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Placement in Apple's iAd program could cost $10 million at launch

post #1 of 49
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Apple's debut in the advertising business could come at a premium price for those who wish to participate, with an initial fee potentially as high as $10 million to advertise with iAd, according to The Wall Street Journal.

Citing a person familiar with the matter, the Journal reported Thursday that Apple's iAd mobile advertising platform will come at a much higher cost than the $100,000 to $200,000 companies pay with existing mobile deals. While those who wish to be a part of the iAd launch could pay as much as $10 million to be first in the door, Apple reportedly aims to charge close to $1 million for ads on its mobile devices this year.

Advertisers would be charged a penny each time a user sees a banner ad under the proposed plan. Tapping on the banner brings up the advertisement within a mobile application, and Apple charges the advertiser $2. A $1 million ad buy would gain an advertiser $1 million worth of ad views and user taps.

The report said that Apple is out pitching its new advertising business to companies, and the handset maker is currently "making waves on Madison Avenue with its price tag." In addition to the high cost, Apple also seeks to have greater control over advertisers' marketing campaigns, author Emily Steel wrote. But those facts have not hurt interest in iAd.

"Despite the high price, ad executives at agencies from Boston to New York and San Francisco to Los Angeles have crowded into conference rooms in recent weeks to listen to the tech company's pitch for iAd," the Journal wrote.

Those pitches have included an advertisement for Nike's Air Jordan basketball shoe, which includes an animated banner and the iAd logo. Selecting the ad brings up a video, an interactive store locator, and exclusive offers at local stores. That same demo was shown off earlier this month at Apple's iPhone OS 4 preview event, where iAd was formally introduced.

The report cited experts who said Apple's entrance into the mobile advertising market is likely to convince others who sell mobile ads for software on Apple's App Store to move to other platforms, such as Google's Android mobile operating system.

Some on Wall Street have very high hopes for iAd, with at least one analyst calling it a billion dollar opportunity for Apple. In-application advertising was a relatively small market in 2009, with an estimated $45 million total size. But with 200,000 applications available on the App Store for the iPhone, iPod touch and iPad, and more than 80 million devices sold, Apple, developers and advertisers see the potential to reach a wide audience.
post #2 of 49
Oh, ok, I may wait a while to sign for an ad buy then
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post #3 of 49
figures

Nike shoes are 1% materials/manufacturing and 99% advertising
post #4 of 49
$2 per click? That seems sort of....high.

Is it?

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post #5 of 49
The advertisers will cast their votes with their paid ads--or lack of them.

It's an intriguing concept to be able to target advertising in this new way. Lots of marketing research can now be done with a lot more (probably more accurate0 focus via such a broad selection of apps and their respective customers.

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post #6 of 49
Great exposure for the advertiser. Just think more than 50 million Iphones out there.
And this may be good for the customer also. How so, simple when a company gets nuts the customers start clicking on the banners wasting their money.

BOTTOM LINE: Ads will have to be descreet, catchy and NOT ANNOYING.
post #7 of 49
Quote:
Originally Posted by Tulkas View Post

$2 per click? That seems sort of....high.

Is it?

Not necessarily, depending on how it's done.

The key will be click through rate as well as the percentage of people who sign up for the service/product plus the value of the service/product.

If you're an attorney handling a given type of litigation and 20% of the clicks lead to new clients and the new clients average $100 K in fees, then $2 would be very cheap.

OTOH, if you're selling Viagra from a foreign pharmacy and 0.000001% of the readers buy from you, it's worth pennies per thousand.
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post #8 of 49
Sounds a lot higher than the numbers I saw from a year or so ago with AdMob-- they were closer to $5/1000 views and $0.25/click being low-bid ($1/click for major campaigns.). If the ad isn't well targeted, it seems like money down the drain...
post #9 of 49
Quote:
Originally Posted by Tulkas View Post

$2 per click? That seems sort of....high.

Is it?


Not at all. With Adwords on the right hand column and at the top of a Google search. Those people are paying 10 times as much depending on the competition in the industry. For example in Data center hosting the top keyword clicks are going for $25 +.

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post #10 of 49
Quote:
Originally Posted by al_bundy View Post

figures

Nike shoes are 1% materials/manufacturing and 99% advertising

I saw something on television a couple years ago, where they said that Nike pays Michael Jordon more money per year than they pay their entire group of factory workers their sweatshop wages. Things are definitely out of whack!
post #11 of 49
I understand the motivation of Apple -- aesthetics, substance and quality of the actual ads for the iAds debut presentation.

However, I hope the rates indicated will apply only for the initial presentation of the iAds. Not too many companies could afford $1 million, let alone $10 million. Then, $2 per click is too high. And, I hope that it is unique clicks (per iPhone ID) because that would be very costly to the advertiser. Otherwise, it can be abused. What is to prevent an Apps developer or websites specially created for the iPhone OS mobile computing device, to perform multiple clicks and request other "friends" to do the same.

If the above rates persist beyond the debut presentation of iAds -- unless Apple bans all other advertisements from other competing ads agencies (AdMob, ads bundling agencies, etc.) -- companies may shy away from using the advertising agency bought by Apple or even participation in the iAds ecosystem.

CGC
post #12 of 49
Quote:
Originally Posted by al_bundy View Post

figures

Nike shoes are 1% materials/manufacturing and 99% advertising

That is why I have never purchased a Nike shoe. I don't need $200.00 Air Jordan shoes, thank you very much.

Which is why I never have to worry about stopping to click a Nike ad link.

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post #13 of 49
Quote:
Originally Posted by jragosta View Post

Not necessarily, depending on how it's done.

The key will be click through rate as well as the percentage of people who sign up for the service/product plus the value of the service/product.

If you're an attorney handling a given type of litigation and 20% of the clicks lead to new clients and the new clients average $100 K in fees, then $2 would be very cheap.

OTOH, if you're selling Viagra from a foreign pharmacy and 0.000001% of the readers buy from you, it's worth pennies per thousand.

Makes sense. Sort of limits it to top tier advertisers that can afford it. Which might mean some compelling campaigns won't make it. Nike could afford it. The Red Cross, perhaps not.

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post #14 of 49
This is a good pricing!

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post #15 of 49
I wonder if Apple will allow ad-blocking software in the App Store (I wouldn't count on it).

I also wonder if ads will be allowed even in paid Apps (I'm guessing they will), and if the apps that have ads will be clearly marked in the App Store (I'm guessing they won't).

This could get to be very annoying.
post #16 of 49
Quote:
Originally Posted by jragosta View Post

Not necessarily, depending on how it's done.

The key will be click through rate as well as the percentage of people who sign up for the service/product plus the value of the service/product.

If you're an attorney handling a given type of litigation and 20% of the clicks lead to new clients and the new clients average $100 K in fees, then $2 would be very cheap.

OTOH, if you're selling Viagra from a foreign pharmacy and 0.000001% of the readers buy from you, it's worth pennies per thousand.

OK, so I had started writing this post---being very skeptical of the figure. I thought that there was no way you'd be able to get companies to pony up $10 million. Super Bow ads go for 1/4 that, for Pete's sake.

Then I did some research. Coca-Cola spends something like $1 billion on marketing every year worldwide and $375 million in the U.S. alone. The major auto manufacturers spend $1 billion EACH. JCP and Federated stores spend $4B. Wowsa! Of course, that might include salaries and benefits of their internal marketing departments, but still.

I just had no idea we were talking those kinds of numbers. Then again, I don't exactly see computer related firms lining up to pay that kind of money.
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post #17 of 49
The chances of me buying an iPhone or iPad are diminishing rapidly.
One of the things I really like about mobileme is that there are no ads, I guess that too will change.
There is no way Apple will allow someone to sell an "iBlock" app.
post #18 of 49
Quote:
Originally Posted by igamogam View Post

The chances of me buying an iPhone or iPad are diminishing rapidly.
One of the things I really like about mobileme is that there are no ads, I guess that too will change.

Not that I like it myself, but: What will you do when other companies follow suit? You will stop using a smartphone?

Quote:
Originally Posted by igamogam View Post

There is no way Apple will allow someone to sell an "iBlock" app.

It's must be great to be privy to the future plans of a company like Apple.

CGC
post #19 of 49
Quote:
Originally Posted by igamogam View Post

The chances of me buying an iPhone or iPad are diminishing rapidly.
One of the things I really like about mobileme is that there are no ads, I guess that too will change.
There is no way Apple will allow someone to sell an "iBlock" app.

Did you see the demonstration of iAd?

You're not forced to watch the ad or interact with it. Only if you want to.
post #20 of 49
Quote:
Originally Posted by BUSHMAN4 View Post

Great exposure for the advertiser. Just think more than 50 million Iphones out there.
And this may be good for the customer also. How so, simple when a company gets nuts the customers start clicking on the banners wasting their money.

BOTTOM LINE: Ads will have to be descreet, catchy and NOT ANNOYING.

One click per day is counted unless you toss your cookies each time... and the next day... you might have to really search to find that same ad again.

They've thought of that, don't worry...
Hmmmmmm...
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Hmmmmmm...
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post #21 of 49
this might make sense if its for unique clicks from iPhone/pod/pad ( so that it doesn't get abused) as we iPhone/pod/pad users are considered people with "disposable income" .
post #22 of 49
Isn't this kind of shades of iTunes LP cost estimates which were out of whack?

http://arstechnica.com/apple/news/20...using-stir.ars
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post #23 of 49
Quote:
Originally Posted by igamogam View Post

The chances of me buying an iPhone or iPad are diminishing rapidly.
.

Apple is DOOMED!!!!!
post #24 of 49
Quote:
Originally Posted by SDW2001 View Post

OK, so I had started writing this post---being very skeptical of the figure. I thought that there was no way you'd be able to get companies to pony up $10 million. Super Bow ads go for 1/4 that, for Pete's sake.

Then I did some research. Coca-Cola spends something like $1 billion on marketing every year worldwide and $375 million in the U.S. alone. The major auto manufacturers spend $1 billion EACH. JCP and Federated stores spend $4B. Wowsa! Of course, that might include salaries and benefits of their internal marketing departments, but still.

I just had no idea we were talking those kinds of numbers. Then again, I don't exactly see computer related firms lining up to pay that kind of money.

Imagine their surprise when because they were first on board when iAd launches, they end up with millions and millions of clicks from people wanting to see the iAd magic and have no intention of buying.

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...sometimes it's both
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...sometimes it's both
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post #25 of 49
Makes sense for the 80+ million iPhone, iPod Touch, and iPad users out there. It'll only get bigger.
post #26 of 49
Quote:
Originally Posted by SDW2001 View Post

I just had no idea we were talking those kinds of numbers. Then again, I don't exactly see computer related firms lining up to pay that kind of money.

You forgot to list that Apple's advertising budget was $486M is 2008:

http://blogs.zdnet.com/Apple/?p=2545

Here's there 2009 Budget, along with MS's, Dell, and RIM's:

http://tech.fortune.cnn.com/2009/10/...alf-a-billion/

You want to eat your words yet.

Advertising business is a Billion dollar business for the big businesses.
post #27 of 49
Heck, I could see Microsoft and Nokia advertising THEIR smartphones on iPhones, trying to get you onto their phones.
post #28 of 49
Quote:
Originally Posted by Tulkas View Post

Imagine their surprise when because they were first on board when iAd launches, they end up with millions and millions of clicks from people wanting to see the iAd magic and have no intention of buying.

That's just SO true!!!
post #29 of 49
Quote:
In addition to the high cost, Apple also seeks to have greater control over advertisers' marketing campaigns, author Emily Steel wrote.

Hrrrm? Can't see where that's going to go over too well, particularly with the erratic stewardship of the App Store as a widely know example.

"We've declined to accept your campaign because we think it's stupid/offensive/libelous/we just don't like it. We have some suggestions regarding how to make it less stupid/offensive/libelous/more likable." Yeah, ad agencies are going to love that.
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post #30 of 49
This is sad. Seems to me we are approaching the point where advertising IS the content. And here we sit, lapping it up like the iDiots we are.

If the charge is a penny an impression the FIRST thing you are going to see when you open an app is that dinky little banner.
post #31 of 49
Quote:
Originally Posted by Tulkas View Post

$2 per click? That seems sort of....high.

Is it?

It really depends on the product.

Quote:
Originally Posted by BUSHMAN4 View Post

Great exposure for the advertiser. Just think more than 50 million Iphones out there.
And this may be good for the customer also. How so, simple when a company gets nuts the customers start clicking on the banners wasting their money.

BOTTOM LINE: Ads will have to be descreet, catchy and NOT ANNOYING.

It seems like Apple is cultivating, for the lack of a better word, a better ad clientele, so hopefully when it settles down, they'll have the clout to reject the spammy type of ads like the "obey one rule", discount ED pills, shady teeth whitener ads and similar trash. This isn't saying that the big companies don't do bad things, but hopefully there's somewhat higher standard of what's allowed.

Quote:
Originally Posted by hmurchison View Post

Isn't this kind of shades of iTunes LP cost estimates which were out of whack?

http://arstechnica.com/apple/news/20...using-stir.ars

The article here says "at launch", and I recall iTunes LP system later opened up so bands could submit their own. So I think the buy-in will probably go down as they settle into their system.
post #32 of 49
Quote:
Originally Posted by djsherly View Post

This is sad. Seems to me we are approaching the point where advertising IS the content. And here we sit, lapping it up like the iDiots we are.

If the charge is a penny an impression the FIRST thing you are going to see when you open an app is that dinky little banner.

then buy a paid app and quit your whining.
post #33 of 49
What makes ads exclusive to free apps? Not the point I was trying to make anyway, but thanks.
post #34 of 49
Quote:
Originally Posted by MacTel View Post

Makes sense for the 80+ million iPhone, iPod Touch, and iPad users out there. It'll only get bigger.

It's not just an issue of quantity, but quality.

What most people are ignoring is that this 80+ million (and growing) number consists of some of the most well-heeled, educated, high-end eyeballs out there.

The pricing could very well be appropriate given the consumer-market segment that those ads will be reaching.
post #35 of 49
Quote:
Originally Posted by djsherly View Post

What makes ads exclusive to free apps? Not the point I was trying to make anyway, but thanks.

Ads aren't totally exclusive to free apps, but most paid apps don't seem to have ads in them.

I think a valid point is that you generally can chose a different app if you don't like how one behaves. In a competitive app market, there's plenty of room for differentiation and market segmentation. Those that don't want to pay for apps can get the the ad-using "lite" version, the paid app generally does away with ads and includes more features.
post #36 of 49
Bloody amazing! From $1m to $10m in less than a full day.
post #37 of 49
first let us realize this is not about Nike, even though they are the devil of all shoe companies.
Lets look at the app side. I know there are a growing number of folks who do not want any type of banner add showing up within their apps on the phone and iPad. I would probably pretian to NEW apps and not apps you already have downloaded I assume but there is no clarification yet on that. As an owner of both products I do not like the idea and if I were a customer considering the switch I would think Long and hard on it IF this actually does happen. But since that is just in the planning stages I do not think we need to worry for a while yet. And Like everything else they do It would probably effect the States and not the rest of the world, at least not for some time..
Bottom line lets wait and see.. Would not be the first time an idea from apple got trashed. We can only hope.
post #38 of 49
That's it?

That means > 100 million potential viewers only costs $10 Million? That's a bargain.
post #39 of 49
$10 million for an iAd ?

*sigh*

There goes my hope to buy an iAd for my homemade lemonade.
post #40 of 49
Quote:
Originally Posted by JeffDM View Post

Ads aren't totally exclusive to free apps, but most paid apps don't seem to have ads in them.

I think a valid point is that you generally can chose a different app if you don't like how one behaves. In a competitive app market, there's plenty of room for differentiation and market segmentation. Those that don't want to pay for apps can get the the ad-using "lite" version, the paid app generally does away with ads and includes more features.

I don't particularly have any feelings about whether an ad appears in my app. I don't think I've ever deliberately clicked on one, ever.

The point I was trying to make is iAds is promoting a more immersive/qualitative experience. It would seem to me that it's not such a large leap to see the Ad itself as becoming 'the content' in certain contexts. Yes, I appreciate that one would have to click on a banner to invoke the advertising content but I wonder how far the day is away where the game/app is essentially the advertising content itself.

I can see advertisers getting poor value for their investment. They will be treading a fine line between providing product information and the ad itself being sufficient content for entertainment purposes. At the suggested $2 click thru, if your ad goes viral it could be a very expensive proposition.
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