Apple Lowers Minimum iAd Buy to $300,000

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Apple has had to cut its minimum buy for iAd, the company’s mobile advertising network. Bloomberg reported that Apple has been offering some advertising agencies a deal for US$300,000, down from $500,000, which was a decrease from the original minimum buy of $1 million, if they’ll bring in multiple campaigns at once.

At the heart of Bloomberg’s report is the idea that Apple has been forced to lower its minimum buy because the company is finding it difficult to sell all the space it has, but price decrease is specifically for a minimum buy, as opposed to a decrease in actual advertising rates.

From the still-steep entry level, to Apple’s refusal to hand over customer data, to the company’s strict controls over advertising content, to the reality that iAd only delivers ads to Apple’s iOS platform, Bloomberg found several people willing to kvetch about the hassles and lack of benefit of buying space on iAd.

Apple introduced iAd in July of 2010, with Apple CEO saying that existing mobile advertising “really sucks,” and by showing Apple’s vision of providing interactive ads that were compelling for both consumers and for advertisers. The minimum buy at launch was a million dollars, an amount that was cut in half in February to $500,000.

At that time, the cut in the minimum buy was positioned by AllThingsD as being about increasing the pool of companies that could afford to walk in the door, and not about the company having any trouble selling ads.

Bloomberg is painting a different picture, reporting that some developers are seeing fill-rates between 5 and 15%, and quoting a host of advertising agencies who have issues with iAd.

“Apple’s closed ecosystem may have been interesting in the short run for advertisers, but in the long run they priced themselves out,” Thom Kennon, senior vice president of strategy for the Young & Rubicam ad agency in New York, said.

“You’re cutting your potential audience in half by focusing on a single platform,” Dane Holewinski, head of marketing at Greystripe, a company that apparently likes to advertise across multiple platforms. “Advertisers don’t care about platform. They care about audience, performance and engagement.”

Rachel Pasqua, vice president of mobile for ICrossing offered a list of issues with iAd, including Apple’s control, the “limited size of the audience,” and how long it takes to get ads approved. “I haven’t encouraged any of my clients towards it,” she said. “I haven’t seen a huge value proposition.”

At the same time, others praised Apple for raising the bar for mobile advertising. Krishna Subramanian, cofounder of Palo Alto, California-based Mobclix told Bloomberg that because of Apple, “You can go to an automotive company and pitch a $500,000 to $1 million campaign, and it’s realistic.”

Rob Norman, CEO of ad agency GroupM North America, said, “Everyone likes the consumer experience it creates. Everyone wants to be there because they think that, possibly since television, this is one of the most elegant customer experiences.”

His company represents Unilever, which currently advertises through iAd.

For Apple’s part, a company spokesperson said in response to Bloomberg’s request for comment that, “In its first year iAd has launched more than 100 campaigns in seven countries.”