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Thanks to the popularity of the iPhone and iPad, Apple arguably has by far the most impressive ecosystem in the mobile market. Based on this, one might logically assume that the company should have the ability to thrive in the mobile advertising space.
As we've reported before, however, Apple's mobile ad offering, iAd, has struggled. And even with the recruitment of a new executive from Adobe to turn it around, iAd's position in the market is apparently not improving.
According to AdAge, iAd's share of the mobile ad market continues to decline, and in response, Apple is doing what it has done before: cutting the minimums it requires advertisers to commit to play ball on the company's mobile ad network.
Recently, Apple had dropped the minimum from the seven-figure range to $500,000. Still a hefty sum, but that drop pales in comparison to the latest, which reportedly has Apple looking for just $100,000 from advertisers. Perhaps even more importantly, Apple is also adjusting its pricing model. Previously, advertisers were charged for impressions and clicks; soon Apple will charge only for impressions. Needless to say, reverting to the traditional CPM model suggests that Apple's plans to revolutionize how mobile ads are bought, sold, created and delivered is not working out as planned.
In what could be considered a sign of even further desperation, Apple is also changing the terms of its relationship with app developers whose apps create iAd inventory. AdAge details:
In addition, app developers will receive 70% of ad revenues from iAds running on their apps, vs. their previous 60% cut. The extra money will compensate for lower ad rates and serve as added incentive for developers to build businesses on Apple devices, even though they may grab a bigger audience or more ad revenue creating apps for Google's Android devices, which now outnumber Apple smartphones in the U.S.
Needless to say, it's fairly easy to dismiss Apple's iAd woes. In the past week, the company's share price surpassed $500 for the first time and there's no indication that its products are losing steam in the marketplace, even if Android devices continue to grow their market share.
But at the same time, there's also no doubt that mobile advertising is an important space for all players in the mobile market, particularly ecosystem players. Apple's largest competitor in the space, Google, seems to be on the right track; its share of the mobile display ad market now stands at 24%, up from 19% in 2010. With Apple losing ground, going from 19% to 15% in the same period of time, the company should be concerned.
The good news for Apple is that, faced with the realization that its plans to revolutionize mobile advertising weren't working, it trying to make changes, even if that means being less 'innovative' or unique. We'll soon find out if the changes pay off.