Apple slashes minimum iAd buy in half

With its iAd mobile advertising network struggling to secure marketer attention, Apple (NASDAQ:AAPL) is cutting its minimum spend demands from $1 million to $500,000 in an effort to attract advertisers with more limited budgets. "This new minimum buy is a great step forward and a necessary one, I think," Mark Read, CEO of global ad giant WPP's digital unit, told All Things Digital. "Lowering the minimum buy to $500,000 from $1 million will certainly make the platform more appealing."

iAd fill rates--i.e., the percentage of ad inventory filled with actual advertisements--have been in steep decline since the year began, insiders indicate. Earlier this month, TechCrunch reported that iOS developers say iAd fill rates have fallen from 18 percent to 6 percent in recent weeks, with some newer applications running with all their ad slots unfilled. While fill rates and advertising budgets across all media platforms tend to drop in the weeks following the holiday shopping season, marketers also seem increasingly wary about committing to the iAd network. "The general consensus among the advertising community is that it is a product they don't want," said one unnamed mobile ad technology executive, adding the iAd business "is hurting."

When iAd first launched in the U.S. in mid-2010, some marketers paid more than $10 million for levels of exclusivity within their respective industry vertical. However, when iAd expanded to the international market late last year, The Financial Times noted that Apple offered European marketers campaigns priced at less than $1 million in an effort to attract marquee brand partners. "Apple is in a weaker position than you'd think," said one unnamed digital ad agency executive at the time--another exec added "Apple is still figuring out how to sell advertising. You don't just become a sell-side media company overnight. The infrastructure is missing at Apple right now."

Campaign delays plagued iAd's U.S. rollout, with marketers blaming Apple's insistence on retaining tight creative control over the process. Execs say the average iAd requires eight weeks from inception to completion, far longer than the norm for mobile ads. Another headache: Apple does not inform marketers where their iAd campaigns will appear, and does not allow advertisers to limit where their ads do and do not run. Moreover, iAd campaigns are limited exclusively to Apple devices--most other mobile ads run across multiple operating systems and networks.

TechCrunch notes that despite Apple's struggles, developers earn five times more from iAd campaigns than they do from other networks, even with fill rates flagging. "You can't even imagine what the [costs per impression] were--completely off the charts," one developer said.

For more:
- read this All Things Digital article

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