updated 09:20 pm EST, Tue February 14, 2012
Share of mobile ad revenue slips to 15 percent
In a sign that softening mobile ad budgets and strong competition from Google and other ad agencies has hurt its high-end intentions, Apple's iAd program has cut the minimum amount it charges advertisers to run a campaign on iAd from its original price of $1 million to just $100,000, and is increasing the percentage of ad revenues developers will receive to 70 percent from the previous 60 percent. The company is also making other competitive adjustments.
This is the third time Apple has cut the threshold budget for an iAd campaign. Though initially highly successful in attracting high-budget marketers, the company's share of the US mobile ad market has dropped from 19 percent in 2010 (making it the second largest single mobile ad agency) to 15 percent in 2011, falling behind Millennial Media at 17 percent. Google took 24 percent of US mobile ad revenue in 2011, up from 19 percent the year before.
By lowering the minimum campaign amount, the company hopes to attract a wider range of clients as well as a bigger audience. The iAd service is only available on Apple's iOS devices, so it has a natural disadvantage compared to Google or others who place ads on both iOS and Android units as well as other platforms.
Two other changes coming to the iAd program since the departure of former head Andy Miller include increasing the amount app developers get from ad revenues to 70 percent, and a new method of charging advertisers. Previously, Apple charged both a fixed rate per 1,000 impressions and an additional fee for click-throughs. Now the company will only charge the per-1K-impressions rate.
The combination of changes plus the remarkable success rate of both iOS sales and the higher click-through and engagement rate of iAd users compared to Android users should help Apple regain lost footing in the mobile ad market. Former Adobe executive Todd Teresi is now running the iAd program.