Apple slashes iAd prices

In response to marquee clients fleeing for rival services, Apple has cut the rates for their iAd service by as much as 70 percent, Bloomberg News reports.

The service started out with a $1M minimum ad purchase, but has since dropped that barrier to entry down to $500k. Mobile ad exchange Mobclix says that developers are only getting 5-15 percent of their ad space filled by iAd.

Apple’s closed garden approach seems to have backfired in the advertising field, as competing services like AdMob (Google), Millennial Media and Greystripe are all cross-platform, and major clients like Citigroup and J.C. Penney Co. have all jumped ship from iAd since its launch last year.

While consumers may certainly care about the quality of the platform they use, advertisers certainly don’t. They could care less what platform the ads run on, just that they reach as many people as possible. The high esteem that Apple’s products carry have little sway with advertisers, making their formerly premium prices seem unenticing.

It will be interesting to see if Apple’s slashed prices will bury their competition. But if they are able to maintain profit margins with the new price, just how much were they overcharging in the first place?

via Bloomberg News


Author: Matthew Ismael Ruiz

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