News that Apple is seeking commitments of at least $1 million for ad campaigns on the iPhone and iPod touch through its new iAd platform had the mobile ad community buzzing Thursday. That's because to date only a handful of brands are budgeting that much for mobile advertising of any kind.
And the $10 million each Apple reportedly wants from a smaller group of launch advertisers is simply unheard of in mobile, where annual spending is still generally less than $250,000. Obviously, the company is betting that top marketers are willing to pay a premium for the cachet of being associated with the Apple brand and the potential of the iAd format to redefine mobile advertising (at least within applications).
"It's got a Super Bowl feel to me, at least for the marketers that would be part of the initial launch," said Jeff Hasen, CMO at mobile marketing firm HipCricket. He added that 2010 is the first year many companies are adding mobile as a separate line item on ad budgets, with global brands like Coca-Cola and Nike earmarking $1 million for the category.
A survey released by mobile ad network Millennial Media last November found that one-third of ad agencies expect to spend between $100,000 and $250,000 on mobile advertising in 2010, up 22% from a year ago, and 15% plan to devote more than $1 million to mobile efforts.
They'd certainly have to spend more than $1 million if they want to advertise through iAd and other platforms as well. But will they? "It really depends on the brands and their media budgets," said Phuc Truong, managing director at Mobext, the mobile marketing arm of Havas Digital. "Some brands want to be a part of anything Apple launches because there's going to be a lot of PR value associated with it."
Indeed, Nike got a good bit of promotional mileage for having one of the demo ads highlighted by Apple CEO Steve Jobs during the iAd presentation as part of the iPhone 4.0 unveiling on April 8. Truong added that the range of interactive and e-commerce features packaged in the new iAd ad unit could prove compelling to marketers.
"It's like having an app within an app," he said, pointing to new wrinkles like being able to click within an iAd unit to download a song or other piece of content without having to be taken to the iTunes store. Based on the pitch Apple made to Mobext, among other agencies it's courting for iAd, Truong said he was also impressed with the potential for users to buy products directly through video elements embedded in the iAd.
The format's capabilities could be even more enticing to marketers when it's rolled out for the iPad later this year. But for most brands, the $1 million price tag may be too much to ask to run on a single type of phone, even if it is the iPhone.
For $1 million or $10 million, HipCricket's Hasen was quick to note marketers could run wider, integrated campaigns starting with SMS text messages and going all the way up to rich-media ads on the iPhone, BlackBerry and Android devices, among others. "I would have a hard time telling anyone to spend $10 million to reach the 5% handset share the iPhone has in the U.S.," he said.
Overall, 85 million iPhones and iPod touches have been sold to date worldwide, and Apple estimates users spend 30 minutes a day using applications. So, it's still a large audience made up mostly of the types of affluent consumers marketers like to reach. Whether it's worth as much Apple says is the $1 million (or $10 million) question.