Despite mobile ads generating tons of money, Apple scales back price for iAds

Feb 15, 2012
Tech

Back in 2010, Apple rolled out the iAd Network, a compelling new way of advertising on its mobile devices, the iPhone, iPod Touch and iPad. Mobile advertising was a huge and growing market capable of pulling down billions each year, and Apple was in a position to leverage its devices to create rich interactive advertisements […]

Back in 2010, Apple rolled out the iAd Network, a compelling new way of advertising on its mobile devices, the iPhone, iPod Touch and iPad. Mobile advertising was a huge and growing market capable of pulling down billions each year, and Apple was in a position to leverage its devices to create rich interactive advertisements that could allow companies to reach customers in ways they’d never done before.

But two years on, the iAd hasn’t really worked out the way Apple intended. According to a story from GigaOM, Apple has reportedly scaled back the up-front price for iAd placement in apps on its iOS devices – down to just $100,000. That sounds like a lot, but it’s merely a tenth of what Apple charged in 2010. Back then, the up-front cost of an iAd ran at $1 million.

This isn’t the first time Apple has greatly reduced the cost of running an iAd campaign; it previously cut the price in half from its original $1 million to $500,000. And in addition to cutting the cost of starting an iAd campaign, Apple is increasing the amount of revenue that developers take home that’s generated from iAd campaigns. Previously, that revenue split was 60 percent for developers, now, it’ll go up to 70 percent, as Ad Age Digital reports.

Apple’s cuts in the rates for iAds underscore the struggle the company is having with mobile advertising. Overall, the mobile ad market is exploding; Media Daily News said in 2010 it expected mobile ad revenue to hit $8 billion by 2015. Meanwhile, one analyst from Cowen thinks that mobile advertising revenue brought in by Google could reach as much as $5.8 billion this year. Google opts for a quicker, dirtier approach to mobile advertising, and it seems that Apple’s more involved iAds haven’t been attracting advertisers.

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In cutting the prices of iAds, Ad Age writes, Apple is hoping to draw developers away from the larger reach of Google’s Android platform for the larger revenue cut and more detailed ads Apple can provide. Back in 2010, Forbes expected the iAd concept to have a big impact on Apple’s share price. Two years later, Apple certainly isn’t hurting for money with its record-breaking 2011, but it seems there’s more work to be done before the iAd program lives up to the vision that brought it to life.

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Phil Hornshaw

Phil Hornshaw is a freelance writer, editor and author living in Los Angeles, dividing his time between playing video games, playing video games on his cell phone, and writing about playing video games. He’s also the co-author of So You Created a Wormhole: The Time Traveler’s Guide to Time Travel, which attempts to mix time travel pop culture with some semblance of science, as well as tips on the appropriate means of riding dinosaurs. Check out his profile.

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