s what we are seeing.”

According to Stern, APIs hold significant advantages over older methods of integration, such as XML and creating point-to-point integrations.

“Point-to-point integrations between two systems are fine, but once you add additional systems the number of points grows exponentially,” Stern says. “Any change to one system has a knock-on effect throughout.”

Numerous companies are signing up to the API vision, such as the online advertising technology company, AdRoll, which recently announced a relationship with Apple that enables it to access inventory in the iAds network through an API.

More on this topic: Razorfish Australia's Doug Chapman discusses how to live in the era of APIs

Managing director for AdRoll in Australia and New Zealand, Ben Sharp, says APIs allow complex tech integration between two different businesses to happen relatively easily.

“It allows us to integrate with other large platforms out there and combine multiple data source to deliver efficient and effective marketing campaigns,” he says.

What can be done with APIs is also expanding rapidly. Amazon’s senior manager for technology solutions in Australia, Glen Gore, says his company’s API strategy initially focused on building scale for its product catalogues by enabling other online services to hook into them.

“Leveraging more channels for that product catalogue, and leveraging the logistics behind it, will drive higher volumes of sales, which drives better buying power and drives lower costs,” Gore says.

Read more: Google discloses tech specs for Glass and bans ads

Today Amazon publishes a plethora of APIs, covering functions including its recommendation engines, product information, advertising, in-app purchasing, virtual currency and more. Gore says the goal is to make it easier for third parties to leverage as much of the Amazon.com product platform as possible, because ‘running big online experiences is not simple’.

“There are APIs that help you earn, there are APIs that help you engage with your customer, and then there are APIs that help you with the experience,” Gore says.

Next page: ebay, Dick Smith talk APIs

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