Following the launch of its iAd advertising network this summer, Apple promptly announced the availability of an ad format designed specifically for application developers. According to some developers, however, trials of the ads so far have been unsuccessful, and resulted in far less return on investment than solutions offered by some rival networks.
According to David Smith, founder and owner of application development firm Cross Forward Consulting, his experiences of Apple’s platform have led him to conclude it is “likely ineffective for driving sales,” and that networks such as Google-owned Admob currently offer better value for the cost.
Speaking with ClickZ News, Smith said he ran an iAd campaign for six days in August to promote his company’s Audiobooks app. The campaign resulted in a total of 84 purchases, but cost an average of $14.90 in ad costs per download, or CPA. As Smith pointed out, for an app that retails at $0.99, “those economics just can’t work.”
“I could be the odd man out, but even if my CPA was two or three times higher than average, it still likely wouldn’t be where it needs to be from an income perspective,” he said. According to a study conducted by App Store analytics firm Distomo, the average price of an iPhone Application in the U.S. in April was $3.82, suggesting few developers would see a return on a CPA anywhere near $15.
Smith said his company has conducted ad trials with “just about every ad platform out there,” but found Apple’s solution considerably more expensive than its rivals’. In fact, citing Cross Forward’s data on click-through rates, Smith said a comparable campaign purchased with Google’s AdMob network was over six times cheaper than iAd, but produced a response five times greater.
Joe Sipher, co-founder of application development company Pinger, said his company had also experienced high CPA rates, but suggested it could be down to the relative infancy of the platform. “We’ve used iAd for both customer acquisition and revenue generation, so we see both sides of the business. Right now… CPAs are high for advertisers and CPMs are high for publishers. Over time the market will determine if this is ‘fair’ or not.”
According to Smith, however, his iAd campaign did not necessarily drive any less sales than campaigns with other ad networks, but it was substantially more expensive. “AdMob seems to have a reasonably high click-through rate, but conversion rates aren’t that much better. I’ve found it’s cheaper to get roughly the same amount of exposure with AdMob,” he said.
Smith went on to suggest the developer-focused portion of Apple’s iAd offering could well have been borne out of Apple’s inability to fill the inventory its network members are currently creating, given that it is running full iAd brand campaigns for just three of four advertisers. “Apple has more inventory than it does advertisers to fill it. It launched the network but didn’t have the brands ready,” he said, suggesting, “This could be an easy way for them to leverage what they have.”
GroupM predicts that global ad spend will top $547 billion next year, up from $524 billion this year. While television will still capture the biggest share of that 12-figure pie (41%), digital's share will grow from 31% to 33%.
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