Apple Slashes Prices of Struggling iAd

by Jeff Wiener on February 16, 2012

It looks like everything Apple touches really doesn’t turn to gold…at least not anymore. Since its flashy and over-blown release as part of the iOS 4 release almost two years ago Apple’s mobile advertising service, iAd, has struggled to capture advertiser interest and unlike almost everything else Apple creates, has almost completely faded into obscurity.

The company’s initial intention with the iAd platform was to use it as a medium for advertisers to create attractive and interactive mobile ads that could be seamlessly integrated into app developer’s software; an innovative way to reach people on the world’s most popular Apple devices (not to mention a way for Apple to capture a huge slice of mobile ad revenues as well).

At the time of its release many scoffed at Apple’s asking price for an advertiser’s initial investment—a staggering $1 million—a price that immediately alienated many and subsequently led to Apple cutting that asking price in half late last year. Now as a sure sign of just of poorly things are going for iAd, this week Apple once again slashed the price of its advertising service to $100,000. Perhaps we’ve finally found Apple’s Achilles’ heel…

If there’s one area where Apple’s iOS platform exclusivity has hurt the company, it’s unquestionably in that of mobile advertising. The advantage of mobile advertising leaders AdMob, a Google subsidiary, and Millennial Media, respectively holding 24 and 17 percent of the advertising market share, is that both are platform-agnostic, meaning that developers can place those advertisements on Android, iOS, and even Windows Phone whereas Apple’s iAd is restricted to its iOS platform only.

Beyond that, developers have long complained that using Apple’s iAd service simply doesn’t pay off, with many not seeing any substantial return on their initial advertising investment and with Apple apparently double dipping by charging advertisers an initial flat rate as well as a fee for every time someone clicked on their banner ad.

That said, the concept behind iAd has always intrigued me, as Apple has endeavoured to create a mobile advertisement that goes beyond those annoying banner ads that pop up at the most inconvenient times to an ad that works more like an interactive mini-app, allowing advertisers to communicate more useful information to potential customers. It’s an innovative idea, save for the debilitating cost.

To that end, along with slashing the price of investing in an iAd advertising campaign to one tenth of what it was less than two years ago, Apple is promising less hidden fees, more revenue from ads (increased from 60 to 70 percent), and a kinder, gentler Apple company on the other end of the phone (well, maybe not that last one).

In my experience, though, none of those things can offset the damaging effects of platform exclusivity, a point that I’ve seen hurt companies in all areas of the telecommunications and technology sectors in the past. What Apple really needs to do to attract advertisers is to make its iAd service platform-agnostic, to allow developers to advertise across all popular platforms.

Of course this is something you would never have seen in the Steve Jobs era, and I’m guessing you won’t see it in the Tim Cook era either.

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