Apple (news, site) has done something right with smartphones and tablets, as evident with the popularity of the iPhone and iPad. However, while the company planned to make it big in the mobile advertising industry, it seems the popularity of its iAd platform is short-lived, as Apple is apparently losing ground in the mobile advertising industry.
Apple launched its iAd mobile advertising network last year with much fanfare. Banking on its mobile ecosystem of apps and developers, Apple initially implemented a US$ 1 million minimum for running ads on the platform, from which the company gets a 40% share and gives 60% to developers. It seems, though, that Apple is slipping, as it has lowered the bar, first to US$ 500,000 and recently to US$ 300,000.
Mobile Advertising Business Slipping
The 70% cut in Apple's rates is seen by analysts as a defensive move to keep competitive, as advertisers turn to other mobile advertising platforms. Notably, Google's Admob, Millenial Media and Greystripe offer multi-platform mobile advertising opportunities that have a potentially wider audience. These deliver ads to more devices, which is the inherent limitation that Apple faces. As iOS is limited to Apple's own hardware, Apple's audience is also limited to its own iPhone, iPad and iPod Touch platforms.
Application developers are already noticing that Apple is having a hard time filling in its advertising space. Advertising exchange network Mobclix says that only 5% to 15% of available advertising space is being filled by Apple. Meanwhile, the market for mobile advertising is projected to grow to US$ 2.5 billion by 2014, and Apple needs to act fast to keep its slice of the pie from dwindling.
While Apple has a hold on certain segments of the market (such as with the popularity of the iPad), advertisers prefer not to be limited to certain devices. "Advertisers don't care about platform. They care about audience, performance and engagement," says ad firm Greystripe's Dane Holewinski in an interview with Bloomberg. As such, even with the prestige and ease-of-use that the Apple brand carries, advertisers are still looking for the value proposition.
Advertisers are also concerned with iAd's limitations when it comes to control. Apple's strict quality control standards mean that ads take longer to approve. Apple also keeps tight control over customer data, which is something that has earned Apple some criticism in the mobile content subscription industry.
Will the iAd price cuts help Apple retain advertisers and get new ones? Apple's iPhone refresh is rumored to be coming in the next couple of months, along with mobile data features for the iPod Touch. Let's see if Apple can bank on the buzz over a new iPhone and iPod in keeping its iAd platform sustainable.