Apple's iAd Focus Turns to iTunes Radio With New Real-Time Bidding Exchange

Apple's iAd team will be focusing heavily on monetizing iTunes Radio through advertising sales in the new year, reports Adweek. Apple's SVP of Internet software and services Eddy Cue reportedly told iAd staff that iTunes Radio ads, rather than app ads, are the new top priority.

Indeed, there is a new focus within the company’s advertising unit, and the mantra came direct from Eddy Cue, Apple's head of software. In a staff meeting before the holidays, Cue indicated that iTunes Radio is the top priority, and app ads are not.

"The message that came across was basically if you’re not working on iTunes Radio, you're irrelevant," an Apple insider said.

To facilitate ad sales, Apple also plans to build a real-time bidding exchange to automate sales, selling individual ad impressions one at a time rather than in bulk. With such a system, which emulates a stock exchange, iAds could ultimately become more affordable and more widely available to various advertisers, and it also allows for very specific targeting.

A source familiar with iAds said Apple has kept its real-time initiative under close wraps and is "not casting a wide net." That may be because the company is figuring out how to gradually transition from earlier aggressive sales efforts that had iAd prices starting at $1 million a pop. "It's a rare advertiser that is going to be willing to pay those rates,” said the source.

iTunes Radio became a new focus for the iAd team ahead of the music service's September launch, with iAd engineers and sales personnel working to secure deals with major advertisers to support iTunes Radio.

Prior to iTunes Radio, which represents a huge shift in focus for iAd, the service was designed to help developers earn money on the iOS platform. As a developer tool, iAd was historically unsuccessful in terms of attracting both developer interest and revenue. iTunes Radio is an important new endeavor as it represents a huge money-earning opportunity for the company. Apple is able to keep 90 percent of total revenue from its audio ads, sharing a mere 10 percent with music companies.

Ads on iTunes Radio are enhanced with Apple's targeting tools that deliver both audio and video ads to specific users on iOS devices, PCs and Macs, and the Apple TV. iTunes Radio initially launched with a number of major ad partners already on board, including McDonald's, Nissan, Pepsi, and Procter & Gamble.