Apple Chops iAd Prices as Big Names Flee to Rival Platforms

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Has Apple priced itself out of a potential $2.5 billion mobile ad market? As top-name advertisers flee iAd, the Cupertino, Calif. company cutting prices up to 70 percent. Is iAd in free fall?

Some of the most-recognizable brands that started with iAd when it launched a year ago, such as Citigroup and J.C. Penney, have left for competing ad platforms, such as Google’s AdMob and Millennial Media, according to Bloomberg. As a result, the iPhone and iPad maker is now offering ad packages once selling for $1 million for as little as $300,000.

Although its App Store boasts more than 425,000 entries for the iPhone, iPad and iPod touch, developers using iAd get only 5 percent to 15 percent of the ad spaces filled. Developers get 60 percent of the ad revenue when a spot runs within their app.

Despite the attractiveness of the Apple ecosystem, where hardware, software and services are all linked, “in the long run they [Apple] priced themselves out,” Young & Rubicam ad agency senior vice president Thom Kennon told Bloomberg.

Whether Apple’s iAd regains its footing, the tech giant’s presence has benefitted the overall mobile advertising market. By iAd offering advertisers $1 million campaigns, huge players, such as automotive makers found mobile ads a realistic alternative to more traditional print and TV spots. By 2014 the mobile ad market could be worth $2.5 billion, according to researchers at EMarketer.

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