Mobile ad wars: Apple to slash iAd prices by 70%?

13/07/2011

Apple has reportedly cut the price of the iAd rate card by 70% since its launch, as the company makes a second mark-down of its mobile ad format this year to attract advertisers. According to a report from Bloomberg, unnamed sources told the news agency that this price drop indicates that Apple is "struggling to parlay its technology leadership into success in the ad industry."

In February, Apple halved the price of its mobile advertising platform. The company has now cut rates by up to 70 per cent following this second price drop.

13/07/2011

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At launch, iAds cost an initial ‘minimum spend’ fee of approximately £660,000 a year ago, with advertisers having to pay CPM rates on top. If the Bloomberg reports are correct, the revised initial fee will now be approximately £200,000.

The price tag is still higher than its competitors, and the more popular choices for advertisers seem to be Google's AdMob, Millennial Media and Greystripe, as the audience is much wider, Bloomberg reports.

The unnamed sources referenced by Bloomberg said that Apple has cut the minimum ad purchase by as much as 70 per cent if the advertiser brings together multiple campaigns.

James Connelly, MD at Fetch Media, said further price cuts could bring advertisers back on Apple’s side.

Connelly said: "There's been two key factors to iAds which has put 95% of advertisers off. The pure focus on brand and of course, the price.With uncertainties in the state of our global economy, budgets in new and untested medias are not flowing as freely as perhaps Apple intended. Reducing these two barrier of entries will drastically increase their chance of a more dominant penetration. It appears they are going for price first, which will be welcomed by the advertisers and the agencies, but it's still extortionately expensive. These days, you can run a TV campaign for £50k.

"I believe we'll see further reductions in the minimum spend, or perhaps the minimum spend will become a minimum commitment over a year, with the ability to run a number of iAds,” Connelly concluded.

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