Promising to transform mobile advertising, Apple last year convinced scores of big brands to commit $1 million each to launch campaigns on its new iAd platform.
According to an All Things D report today, Apple is now cutting the minimum iAd buy in half to $500,000 to help broaden its appeal to smaller agencies and brands. The report contains no confirmation from Apple but cites WPP Digital CEO Mark Read as the source on the halving iAd fees.
Apple didn't respond to a media inquiry sent today to confirm the All Things D report. But assuming it's accurate, dropping the minimum spend for iAd is a logical step given heightened competition from Android, other rich media technology providers, and the luster the platform has lost in the last year.
Think of it something like Apple cutting the price of a previous iPhone model in half with the release of the latest version.
It was only a few months after the iAd's unveiling last April that reports emerged of campaigns being delayed because of Apple's tight control of the creative process -- and launch advertisers, like Chanel, dropping out of the program.
When Apple rolled out iAd in Europe toward the end of the year, it was forced to drop the $1 million entry fee because brands there were more reluctant to pay that amount upfront, according to a Financial Times report last November.
At the same time, Apple has seen Android emerge as a much more formidable rival for mobile ad dollars as the Google mobile platform rapidly gained market share in 2010. In the fourth quarter, Android became the world's top-selling smartphone platform, according to research firm Canalys. And on the ad side, it overtook iOS as the top smartphone system on Millennial Media's mobile ad network.
The $1 million ante Apple set for iAd also opened the door to rich-media competitors like Medialets, Greystripe and Crisp Media to offer their own "iAd-like" units without the hefty price tag -- or necessarily requiring advertisers to pay on both an impression and per-click basis for ads.
Apple itself at the end of 2010 introduced iAd Producer, a developer tool kit to help simplify the basic aspects of creating iAd campaigns and open the platform to a wider range of publishers and brands. Slashing the minimum media buy would go further to that goal. "By lowering it, Apple will get more entrants into the space," said Phuc Truong, managing director of U.S. mobile marketing at Mobext, a unit of Havas Digital.A brand that was balking at spending half its annual mobile budget on a $1 million iAd buy, would be more likely to take the plunge at half that amount, he added. Even so, many marketers still aren't even spending $500,000 a year on mobile advertising, so iAd is still geared to larger brands for whom half a million dollars is small change. Apple can only cheapen its own brand so much.