Apple Cuts iAd Prices To Attract Brands, Compete With AdMob

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Apple is a company that rarely discounts its products. Not so with iAd, which is once again cutting prices to attract advertisers.

According to AdAge, the new iAd minimum ad spend is being reduced from $500,000 to $100,000. It began at $1 million when the platform launched two years ago.

Apple’s iAd was the product of the acquisition of Quattro Wireless, which Apple bought for roughly $275 million after it failed to acquire AdMob in a bidding war with Google. Google wound up paying $750 million for AdMob in an all-stock transaction.

AdAge also says that the cut developers and publishers will receive from iAds will increase to 70 percent from 60 percent of ad revenue. In addition the company is also eliminating a CPC fee on top of a CPM. It will now simply charge a CPM.

When iAd launched then Apple CEO Steve Jobs said he wanted to bring the emotion and creative range of TV to the nascent mobile ad market. To varying degrees that ambition has succeeded and influenced others, including Google, to develop more dynamic and interactive ad units. There have also be suggestions that some iAd campaigns outperformed TV advertising.

US mobile advertising crossed the $1 billion threshold last year, with Google saying that it had a $2.5 billion global-mobile ad-revenue run rate. This year Google may announce that run rate has increased to $4 billion or more.

Search is the largest portion of the US mobile ad market. The display side is carved up among several companies with Google owning the largest piece, followed by Apple and Millennial Media.

According to eMarketer’s most recent mobile ad forecast, the US mobile ad market will grow to $2.6 billion this year.

Postscript: Apple just announced the new and improved revenue split for developers, which will apparently go into effect on April 1:

The iAd mobile advertising network provides a simple and compelling way to generate additional revenue from your apps. Now we’re making it even better, raising your revenue share to 70 percent. The new revenue share goes into effect automatically on April 1 for all developers in the iAd Network.

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About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.

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