Apple studying iTunes purchases to hone iAd targeting

Apple (NASDAQ:AAPL) is closely examining the purchasing patterns of its 150 million-plus iTunes digital storefront customers in an effort to improve consumer targeting across its new iAd mobile advertising network, which launched last week. Bloomberg reports that Apple is studying music, video, book and application downloads to build behavioral profiles it can match with appropriate iAd campaigns--on the Apple website, the computing giant states its "standard targeting options" include demographics, application preferences, musical tastes, movie and television genre interests, and location. "Apple knows what you've downloaded, how much time you spend interacting with applications and knows even what you've downloaded, don't like and deleted," said Rachel Pasqua, director of mobile at marketing firm ICrossing.

The first wave of iAd brand partners includes Unilever, which said its campaign for Dove Men+Care soap targets married men in their late 30s with children. "Apple then overlays that with the iTunes information and targets quite well and quite surgically," said Unilever marketing director Rob Candelino, adding that while Apple doesn't share information on individual consumers, it does allow advertisers their choice to market across certain "buckets" of iPhone applications (e.g., news and entertainment apps) based on users characteristics. "The leading global brands we're working with are developing iAds timed with their seasonal marketing campaigns, such as back to school and the holiday shopping season," said Apple spokeswoman Trudy Miller. "We're just taking our first few steps. We'll work our way up to walking and running as this year progresses."

Apple officially introduced iAd on July 1. Most marketers are spending a minimum of $1 million to launch on the iAd network, with some paying more than $10 million for levels of exclusivity within their respective industry vertical--for example, Nissan is the sole automaker advertising on iAd, and Citi is the lone bank. Apple is charging $10.00 per thousand impressions for each iAd banner as well as a cost-per-click fee of $2.00.

iAd could yield developer revenues reaching $825 million this year, according to a research note published by Bernstein Research analyst Toni Sacconaghi. Estimating that iPhone developers presently generate $1 billion to $1.8 billion in annual App Store sales, Sacconaghi notes that iAd revenues will herald an annual increase between 40 percent and 80 percent. Sacconaghi anticipates Apple will collect about $815 million from iAd this year: $550 million from apps and $265 million from media providers like publishers and television networks. He adds Apple will generate roughly $58 billion in total worldwide sales this year.

For more on iAd targeting:
- read this Bloomberg article

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