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Apple Cuts iAd Commitments

Signaling struggles for its iAd mobile-ad business, Apple has reportedly cut ad commitments by as much as 70% amid defections by top advertisers.  When Apple rolled out iAd a year ago, companies such as Citigroup and J.C. Penney Co. were being charged $1 million or more to run ad campaigns," Bloomberg reminds us. "Today those brands aren't using iAd, and Apple is offering packages for as little as $300,000," it reports, citing sources.

"Apple negotiated the first of these deals with WPP's ad buying unit GroupM," reports The Wall Street Journal. Still, "The advertising firm, which works with several major marketers including Unilever, is committing that a group of its clients together will spend more than $1 million with the iAd product."

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"Even with lower prices, some advertising agencies are balking at iAd's cost, especially because the promotions only reach Apple users," Bloomberg adds. "They're turning instead to Google's AdMob, Millennial Media and Greystripe, which serve a range of devices." 

"In other words, despite Apple's Midas touch and the beauty of the iAd formats, it simply isn't offering enough value to advertisers," Econsultancy writes. 

Meanwhile, citing data from mobile ad exchange Mobclix, The Register reports that application developers are seeing iAds fill only about 5-to-15% of their available ad space. "When an ad does run, developers get 60 per cent of the revenue," it notes.

At risk is marketshare in a market that will generate $2.5 billion by 2014, according to eMarketer.

Noah Elkin, an analyst at eMarketer, tells Mashable that Apple may be trying to make the ads less exclusive. "Apple is never about mass appeal, but this is really about making the upfront cost more manageable for a greater variety of advertisers," he said. "[It] rekindles marketer interest in something that got a lot of fanfare last year, but hasn't been talked about that much lately."

1 comment about "Apple Cuts iAd Commitments".
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  1. Jeff Williams from SHHH..., July 8, 2011 at 11:33 a.m.

    Read the ridiculously one sided IAD T&C's... it's not just the cost. A responsible media buyer would never agree to those terms.

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