Apple to demand $1 million for iPhone mobile ads

Apple is planning to charge close to $1 million dollars for mobile advertisements included in iPhone applications when its iAd initiative launches this summer. Citing ad executives briefed on the computing giant's plans, The Wall Street Journal reports Apple could charge marketers as much as $10 million for inclusion in the first wave of iAd promotions when the service goes live on iPhone and iPod touch devices in June, with the iPad scheduled to follow later this year. By comparison, ad execs say they typically pay between $100,000 and $200,000 for similar mobile deals. The Journal adds that in addition to the exorbitant price tag, Apple is also demanding greater control over campaigns that run on the iPhone platform. Apple declined comment, but reiterated that developers will receive 60 percent of all iAd revenues, with Apple keeping the remaining 40 percent.

Despite the proposed costs, the Journal notes that ad agencies across the country are currently preparing creative concepts for iAd campaigns. Apple is presently meeting with advertisers to show off iAd up close--one ad prototype touting Nike's Air Jordan basketball shoe launches an animated banner ad across the border of the device screen inside an iPhone app, along with an iAd logo. If the consumer taps on the ad, it expands across the screen, displaying a video, an interactive store locator and exclusive retailer offers, alongside other features. Apple is reportedly planning to charge advertisers a penny each time a consumer sees a banner ad--when the banner is tapped, Apple will charge $2. In the case of large ad buys like the proposed $1 million package, views and taps will gradually add up until the agreed-upon price is reached.

Apple unveiled iAd earlier this month in conjunction with its iPhone OS 4.0 upgrade. Apple CEO Steve Jobs boasts iAd can serve as many as 1 billion ad impressions per day across the worldwide iPhone ecosystem. During the computing giant's Q1 earnings call last week, Apple said it will limit initial revenue expectations for the new mobile advertising network--Apple senior vice president and CFO Peter Oppenheimer said "Don't expect much from us this calendar year. We think we will learn a lot and build a foundation for the future."

For more on Apple's iAd pricing:
- read this Wall Street Journal article

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