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Apple’s Eating Humble Pie
Posted By: Sachin Bansal

Apple in dilemma regarding iAds

Has Apple Inc priced itself out of the market with regard to its iAd mobile advertising business?

Well, it certainly appears as though Apple Inc has to eat humble pie, in a manner of speaking, with sought-after clients now courting adversaries. Now, that’s tough news for Apple Inc that, only about a year ago, it was raking in massive profits from top clients like JC Penny Co Inc and Citigroup Inc. It was, then, charging these companies nothing less than USD 1 million to run their campaigns. Today, there seems to have been a turnaround in Apple’s fortunes in its iAd mobile advertising business line. Today Apple’s clients are being charged a measly USD 300,000 per campaign.

You might be wondering what led to this?  It appears that promotional material rolled out by mega companies only connect with Apple users. To make matters worse, former clients of Apple’s iAd mobile advertising business are increasingly turning to Google Inc. The reasons are not far to seek: Google’s top of the range iPhone ad networks such as AdMob, Millennial Media, and Graystripe offers more visibility to clients and are also deemed more versatile compared to their Apple Inc counterpart. Millennial Media ranks sixth, for instance, when it comes to driving traffic.

Says Thomas Kennon, Senior vice- president of strategy for the Young & Rubicam, a New York-based advertising agency, “Apple’s closed ecosystem may have been interesting in the short run for advertisers, but in the long run they have priced themselves out”

The results are clearly visible: Apple is now offering deals to agencies as low as USD 300,000 if they get in manifold campaigns. One of the greatest advantages of the company, even today, is that it offers a wide selection with regard to its mobile applications. The App Store runs close to 430,000 programs.

Apart from offering low ad spend Apple Inc is attempting to woo clients in a different way, by altering some of its advertising strategies. It has hired Carrie Frolich, former head (Digital) WPP Plc’s MEC. It has also appended iAd Producer, a novel online ad designing feature that will assist agencies design ads with greater enthusiasm.

The iAd, many people, including clients, will swear is a great product. In the past year, about 20 odd companies, including Walt Disney, has deployed iAd with satisfactory results.  And, if sources at Apple Inc are to be believed, 50 more are poised to jump on the bandwagon. With new strategies and features in place the picture may get rosier for Apple.

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