You may not know it, but your internet experience runs on APIs. See, without APIs you couldn’t order an Uber, check your Facebook, or even make basic purchases online. There would be no Airbnb, and you wouldn’t be able to watch Netflix on your smart TV.
An API (Application Programming Interface) is a type of software that connects two applications. They work like a digital middleman, allowing one application to pull data from another.
How Do APIs Work?
APIs are software-to-software interfaces that allow two apps to communicate without any input from the user.
We’ve seen this analogy crop up on several different websites, but it’s a good way to explain APIs in layman’s terms. Imagine you’re at a restaurant, scanning the menu for something to eat. In this scenario, there’s a chef ready to fulfill the order, but they can’t personally take your order because they are busy preparing orders for customers.
So, the waiter functions as that link between you, the customer, and the person making your food. You place your order with the waiter, then they pass your request to the kitchen, and once your order is ready, the waiter delivers it to your table.
APIs essentially place orders through a server on behalf of the user, allowing developers, applications, and websites to pull data and assets into a central location for seamless connectivity.
Public v. Private APIs
APIs can be public or private. Public APIs are released by companies like MailChimp, Slack, Twitter, Shopify—the list is endless. Public APIs have become so popular, they’ve become a cornerstone of the modern economy.
These companies share APIs publicly in the hopes that developers will use their apps for their own platforms.
Take, for example, Amazon’s API, which allows developers to add their product info to third-party websites. This way, users can post direct links to Amazon products, allowing the tech giant to drive more sales.
YouTube’s API allows other apps to feature embedded videos. Slack’s team collaboration API lets developers create intelligent bots, with their natural language processing capabilities. Third-party developers benefit as they don’t have to spend countless hours teaching bots about human language patterns.
Then you have apps like Mint, which uses APIs from various banking services to pull financial data from multiple sources. Users then have a holistic view of their financial situation, rather than having to visit separate sites to gather information.
Another example is NASA’s public API. The open API allows developers to both use NASA’s digital assets in their own applications or contribute code to the API catalog.
The benefit there is to crowdsource developments in areas like technology infusion, big data, and data management from outside innovators who might have something to offer the space agency.
By contrast, private APIs are typically used internally by companies to connect disparate software products. Businesses might use a private API to pull data from different sources for analysis. Or, it may be used to boost productivity by allowing various departments to access one broader data set.
Private APIs are also a big part of microservices solutions–apps that function as a unified suite of tools but are made up of several modules connected by APIs. That separation between applications and servers means developers can add, retire, or update one feature at a time without compromising the entire system.
How APIs Bring Value to Companies
Beyond the conveniences they bring to users, APIs give businesses a competitive edge, in this so-called “connected era.” They’re a marketing tool that helps brands build partnerships with other businesses and their users.
As software companies scale, they don’t always have the time or the capital to develop every feature that might add value to their platform.
By creating APIs, businesses allow third-party developers to take expansion into their own hands. As more outside tools use the API in their apps, users begin to rely on the data sourced from their API — which, best case scenario, leads to more opportunities to profit.
Read More: How is internet running our lives?
Here are a few examples of how companies monetize their API:
●Subscription-based access – API access is included as part of a product/service. This is pretty common in SaaS platforms.
● Revenue-sharing – Access to an advertising network (i.e. Google Display Partners) or an affiliate marketing program.
● Data collection – If your API manages large data sets with a proprietary algorithm, you may be able to license that data system to other users like Facebook’s advertising platform or FitBit’s user insights.
According to The Harvard Business Review, as APIs attract more users, businesses can leverage these data sets to make predictions about consumer behavior. In this case, insights can be used to customize ads, create personalized content, and attract advertisers.
APIs Control Access to Resources
If you use any SaaS services be it Salesforce, HubSpot, or MailChimp, you’ve probably seen API keys featured on the platform’s spec sheet. API keys give third-party users access to whatever assets the developer chooses to share.
APIs also play a role in facilitating security, working as a gate-keeper by opening access to some parts of the system, while keeping others closed off to the public.
For industries dealing in high volumes of sensitive information like healthcare, finance, or those selling access to consumer insights, security is vital. Keep in mind, you’ll need to be transparent about how customer data is being used.
Additionally, while you can control the number of calls made to your API or block anonymous traffic, API keys alone aren’t totally secure, and as a result, must be combined with other security mechanisms.
The bottom line; APIs make the digital world go round. And, as more companies work to develop and incorporate both public and private APIs, the ability to pull off successful API strategies is no longer a competitive advantage, so much as a barrier to entry.
If you’re considering an API strategy of your own, you’ll want to be sure to get it right. Work with an API consulting service that guides teams through implementing an agile API development process.
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