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

Posted:
in iPhone edited January 2014
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.

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Comments

  • Reply 1 of 48
    MacProMacPro Posts: 17,586member
    Oh, ok, I may wait a while to sign for an ad buy then
  • Reply 2 of 48
    al_bundyal_bundy Posts: 1,525member
    figures



    Nike shoes are 1% materials/manufacturing and 99% advertising
  • Reply 3 of 48
    tulkastulkas Posts: 3,735member
    $2 per click? That seems sort of....high.



    Is it?
  • Reply 4 of 48
    danielswdanielsw Posts: 905member
    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.
  • Reply 5 of 48
    bushman4bushman4 Posts: 793member
    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.
  • Reply 6 of 48
    jragostajragosta Posts: 10,473member
    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.
  • Reply 7 of 48
    aaarrrggghaaarrrgggh Posts: 1,562member
    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...
  • Reply 8 of 48
    mstonemstone Posts: 11,510member
    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 +.
  • Reply 9 of 48
    ruel24ruel24 Posts: 432member
    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!
  • Reply 10 of 48
    cgc0202cgc0202 Posts: 624member
    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
  • Reply 11 of 48
    rot'napplerot'napple Posts: 1,839member
    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.
  • Reply 12 of 48
    tulkastulkas Posts: 3,735member
    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.
  • Reply 13 of 48
    This is a good pricing!
  • Reply 14 of 48
    elrothelroth Posts: 1,201member
    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.
  • Reply 15 of 48
    sdw2001sdw2001 Posts: 16,899member
    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.
  • Reply 16 of 48
    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.
  • Reply 17 of 48
    cgc0202cgc0202 Posts: 624member
    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
  • Reply 18 of 48
    bkerkaybkerkay Posts: 138member
    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.
  • Reply 19 of 48
    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...
  • Reply 20 of 48
    riderrider Posts: 31member
    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" .
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