Amid growing competition, Apple is cutting the buy-in fees for its mobile ad network, iAd. Several months ago, Apple was reported to have cut up to $500,000 out of its fees, but it appears Apple has to cut more off the price tag.
According to Bloomberg, ads that once cost $1 million are now selling for as low as $300,000, which is a 70 percent cut from the original cost. Thom Kennon, Senior Vice President of Strategy for the Young & Rubicam ad agency in New York said:
[quote]Apple’s closed ecosystem may have been interesting in the short run for advertisers, but in the long run they priced themselves out.[/quote]
Kennon raises a great point. Unlike AdMob and others, iAds only appear within iOS applications — not on the web, which attracts a much larger multitude of users. With these price cuts, it is clear advertisers are catching on to that fact.
Additionally, iAds appear in only a select few iOS applications. Of the 20 or so apps on my iPhone, only one — Boxcar — uses iAds. Of course, it’s hard to say if this is the result of developers not wanting to adopt iAd, or there simply not being enough advertisers using the system to go around.