Apple Continues to Shave iAd Buy-In Fees Amid Increasing Competition

Bloomberg reports that Apple has continued to reduce the buy-in fee for its iAd mobile advertising service, dropping package prices for mainstream advertisers from the original $1 million commitment down to just $300,000 in some cases.

Apple Inc.'s iAd mobile-advertising business has cut rates by as much as 70 percent as some marquee clients are using rival services, two people with knowledge of the matter said, signaling the company is struggling to parlay its technology leadership into success in the ad industry.

When Apple rolled out iAd a year ago, companies such as Citigroup Inc. and J.C. Penney Co. were being charged $1 million or more to run ad campaigns. Today those brands aren't using iAd, and Apple is offering packages for as little as $300,000, said the people, who asked not to be named because the rates are private.

Just a few months ago, Apple was reported to have cut the buy-in fee down to $500,000, but even that level has apparently not been enough to keep existing advertisers on board and bring on new ones to meet the ever-growing number of ad slots available. The new $300,000 rate is said to be being offered to companies willing to package together multiple campaigns for iAd.

iad engaged audience
For its part, Apple touts the over 100 campaigns already pushed through on iAd and notes that 20 companies have used the service over the past month with another 50 set to debut in the coming months. But still, app developers are only reporting fill rates in the range of 5-15%, limiting the potential income available through the iAd program.

According to the Bloomberg report, advertisers are turning to Google's AdMob, Millennial Media, and Greystripe as cross-platform advertising services competing against the iOS-only iAd. With the growing strength of Android, high buy-in fees for iAd, and developer dissatisfaction with iAd's performance, advertisers are increasingly interested in addressing multiple platforms, a key feature not available with iAd.

Apple is not standing still, having recently hired a prominent former advertising agency executive to help draw in brands to the iAd program and last December debuted its iAd Producer software to make it easy for advertisers to design their ads. But it remains to see whether these moves along with iAd's Apple prestige and sleek appearance can overcome the limitations inherent in the program.

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Top Rated Comments

Popeye206 Avatar
169 months ago
I'm still wondering why anyone cares about iAd. The premise of making an intrusive ad "cool" is something only the Kool-Aid drinkers buy into.

Not sure what you mean by the Kool-Aid???

Advertising is not a bad thing - annoying at times, but not bad. It subsidizes our content. I don't want ads in Apps I pay for, but it's not a bad way for free Apps to make some money for their efforts. Everyone needs to get paid somehow or we won't have any Apps.

Look at Google.... their whole system is based on Advertising revenue. There's a lot of money to be made out there for everyone if they can get this figured out to what makes sense.
Score: 4 Votes (Like | Disagree)
TimUSCA Avatar
169 months ago
I'm still wondering why anyone cares about iAd. The premise of making an intrusive ad "cool" is something only the Kool-Aid drinkers buy into.

As a marketing professional, I can tell you that more than just Kool-Aid drinkers enjoy well-designed ads.

Here's the deal... as a consumer, we're all forced to see ads anyway. So advertisers want their ads to stick out more than the competition. The only way to do that is to make exceptional ads that keep the user engaged and entertained. Otherwise, the user just ignores the ad like anything else that gets in the way. And the beauty of iAds is that they're just as unobtrusive as any other mobile ad - it's only more engaging when the user taps on the bar.

I'm not the typical user since I'm in advertising and marketing... I click iAds just to see them because I appreciate what they're trying to do. But I think plenty of "normal" users (read: non-koolaid drinkers) do the same because iAds are almost like mini apps that are entertaining. I've found activities, coupons, etc in iAds. Plus, users know that an iAd will not take them away from their app. That's one of the biggest reasons most people don't click on mobile ads.

In any case... I think you're wrong when you say only Kool-Aid drinkers click on iAds. Only Kool-Aid drinkers DO, however, download the iAd showcase app. That just seems weird to me.
Score: 4 Votes (Like | Disagree)
winston1236 Avatar
169 months ago
Is it just me or every time the feed updates with another story, do you hold your breathe and hope it is the Lion release notice?

Maybe there should be no Apple news until this happens.
:apple:
I'm ashamed...but yes :)
Score: 3 Votes (Like | Disagree)
a.gomez Avatar
169 months ago
it would have been hard for Apple to convince any decent ad/design agency that they needed iAd to make a compelling campaign for mobile - fact that it is not cross-platform is just another nail.
Score: 1 Votes (Like | Disagree)
JuicyGoo Avatar
169 months ago
As someone who's actually worked on an iAd, I can say that it left a lot to be desired.

Apple wanted full control of the programming and thus fought us against any creative that strayed beyond their pre-made animation/navigation templates.

The end result was very choppy animation and very slow loading times.

Not sure what the end financial measurables were for the client, but I can see why ad/design agencies are losing interest in creating iAds.
Score: 1 Votes (Like | Disagree)
tljff9 Avatar
169 months ago
iAds have dropped tremendously over the last year. Last year this time I was making $10+ eCPM on iAds and today I am making $2.50. It seems like all I see any more are developer ads and very few actual ad campaigns from large companies. It's a shame because it had so much promise.
Score: 1 Votes (Like | Disagree)