Apple’s new iAd mobile advertising platform offers the enticing proposition of advertising seamlessly integrated into Apple’s myriad mobile applications. But according to one developer, the acquisition cost on the platform is around $15.

If other users have similar problems, this could spell trouble for Apple.

Developer David Smith of Cross Forward Consulting recently spent
$1,251.75 on an iAd campaign that generated only 84 downloads. He documented his issues on the company blog. According to Smith:

“This campaign is the last in a series of trials with just about every
mobile advertising platform to try and find an edge in promoting our
apps. The goal is to find an economically viable way to introduce our
apps to new customers, who might not find them through the typical Top
Charts within the App Store. When iAd for Developers was announced I
was really curious if Apple had finally cracked the puzzle of
discoverability with a way to put our apps directly in front of users
and provide a seamless way to buy them.”

Unfortunately for Smith, iAd didn’t work. Apple made the process simple enough. With a simple horizontal and vertical image optimized for the iPhone’s retina display, ads can be up and running on the service with a cost per click (CPC) of $0.25.

Cross Forward chose Audiobooks, its most popular app, to test the platform, then created a text-based ad to be as informational as possible. Considering they paid for each click, Cross Forward wanted viewers to know what they were getting into before clicking.

The company’s Audiobooks app suite has had over 1.6 million downloads and often resides in Apple’s list of Top 10 Book apps, giving users access to 3,500 public domain audiobooks and other titles available for in-app purchase.

According to Smith, iAds’ lauded targeting capabilities didn’t work for him. He was spending between $100 and $260 a day and only getting 6 to 19 app purchases. He considered pulling the plug on his campaign during the first few
days, but was encouraged by his Apple reps (who, he admits, were very
friendly and helpful) to continue.

Over the course of a week, accumulated only 84 downloads, total.

Interestingly, Smith then went to Apple’s competitor AdMob to test out its mobile ad platform. With the exact same ad, he ended up spending much less money and getting much better results. He writes:

“AdMob is 6.25X cheaper than iAd, and surprisingly had a CTR that was 5.5X better. This surprised me given all the marketing about how Apple believed that
their putting an iAd badge on their advertisements would induce a level
of trust and excitement with users.”

Smith notes his less than impressive mobile ad campaigns are likely due to the nature of mobile app purchases — people like getting recommendations rather than trusting ad copy. However, Apple’s iAd rhetoric would certainly lead customers to expect better performance. Writes Smith:

“I was willing to try out iAd because it did one thing that no other
platform can offer – a seamless purchase experience. The user never
leaves the current app to complete the purchase, so the user experience
is about as good as you get. However, I think that Apple has found
itself falling foul of exactly the same problems they called out when
the unveiled iAd. The ads lack engagement and emotion.”

If Apple can deliver on its promise of more interesting mobile ads, that could change. But currently, Smith points out to a problem that many developers are likely to observe. And one that competitors are likely relishing.

The funny thing about this particular example is that Smith’s failure to market his app on iAd — and deciding to write about it — could be his best app marketing idea yet.