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.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
4 responses to “Apple Chops iAd Prices as Big Names Flee to Rival Platforms”
This was a totally new market for advertising and one would expect the first mover to adjust its offerings in the light of experience. Adjustments to techniques, pricing, placement, payment mechanisms and technologies would not be unusual. That Apple is responding to the experience gained at least speaks to the company’s willigness to learn.
It does not signify – in my opinion – in any sense that Apple has shot its bolt and can find no way forward. Far from it. The basics of the mobile space seem clear: Apple’s customers have proven to be far more willing to pay for content than those on Android devices, they buy more apps and spend more on advertised products. The iOS platform itself offers both advertisers and viewers a more robust and immersive experience than they get elsewhere. These things augur well for advertisers on the platform. They and Apple will figure a sweet spot for ads and then things wil move forward again.
The Young and Rubicam guy is talking through his hat when he says ‘in the long run Apple priced itself out of the market’. The long run? The thing hasn’t been going a year. There’s a long period ahead before this market dies.
Speaking personally, I wouldn’t care a hoot if the entire mobile advertising endeavour folded its tent and shuffled off into the dark night. I don’t want ads polluting the mobile space the same way they strangled the TV world with mindless crap, repeated ad nauseam. But that’s just me.
It is pretty much expected that iAd purchases will come down. After all, actually making the ad doesn’t cost that much. Perhaps a month of work? and the media at $10 CPM and $2CPC was at least 10x more expensive than industry standard.
Reduced barriers of entry are great for getting brands into the door and making mobile advertising a part of the campaign budget. Kudos to Apple for opening the door to all the mobile advertising players including us (http://mobdis.com)