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Apple slashing iAd prices as advertisers pull out

updated 01:55 pm EDT, Thu July 7, 2011

iAd placements rates said to be cut by 70%

Apple is reportedly slashing prices for iAd campaigns, as many advertisers are said to be departing from the platform. Unnamed sources have told Bloomberg the company is cutting its rates by as much as 70 percent in an effort to woo wary advertisers, many of which are said to be gravitating toward alternative platforms offered by companies such as Google.

Early partners in the iAd program were reportedly paying $1 million or more to secure contracts on Apple's platform, however many of the first companies to sign up have since left. The sources suggest companies can now enroll in the program for prices starting around $300,000 for multiple campaigns, with a minimum purchase of $500,000.

The high cost of entry is blamed as one of the reasons advertisers are looking elsewhere. Companies are also said to be focusing on platforms that reach a wider range of mobile platforms, rather than limiting ad campaigns to iOS devices.

Aside from the cost and limited reach, early reports suggested some advertisers were turned off by Apple's tight controls over advertising content. Advertisers complained that Apple slowed down the process by maintaining involvement in the entire development process.

Despite the criticism and defecting advertisers, Apple's new pricing strategy may be working to bring in new partners. The company is reportedly preparing to add approximately 50 new campaigns through the next several months.




by MacNN Staff

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Comments

  1. pairof9s

    Joined: Dec 1969

    -2

    Why would they "move"?

    When evidence shows the greater purchasing power of iOS owners in comparison, why speculate that these companies are moving to a market that shows lower potential?

    What good is it to spend $200,000 less if you sell $500,000 less?

    /

  1. AlenShapiro

    Joined: Dec 1969

    +1

    The Art of War - er - Business

    Apple makes money on hardware sales with proprietary software. Google comes along and produces software, which it gives away, to entice hardware manufacturers to compete on their behalf in the mobile space. This undermines Apple's business model by reducing Apple's unit sales. Google's motivation: Ad impressions on their free software base.

    Google makes money on advertising revenue. Apple comes along and initially tries to compete in that same space but has (hopefully) figured out that they can reduce Google's income if advertising dollars are diverted to Apple's ad platform. Hopefully they'll go a step further and introduce a special tier of iAd pricing that is contigent on exclusively advertising on iOS.

    Might reduce Apple's income a little, but that is not the strength that Apple relies on. It could undermine Google's mobile business model quite a bit though which is one of Google's cornerstones.


  1. testudo

    Joined: Dec 1969

    +3

    Re: Why would they "move"?

    When evidence shows the greater purchasing power of iOS owners in comparison, why speculate that these companies are moving to a market that shows lower potential?

    Um, because they are advertisers and know what they're talking about, which, apparently, you do not.

    They are NOT leaving iOS. There are many advertising choices on iOS devices besides iAd. AdMob, owned by Google, for one.

    What they are doing, in theory, is leaving the expensive land of iAd for a more open advertising model. iAd is acting not just as an ad delivery system, but as an ad agency. Using iAd is like programming for iOS: You give total control to Apple on your ad: how it looks, how it interacts, etc. Thus they are limited from what they WANT to do to what Apple will LET them do.

    What good is it to spend $200,000 less if you sell $500,000 less?

    This is going on the assumption that these companies are even making money from this advertising. Here's another question. What good is it to spend $500,000 if you only sell $200,000?

  1. testudo

    Joined: Dec 1969

    -1

    Re: The Art of War - er - Business

    Google comes along and produces software, which it gives away, to entice hardware manufacturers to compete on their behalf in the mobile space.

    Wrong. Android is free, but not with Google apps. That version of Android needs to be licensed, which means money.

    This undermines Apple's business model by reducing Apple's unit sales.

    How does this undermine Apple's business model? If Google charged (more) for the OS, would that be better? Or is the undermining just from having a competitor?

    Google makes money on advertising revenue. Apple comes along and initially tries to compete in that same space but has (hopefully) figured out that they can reduce Google's income if advertising dollars are diverted to Apple's ad platform.

    More nonsensical writing. Why did they get into the ad market, if not to (a) make big bucks, and (b) hurt the competition? You think it took someone a year to go "Hey, if we get people to come to our ad network, google will make less money!"? Insane.

    Hopefully they'll go a step further and introduce a special tier of iAd pricing that is contigent on exclusively advertising on iOS.

    More insanity. No one is going to exclusively advertise on iOS. Unless they were selling iPod/iPad accessories, that is. So, Nissan can save a few dollars if they only put ads on iOS, but not on TV, magazines, newspapers, internet, etc? Yeah, that will happen.

    Might reduce Apple's income a little, but that is not the strength that Apple relies on. It could undermine Google's mobile business model quite a bit though which is one of Google's cornerstones.

    It will have little effect on google's business. Why? Because Apple's business is centered all around Apple. The problem with that is advertisers are companies with products. And they tend to be people who want to sell to anyone. As such, they tend to advertise in multiple areas. Companies are probably looking at this and going "So, I could get an iAd ad, but that's only going to serve me to half the market. But if I go to adMob, I can serve 100% of the market. What should I do?"

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