Apple Seeks Seven-Figure Sums for First iAd Buys

Apple has begun pitching its iAd mobile advertising product to agencies, and is hoping to attract seven figure sums for initial ad buys charged on a $10 CPM basis and coupled with a $2 click-through.

Speaking with ClickZ News, Phuc Truong, U.S. managing director of mobile agency Mobext, said his firm was among the first approached by Apple sales teams, and that it is now gauging interest from its clients regarding the opportunity.

As well as the price-point, Truong said the sales staff – likely made up of Quattro staff following Apple’s acquisition of the mobile ad network in January – described targeting capabilities based around users’ interactions with iTunes and the application store, as well as location data. “The demos were pretty impressive. The ads provide a really immersive user experience, but offer deeper targeting based on location and media consumption – like which songs and applications users have downloaded,” he said. However, users’ registration data will not be used for targeting purposes, he added.

The Wall Street Journal first reported details of Apple’s iAd pricing strategy.

Historically, ads in both the mobile and traditional online space have been charged on either a cost-per-click or an impression basis, but Apple hopes to combine the two with this initial offering to advertisers, a model Truong said he hasn’t seen offered before.

A $2 click-through seems relatively pricey, but as Truoc points out, there’s added value to be gained from being one of the first brands to make use of the new formats. “I’d expect those costs to reduce, and the novelty will wear off following the initial launch,” he said. “The key following that is to see what the performance is.”

He suggested users will likely be more engaged with the ads following their immediate launch, mostly through curiosity.

Despite the price tag, Truoc said his agency was currently in discussions with clients, and was still “gauging their interest.” He suggested brands in the consumer goods, entertainment, auto, and finance sectors might find the most value from the proposition. Mobext’s clients include major brands such as Nike, Coca-Cola, McDonalds and Volvo. Nike was one of the brands featured in mock ads during Apple’s announcement of the iAd offering at the beginning of the month.

Earlier this month, Apple altered its application developers’ license agreement to include language that appears to outlaw the serving of third-party advertising in applications, a move that would ultimately make Apple the sole provider of ad opportunities on apps made for its devices – including the newly launched iPad.

Although Truong said the changes could “make things interesting,” he views it as a bad move for the industry, stating, “if you take out third party reporting, you’re left having to just trust Apple. Advertisers want third party reporting, it makes advertising more credible.”

Newfound rival Google has had its own movement into the mobile ad space hindered by regulatory scrutiny following its of its agreement to purchase mobile ad network AdMob for $750 million in October. Meanwhile, AdMob itself reported Apple’s share of impressions is dwindling across its network, suggesting a possible bifurcation with regards to access points to mobile ad opportunities.

In theory, those relationships could reach a point where Apple controls advertising across its own devices, with Google dominating access to Android-powered devices through AdMob.

AdMob did not return requests for comment on the potential implications of Apple’s new developer agreement for its business.