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Apple's iAd business is 'hurting,' fill rates dropping - report

post #1 of 48
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Application developers and advertising industry insiders reportedly claim that after a strong start, Apple's fledgling iAd interactive advertising business for iOS is "hurting" to fill slots and renew contracts.

A number of developers and advertising executives spoke anonymously with TechCrunch for a report that paints a grim picture for Apple's iAd business. Developers indicated that after the new year, the fill rate -- or what percentage of ad inventory is actually filled with an ad -- dropped from 18 percent to 6 percent.

iAds launched in the U.S. in July and got off to an initial strong start. While Apple managed to carve out a significant market share, there were some issues, as some advertisers found Apple's ad creation process too limiting. Two of the initial 17 advertisers who joined iAd opted out of the program and went to alternative networks.

While Apple made a strong initial push to secure those first iAd contracts by selling them directly to CEOs, the relationships were then "dumped into the laps of junior account managers in Apple's advertising business," author Erick Schonfeld wrote. Those employees came from Apple's $275 million acquisition of mobile advertising firm Quattro Wireless in late 2009.

Those account managers are now attempting to secure renewals from advertising partners, but their counterparts at ad agencies and brands are allegedly having a hard time securing $1-million-plus for a mobile advertising campaign with iAds. One anonymous ad executive said iAd people have been "calling a lot more and becoming very aggressive in pushing for renewals."

Other problems with the iAd network are said to be the fact that it isn't cross-platform and do not allow companies to access users on other devices and platforms, as well as the fact that Apple employs a "black box" approach that does not allow advertisers to control what applications their ads appear in.
post #2 of 48
Google is much more successful at apples business then apple in googles. I am not sure why, considering apple has always had good marketing.

Perhaps getting engineering is in a wierd way easier then creating ads people want to pay for or see.
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post #3 of 48
Quote:
Originally Posted by sheff View Post

Google is much more successful at apples business then apple in googles. I am not sure why, considering apple has always had good marketing.

Perhaps getting engineering is in a wierd way easier then creating ads people want to pay for or see.

Yeah selling user data is not apple's usual business
post #4 of 48
January-february is always slow in the ad business in my experience. The media agencies are currently planning their activities and budgets, therefore it's harder to close the deals.

With the impressive effect reports we have heard from the iAd platform I doubt that it'll fail.
post #5 of 48
I always thought the million dollar threshold was going to hurt them. The thing is that there is an iAd dev kit that works pretty well except that the license says that it can only be used to deliver ads through the iAds network. If developers were allowed to leverage the kit but use it inside their own apps, then advertisers could purchase ad space directly from the app publisher just like they do for TV and print media. Apple could instead offer a reporting and tracking service to advertisers and developers for a reduced revenue sharing and just bail on the creative services.

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post #6 of 48
Quote:
Originally Posted by sheff View Post

Google is much more successful at apples business then apple in googles. I am not sure why, considering apple has always had good marketing.

Perhaps getting engineering is in a wierd way easier then creating ads people want to pay for or see.

Unless you care to elaborate. If you are talking about iPhone/Android, then no, because they make nothing directly off of any Android-driven handset. Google is excellent at Google's business, which is search-driven ad revenue. Android and it's army of handsets is a stalking horse for the ad revenue. If another, better means of doing that comes along, Android will be dropped and the new thing will take it's place.

TechCrunch makes several good points about how marketing operates and the hierarchy that drives marketing can negatively impact continuing success when the decisions are being made in the trenches and not by the marketing CEOs. That made the most sense in the article. Perhaps the usual post-holiday downturn impacted a bit too, but I think Apple may not have calculated on entrenched behaviors impacting their approach - and marketing has some highly reinforced behaviors that are hard to disrupt.
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post #7 of 48
Google is good in this space and they have to.

97% of their profit depends on it!
post #8 of 48
Quote:
Originally Posted by johnnielse View Post

... With the impressive effect reports we have heard from the iAd platform I doubt that it'll fail.

Quote:
Originally Posted by mstone View Post

I always thought the million dollar threshold was going to hurt them. The thing is that there is an iAd dev kit that works pretty well except that the license says that it can only be used to deliver ads through the iAds network. If developers were allowed to leverage the kit but use it inside their own apps, then advertisers could purchase ad space directly from the app publisher just like they do for TV and print media. Apple could instead offer a reporting and tracking service to advertisers and developers for a reduced revenue sharing and just bail on the creative services.

I think that without managing the production values, iAd ads would quickly turn into the cess pool that other online and mobile ads have become. The creative services are what make the ads as effective as studies seem to suggest, so without that, the API is pretty worthless. Some advertisers may be balking at the price tag but that's just because they are used to wasting smaller amounts of money on crappy online and mobile ads. (Kind of like users who expect everything for free on the web and get a lot of junk, advertisers expect their junk to be placed for nearly free.) Once it becomes clear that you get what you pay for out of ads, I don't think there will be any problems selling them.
post #9 of 48
Quote:
Originally Posted by anonymouse View Post

I think that without managing the production values, iAd ads would quickly turn into the cess pool that other online and mobile ads have become.

The thing about iAds is that the banner is understated and the user has to click to view the full ad. Whatever content is in the ad is displayed by user choice. If the advertiser wants to have a less expensive campaign then why not allow them to? The cesspool factor is already dealt with in the iAd kit which would display only a static banner, not an in your face animation.

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post #10 of 48
I wonder how advertising execs would have access to this information. Apple is unlikely to tell them what percentage of available inventory is filled.

Yet, ad execs benefit if they can create a sense of panic and force Apple to lower its prices.

I call BS.
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post #11 of 48
anecdotal I know...but I never even look at those ads on my iPhone and I certainly never click on them....except once....by accident!

If I get a free app that has them, I usually upgrade and pay for the app if I like it. But most often I delete the app.

I never click on the ads on websites I view when working on my iMac either!

Best
post #12 of 48
Honestly, I wish authors would just dump the free and $1 app + advertising model. If apps were $10+ then app authors would have more incentive to make higher quality apps. I would rather pay more and have less apps but of higher quality, then the orgy of free but half-assed apps we see on the store right now.
post #13 of 48
Quote:
Originally Posted by enjourni View Post

Honestly, I wish authors would just dump the free and $1 app + advertising model. If apps were $10+ then app authors would have more incentive to make higher quality apps. I would rather pay more and have less apps but of higher quality, then the orgy of free but half-assed apps we see on the store right now.

I agree, but it seems that a $1 app can sell 20 times as many copies as a $10 app - not just 10 times as many.
post #14 of 48
In my experience iAds provides developers with more revenue for less ads than other networks. I'd rather have a low fill-rate (less ads) and more revenue (iAds) than a high fill-rate (lots of ads) and less revenue - (Admob).

I'd still like to see an improvement in the fill-rate but so far since new year my apps have resulted in a 14% fill-rate (it's currently rising week on week). And the revenue for the past 6 weeks has been equivalent to a year with Admob (based upon number of ads shown in the same app / same users).
post #15 of 48
Quote:
Originally Posted by mstone View Post

The thing about iAds is that the banner is understated and the user has to click to view the full ad. Whatever content is in the ad is displayed by user choice. If the advertiser wants to have a less expensive campaign then why not allow them to? The cesspool factor is already dealt with in the iAd kit which would display only a static banner, not an in your face animation.

Well, that's true of pretty much all mobile ads that use banners, so it's not really unique to iAds. Those "in your face" ads that take over the screen are indeed part of the cess pool, but I don't think anyone is making money off them except the ad networks. (I delete any app that uses those ads.) A lot of advertisers are currently wasting a lot of money in online and mobile advertising, but, if they choose to do so, there are plenty of other ad networks where they can throw their money away.
post #16 of 48
Something will have to give.
Apple is in a new Frontier.
Things have not been done this way yet. I am sure the ads being done are better than what was done prior. But Apple does not have enough eyeballs seeing them yet.

That will also be the case for the papers and magazines coming onboard.
Either Apple will have to sacrifice a little and let these people see some better money, or all the other Googles of the world will undercut them.

Apple is making enough money anyways.
That 70-30 split will not work well for everything. At least until the new Frontier becomes a little older.
post #17 of 48
Quote:
Originally Posted by sheff View Post

Google is much more successful at apples business then apple in googles. I am not sure why, considering apple has always had good marketing.

Perhaps getting engineering is in a wierd way easier then creating ads people want to pay for or see.

Not every company wants to have an interactive ad. Most just want to have a image that links to their site.

I am sure they will adapt. Not that big of a deal if you ask me.
post #18 of 48
Running an advertising business and managing real "creative people" capable of creating ingenious, memorable ads is very difficult and not something a company like Apple can simply dabble in. Apple is used to being "the client" and getting their way. Not so when you are an agency.

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post #19 of 48
Quote:
Originally Posted by enjourni View Post

Honestly, I wish authors would just dump the free and $1 app + advertising model. If apps were $10+ then app authors would have more incentive to make higher quality apps. I would rather pay more and have less apps but of higher quality, then the orgy of free but half-assed apps we see on the store right now.

Two problems with that-- one is the marketing side of the app-- impulse purchase for the masses vs a thought-through decision. It appears that Free to $1 is the range that pushes the most "sales."

You need support for different models. Highly specialized apps can charge more than something everybody needs. (How much is a weather app worth to you, compared to the task of going to a website?)

I just hate ad-supported apps. It is a waste of real-estate, and they just never seem to offer anything of value. Statistically 2% of the views are meaningful to anybody, so for the other 98%+, there is no benefit.

Maybe you should just have a "gullible" checkbox when you sign up for iTunes...
post #20 of 48
Quote:
Originally Posted by aaarrrgggh View Post

Two problems with that-- one is the marketing side of the app-- impulse purchase for the masses vs a thought-through decision. It appears that Free to $1 is the range that pushes the most "sales."

You need support for different models. Highly specialized apps can charge more than something everybody needs. (How much is a weather app worth to you, compared to the task of going to a website?)

I just hate ad-supported apps. It is a waste of real-estate, and they just never seem to offer anything of value. Statistically 2% of the views are meaningful to anybody, so for the other 98%+, there is no benefit.

Maybe you should just have a "gullible" checkbox when you sign up for iTunes...

If I recall (I may be mistaken) a 2% successful sales rate is better than the old direct mail campaigns, which I remember as being only in the 1% range. If so, then it makes sense to continue, even if 2% is your return.

In Google Adwords, even 1-2% is considered successful as far as Google is concerned, and will justify the ad cost. I know, because I use Adwords in our practice, and anything over 2-3% is rewarded by Google with lower costs (better "quality score").
post #21 of 48
Quote:
Originally Posted by jragosta View Post

I wonder how advertising execs would have access to this information. Apple is unlikely to tell them what percentage of available inventory is filled.

Yet, ad execs benefit if they can create a sense of panic and force Apple to lower its prices.

I call BS.

LOLOL. I can tell you from a developer's perspective that the fill rate did fall since Christmas. By an order of magnitude. And any revenue from iAds for most developers using iAd is probably around 1/10th to 1/8th of what it was.

I don't know if anyone knows what the real story is but whatever the story is, iAd is currently a flop with real ads (the ones that generate over 20 cents on click through) being served in only 1 country, App Store dev ads (the ones that generate absolute garbage on click through) being served to about 3 countries.

Before Christmas, the US had a half decent fill rate. Now the fill rate and eCPM has reached rock bottom.
post #22 of 48
Quote:
Originally Posted by anonymouse View Post

Well, that's true of pretty much all mobile ads that use banners, so it's not really unique to iAds. Those "in your face" ads that take over the screen are indeed part of the cess pool, but I don't think anyone is making money off them except the ad networks. (I delete any app that uses those ads.) A lot of advertisers are currently wasting a lot of money in online and mobile advertising, but, if they choose to do so, there are plenty of other ad networks where they can throw their money away.

Well I for one would like to advertise using iAds quality with the iAds kit code, however, I don't have a million dollars, and I would like to use our own creative services to build the ads since it is a lot easier than teaching some agency guys in NYC everything about our products. Our niche it is really technical and our people are already up to speed and have all the collateral material at their finger tips. Furthermore, and for the same reason, I don't think any algorithm is going to accurately find our target market since it is so specialized. The cost of iAds is probably one of the issues, among others, that the Daily analyzed before choosing not to use iAds.

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post #23 of 48
There are some businesses -- e.g., search -- that Apple simply should not bother to be competing in. Ads is another. There are others who do it better.

There is no need to be everything to everyone. Apple should just focus on what it is absolutely the best at, which is beautifully designed, consumer-firendly, computing hardware tightly integrated with unbeatable software. Apple should not be spreading itself thin. Leave that to Google and Microsoft.
post #24 of 48
Quote:
Originally Posted by SpamSandwich View Post

Running an advertising business and managing real "creative people" capable of creating ingenious, memorable ads is very difficult and not something a company like Apple can simply dabble in. Apple is used to being "the client" and getting their way. Not so when you are an agency.

But being creative and having a memorable ad --- doesn't mean that it is going to increase sales, which is the purpose for advertising.

Apple's memorable, and critically acclaimed "1984" ad --- was a sales DUD, which led to Steve Jobs' ouster. Wendy's critically acclaimed 'Where's the beef?" ad was also a sales DUD --- which led to massive restructuring (and closing thousands of stores). What worked for Wendy's --- silly Dave Thomas ads.
post #25 of 48
This is one area where Apple's closed off strategy doesn't work. Creative people don't like being told by someone else "this is how it's going to be".
post #26 of 48
Quote:
Originally Posted by mstone View Post

I always thought the million dollar threshold was going to hurt them. The thing is that there is an iAd dev kit that works pretty well except that the license says that it can only be used to deliver ads through the iAds network. If developers were allowed to leverage the kit but use it inside their own apps, then advertisers could purchase ad space directly from the app publisher just like they do for TV and print media. Apple could instead offer a reporting and tracking service to advertisers and developers for a reduced revenue sharing and just bail on the creative services.

The cost is definitely an issue, However, the bigger issues to me are the clumsy ad creation process and the breadth of ad placement venues.

Apple need to provide tools so that creatives can fully build their own iAds without Apple intervening. If Apple wants to stamp a seal of approval on an ad, okay, although I don't think Apple should be deciding how companies promote and advertise themselves.

The second issue is that iAds simply do not appear in enough places - ubiquity is important for a successful ad network.
post #27 of 48
Quote:
Originally Posted by fecklesstechguy View Post

Unless you care to elaborate. If you are talking about iPhone/Android, then no, because they make nothing directly off of any Android-driven handset. Google is excellent at Google's business, which is search-driven ad revenue. Android and it's army of handsets is a stalking horse for the ad revenue. If another, better means of doing that comes along, Android will be dropped and the new thing will take it's place.

But (last I knew) Verizon - the biggest Android seller to date - installed Bing as the default search engine on their Android phones. So no revenue on searches there. And no difference for Google if an ad-words ad on a site is viewed on any particular device, PC, mobile or otherwise. So Android has to have a monetization model to be worth Google's time.

What am I missing here?

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post #28 of 48
Quote:
Originally Posted by penchanted View Post

The cost is definitely an issue, However, the bigger issues to me are the clumsy ad creation process and the breadth of ad placement venues.

Apple need to provide tools so that creatives can fully build their own iAds without Apple intervening. If Apple wants to stamp a seal of approval on an ad, okay, although I don't think Apple should be deciding how companies promote and advertise themselves.

The second issue is that iAds simply do not appear in enough places - ubiquity is important for a successful ad network.

There is an iAd development kit. You can code and design the whole thing yourself and upload it to iAd network. What happens after that, I'm not sure.

It looks like Apple is taking baby steps as they often do. Eventually for the iAd concept to really pay off, they need to be on the web. There are billions of web pages serving ads versus only thousands of iPhone apps. Plus it is way easier to target ads on the web. In our case if people search for our little niche keywords we will want to be on that page. Google lets you fine tune where and when your ad will show up which lets you budget your costs and monitor your results on a day to day basis.

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post #29 of 48
Quote:
Originally Posted by aaarrrgggh View Post

Maybe you should just have a "gullible" checkbox when you sign up for iTunes...

Hey, you don't need one: you bought the iPhone already.

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post #30 of 48
Quote:
Originally Posted by fecklesstechguy View Post

Unless you care to elaborate. If you are talking about iPhone/Android, then no, because they make nothing directly off of any Android-driven handset. Google is excellent at Google's business, which is search-driven ad revenue. Android and it's army of handsets is a stalking horse for the ad revenue. If another, better means of doing that comes along, Android will be dropped and the new thing will take it's place.
.

This is why I get so bent out of shape when I see numbers claiming that Google/Android is surpassing Apple sales.
Google is not competing against Apple. (For eyeballs, maybe, but not for phone sales.)
HTC is competing against Apple. Motorola is competing against apple. Go on down the list.
And in each case, Apple is kicking ass and taking names.
Additionally, HTC is competing against Motorola, and both are competing with LG.
Somehow the pundits want everyone to believe that the Android licensers are all huggy bear with each other as they compete together against Apple.
The real blood bath is between the various Android makers, not between them/Google and Apple.
post #31 of 48
This is realy bad news. iAD could be so much more. At least we could have an ad with a taste for a change.
I know it's in trouble when even The Daily which Apple helped created didn't use iAD. The key is it need to be cross platform and a millon dollar threshold need to be reduced.
post #32 of 48
I was talking about making a solid OS and app marketplace. Sure they are not making money off the OS, but it is the second and by some recent accounts most widely used smartphone OS here in the states. In addtion it is, in my view, the second most advanced mobile OS and very close to iOS. Sure they don't make hardware, but they are doing very well in the mobile OS business.

If you look at apple, iAd, its not all ads, just ads within apps. So I guess apple is not fully in the ad business, and is not in the business for any type of considerable revenue. WHich means both companies are entering arenas of the others in a limited way to ensure relevancy and diversity, but google has been doing this much more successfully then apple so far. When I get Ads inside apps I would say 80-20 split right now between Google and iAds.

Quote:
Originally Posted by fecklesstechguy View Post

Unless you care to elaborate. If you are talking about iPhone/Android, then no, because they make nothing directly off of any Android-driven handset. Google is excellent at Google's business, which is search-driven ad revenue. Android and it's army of handsets is a stalking horse for the ad revenue. If another, better means of doing that comes along, Android will be dropped and the new thing will take it's place.

TechCrunch makes several good points about how marketing operates and the hierarchy that drives marketing can negatively impact continuing success when the decisions are being made in the trenches and not by the marketing CEOs. That made the most sense in the article. Perhaps the usual post-holiday downturn impacted a bit too, but I think Apple may not have calculated on entrenched behaviors impacting their approach - and marketing has some highly reinforced behaviors that are hard to disrupt.
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post #33 of 48
Been saying it for 5 months now. Been laughed at and ridiculed for it too.
iAd will be dropped or completely revamped this year.

Market blowback is a bitch - and iAd is just the beginning.
Apple got too greedy too fast - and will pay the price.

Doesn't matter that it's superior technology or a superior user experience... pimping out a jail cell is still a jail cell.

History is repeating.

sell sell sell
post #34 of 48
Quote:
Originally Posted by rain View Post

Been saying it for 5 months now. Been laughed at and ridiculed for it too.
iAd will be dropped or completely revamped this year.

Market blowback is a bitch - and iAd is just the beginning.
Apple got too greedy too fast - and will pay the price.

Doesn't matter that it's superior technology or a superior user experience... pimping out a jail cell is still a jail cell.

History is repeating.

sell sell sell

Just another of your inane rants.

Apple will make adjustments - likely bringing iAds to the web.

But please do encourage people to sell, I want to buy a largish block of AAPL at a great price.
post #35 of 48
I've run a webcomic for five years with a mid-sized audience I get about 600,000+ pageviews per month these days.

January and February are ALWAYS dismal, after a gangbusters December. Every single cartoonist or blogger I know has the same experience. Online ad budgets just work that way. Certainly part of it is that there's less to promote in January (no major movies come out in January and February, for instance; most companies will release their new gadget before Christmas; etc.)

Surely the editors of AppleInsider know this better than I do.
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post #36 of 48
Quote:
Originally Posted by mstone View Post

The thing about iAds is that the banner is understated and the user has to click to view the full ad. Whatever content is in the ad is displayed by user choice. If the advertiser wants to have a less expensive campaign then why not allow them to? The cesspool factor is already dealt with in the iAd kit which would display only a static banner, not an in your face animation.

Part of the reason for the cost is that Apple has developers working on the ads from their end also, so they need the campaign to be big enough to recoup their costs. Additionally they at least were short on staff for iAd, so they needed to concentrate on more lucrative campaigns. They could probably cut the up front commitment in half, but I don't see them going any lower than that.
post #37 of 48
Quote:
Originally Posted by anonymouse View Post

The creative services are what make the ads as effective as studies seem to suggest, so without that, the API is pretty worthless.

I'd like to see those studies, because I think you're basically talking out of their ass. Maybe when it comes to the Superbowl it makes sense, but certainly not in the online world.

In the online world, relevance is what makes ads effective. Google are good at this. Apple are awful at this and haven't concentrated on this angle at all. This idea was doomed from the start.
post #38 of 48
Quote:
Originally Posted by anantksundaram View Post

There are some businesses -- e.g., search -- that Apple simply should not bother to be competing in. Ads is another. There are others who do it better.

There is no need to be everything to everyone. Apple should just focus on what it is absolutely the best at, which is beautifully designed, consumer-firendly, computing hardware tightly integrated with unbeatable software. Apple should not be spreading itself thin. Leave that to Google and Microsoft.

I disagree with you this time.

iAd is potentially huge. The concept is sound but the execution looks poor. Apple need to do something they're not used to doing: talk to your customers, the ad agencies, and find out what needs to change to make it a success.
post #39 of 48
Quote:
Originally Posted by Krentist View Post

I don't know if anyone knows what the real story is but whatever the story is, iAd is currently a flop with real ads (the ones that generate over 20 cents on click through) being served in only 1 country, App Store dev ads (the ones that generate absolute garbage on click through) being served to about 3 countries.

This is not true. I've recently seen a few different real/full iAds in more than one country including the UK.
post #40 of 48
Quote:
Originally Posted by christopher126 View Post

anecdotal I know...but I never even look at those ads on my iPhone and I certainly never click on them....except once....by accident!

If I get a free app that has them, I usually upgrade and pay for the app if I like it. But most often I delete the app.

I never click on the ads on websites I view when working on my iMac either!

Best

I'll go one better - I don't ever see iAds.

http://www.gadgetsdna.com/how-to-dis...d-killer/4547/

It's much nicer that way. And if you haven't jailbroken yet, here's a good reason to go ahead and do it.

And yes, I hope Apple's ad business fails. Apple users should be Apple's customers, not Apple's product - and that's exactly what Apple being in the ad business does to us - turns us into a product.
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