Apple to iAd: Focus on iTunes Radio


iTunes RadioApple has reportedly shifted its iAd sales team’s focus toward bringing in advertisers for its iTunes Radio service. Eddy Cue, the Apple SVP in charge of iTunes, is said to have personally handed down the order to key in on iTunes Radio inventory, said an AdWeek and Apple Insider story.

The move comes just days after former Cumulus Media EVP/Sales Michael Pallad moved over to run ad sales for iTunes Radio. Pallad started with Apple on 12/2. Apple launched iTunes Radio in September with audio, video and display ads that air between songs sold to McDonald’s, Nissan, PepsiCo and Procter & Gamble, among others.

However, those initial deals expire at the end of this year, when Apple will begin pitching the service more broadly. Apple is looking to sign 12-month commitments that begin at $1 million apiece and go up to up to $10 million to gain exclusive access to an ad category on the service.

iTunes Radio has ramped up its listener base relatively quickly — 20 million users had streamed more than 1 billion songs just one month after the service’s release, noted Apple Insider, “but has yet to catch up to established players like Pandora and Rdio in the streaming audio space, a market which is suddenly red hot.”

In addition, Spotify last week announced free, ad-supported streaming on mobile devices.

“The message that came across was basically if you’re not working on iTunes Radio, you’re irrelevant,” an Apple insider told AdWeek.

“iAd’s [in-app] display advertising business, however, has struggled,” noted the Apple Insider story. “Despite Apple’s loftier customer demographics and iAd’s status as the first major mobile ad network to secure Media Ratings Council accreditation, in-app advertising rates on the service have steadily declined from a reported minimum $1 million commitment at launch to just $100,000 today.”

Apple also hopes to reverse iAd’s fortunes by moving to a self-serve, real-time bidding system.

Eddy Cue also said in October the company wants to eventually bring iTunes Radio to more than 100 countries, including the U.K. Pallad will oversee sales efforts for those countries as well.

See the Apple Insider story here

RBR-TVBR observation: It looks like Pallad has his work cut out for him, but that’s why he was brought on board. To put out a directive like the AdAge story said means at least one of the two things: 1) The rates are too high and advertisers are balking; and 2) Apple iTunes Radio thought it would have ramped up a bit more against Pandora by now and there is a bit of humble pie being passed around Cupertino.