Facing challenges winning over customers for its iAd mobile ad service, Apple is softening its approach as it loses ground to Google in the mobile ad market. Launched in July of last year iAd is Apple’s service for selling ads within mobile apps on iPhones, iPads and iPod touches.
Last year, Apple shared the top spot in the mobile display ad market with Google, with each company capturing 19%, according to research firm IDC. This year, Apple fell to the No. 3 spot, behind Google and independent mobile ad firm Millennial Media, capturing 15%, or $95 million, of the $630 million market, IDC says.
According to WSJ, marketers say they have been turned off by iAd’s high price tag as well as Apple’s hard-charging sales tactics and its stringent control over the creative process.
Google’s AdMob service, on the other hand, is priced more reasonably, ad execs say, and is available on a wide array of devices—not just Apple products.
In response, Apple is making some changes. It is showing more willingness to bargain on the spending commitment it requires of advertisers.
Having originally asked marketers to commit to spend at least $1 million—an amount later dropped to $500,000—Apple is now discussing ad deals with a minimum commitment of just $400,000, according to the story.
Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers. Instead of charging marketers every time a user taps on an ad—a policy which often led to ad budgets quickly being exhausted—Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.
Pricing for Google’s mobile-ad products vary widely, according to one ad executive. Display ads on apps from a range of providers vary from $4 to $12 per thousand views. Advanced targeting or mobile video can command higher premiums than static banner ads, this person said.
A typical iAd is one for Unilever’s Dove Men + Care soap brand. In it, a consumer sees a banner ad at the bottom of an application on a phone or iPad. When the consumer taps on the ad, videos featuring baseball players like Andy Pettitte appear, as well as more info about Dove products.
In an effort to woo more advertisers, Apple is establishing a training program, arranged in conjunction with its media buying agency OMD, to teach the firm and its clients about the mobile marketing landscape.
In recent weeks about 30 senior marketing executives, from firms including PepsiCo, Clorox and J.C. Penney, visited Apple’s HQ in Cupertino, CA. The marketers got a tour and a series of info sessions with Apple designers and product teams.
OMD is planning a trip to Apple in February with more of its advertiser clients, according to the story.
“They are still learning the advertising world,” Shiv Singh, head of digital at PepsiCo Beverages told WSJ.
Apple launched iAds to make building Apple apps more attractive for developers, who are increasingly interested in building software for Android devices and getting advertising checks from Google. Many developers have activated iAd, but they say that Apple hasn’t sold enough to make any meaningful revenue for them. David Barnard, founder of mobile app company App Cubby, says he earned $320 from iAd in the past 30 days and that the service is only filling roughly 13% of his apps requests.
RBR-TVBR observation: Apple only sells ads that appear on Apple devices, so the problem may be that marketers are forced to buy ads from competitors to get the reach the buy requires. Google ads, however, will show up on all mobile operating systems.