Apple adapting iAds to retain advertising clients

in General Discussion edited January 2014
Apple has made several adjustments to its iAd mobile advertising platform in order to spur renewed interest in the service, according to a new report.

People familiar with the matter told The Wall Street Journal that Apple has reduced the minimum commitment for iAd to $400,000.

In February, it was reported that Apple had lowered its minimum from the original $1 million amount to $500,000. Bloomberg claimed in July that Apple was offering clients iAd packages for as little as $300,000 if they brought multiple campaigns.

The Cupertino, Calif., company has also reportedly introduced more flexibility to its pricing scheme. Advertisers now pay $10 per thousand views and $2 per tap.

"Instead of charging marketers every time a user taps on an ad?a policy which often led to ad budgets quickly being exhausted?Apple is willing to put a cap on what it charges for the taps, according to the person," the report noted.

Apple has put together a training program in conjunction with media buying agency OMD to educate clients about mobile marketing. The report claimed 30 senior marketing executives, including representatives from Pepsi, Clorox and J.C. Penney, have visited Apple's headquarters in recent weeks to participate in a tour and information sessions with designers and product teams. OMD is reportedly planning another trip to Cupertino in February, the source said.

As a relatively new entrant to the advertising industry, Apple has faced a learning curve with iAd. "They are still learning the advertising world," said Shiv Singh, head of digital at Pepsi.

The company is also facing pressure from Google's rival AdMob service, which tends to have more flexibility in its pricing, according to ad executives. Apple actually attempted to buy AdMob before Google "snatched" it away, according to late co-founder Steve Jobs.

Though Apple made waves when it introduced iAd last year, interest in the service has dropped off in 2011. Market research firm IDC noted Apple as having shared the No. 1 in the mobile display ad market with Google last year, but the company is now in third, behind Google and Millenial Media, with a 15 percent share of the $630 million market.

iAd is unlikely to become a significant revenue generator for Apple anytime soon, but the company views it as a vital part of the iOS app-based ecosystem. The growing rivalry between Google and Apple, mostly over Google's Android mobile OS, appears to have prompted Apple to decrease its reliance on Google's products.

The response to iAd has been mixed. For instance, Unilever, an initial iAd launch partner that has run 13 campaigns, is pleased with the 68-second average viewing time of its iAds and has decided to renew its iAd contract for next year.

"We got in there early and we're both learning together. They learn from us and we've learned from them," said Unilever Chief Marketing Officer Keith Weed.

But, some app developers haven't seen iAds work for them. App Cubby founder David Barnard said iAd is only filling about 13 percent of his apps' requests.

Last year, reports emerged that some iAd clients had backed out of the program because Apple had exerted too much control. Ad executives allegedly said Jobs had been "too much of a control freak."

At the service's unveiling last April, Jobs attempted to position iAds as a new interactive and emotional form of mobile advertising that was more like television commercials than existing mobile search ads.

A number of industry watchers view the iAd initiative as a failure for the company. "Apple said, 'Let's try to disrupt the advertising business.' On this one, they didn't succeed," Alexandre Mars, head of mobile for Publicis Groupe SA, told the Journal. "They know that they need to adapt themselves now if they want to survive - even if it is Apple."

IDC analyst Karsten Weide sees cross-platform competitors as a more appealing alternative for marketers. "Apple we believe will, over time, fade into the background," he said. "It was attempted to make sure that even consumers advertising experience on Apple devices was perfect, but it hasn't really worked."

In spite of early pronouncements of iAd's death, Apple has continued on with the product. Last month, the company issued a 2.0 version of its iAd producer software, adding new animation tools, page objects and code-editing improvements.
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