Apple has halved the minimum spend for campaigns on its iAd mobile advertising network, lowering the bar for advertisers as it looks to move beyond its first wave of partners. Since announcing the product last April the company has demanded a minimum $1 million investment per campaign, which will now be reduced to $500,000.
The company has already dropped its minimum spend policy in Europe to attract launch sponsors there, according to reports.
At present iAds are sold on a combined performance and impression basis, with inventory priced at a $10 CPM coupled with a $2 click-through charge. That pricing structure will remain unchanged following the reduced minimum, meaning advertisers won't pay less for their inventory but will essentially commit to buying less of it.
That suggests Apple expects to generate similar revenues from iAd campaigns despite generating less per campaign. Of course, the change could also reflect the inability of Apple's sales staff to generate advertiser interest under the previous terms. "This new minimum buy is a great step forward and a necessary one, I think," Mark Read, CEO of WPP Digital told AllThingsD, adding that the new minimum buy will make the platform "more appealing."
That doesn't necessarily detract from the value of the $1 million investments made by the iAd launch sponsors, which included Nissan, Unilver and AT&T, thanks to the added impact of being associated with such a new medium.
To date over 60 brands have purchased rich media campaigns across the iAd network - suggesting Apple has already generated at least $60 million from the product - but the company has been working to streamline the campaign process in order to attract more. For example, it launched an iAd Producer tool in December, which essentially allows agencies and brands to create their own ads in a drag and drop fashion.
Prior to the launch of that feature Apple was handling the production of creative units itself to maintain quality, it said. That situation caused friction between the company and some of its advertisers, however, with some brands reportedly canceling their campaigns following delays and disagreements between the parties.
The availability of that production tool places creative control back in the hands of agencies which, coupled with a reduced minimum investment, may well lead to increased advertiser interest surrounding the iAd product.
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March 19, 2014