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

Posted:
in iPhone edited January 2014
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.
«13

Comments

  • Reply 1 of 47
    sheffsheff Posts: 1,407member
    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.
  • Reply 2 of 47
    sambansamban Posts: 171member
    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
  • Reply 3 of 47
    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.
  • Reply 4 of 47
    mstonemstone Posts: 11,510member
    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.
  • Reply 5 of 47
    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.
  • Reply 6 of 47
    msanttimsantti Posts: 1,377member
    Google is good in this space and they have to.



    97% of their profit depends on it!
  • Reply 7 of 47
    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.
  • Reply 8 of 47
    mstonemstone Posts: 11,510member
    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.
  • Reply 9 of 47
    jragostajragosta Posts: 10,473member
    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.
  • Reply 10 of 47
    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
  • Reply 11 of 47
    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.
  • Reply 12 of 47
    gustavgustav Posts: 826member
    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.
  • Reply 13 of 47
    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).
  • Reply 14 of 47
    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.
  • Reply 15 of 47
    juandljuandl Posts: 230member
    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.
  • Reply 16 of 47
    ihxoihxo Posts: 563member
    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.
  • Reply 17 of 47
    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.
  • Reply 18 of 47
    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...
  • Reply 19 of 47
    bagmanbagman Posts: 349member
    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").
  • Reply 20 of 47
    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.
Sign In or Register to comment.