Apple’s iAd platform continues to struggle, forcing the company to lower prices as competitors like Google surge ahead in mobile advertising.
The Cupertino, Calif.-based company will now allow prospective advertisers to buy ads starting at $100,000, less than half the previous asking price. Advertisers will also be charged a single rate for every 1,000 ad clicks, and not be subjected to a small fee for every click.
When iAd launched in 2010, Apple’s asking price for advertising packages opened at $1 million. The platform failed to attract advertisers as Apple had hoped, so the company began to make concessions before finally lowering the price to $400,000 in December. Now, Apple has once again decreased the iAd cost as its competitors continue to surge.
Google’s AdMob service holds a 24 percent share of the U.S. mobile advertising market, according to IDC, while Apple’s share dropped to 15 percent in 2011 and Millennial Media surpassed it.
Sitting at third place in a market is uncharacteristic of Apple, and the ranking is due in part to advertisers’ perceptions that iAd is expensive and limited in reach. Google’s AdMob or Millennial Media ads reach across platforms, from iOS to Android and Windows Phone, but iAd only allows companies to reach iOS users. Apple’s ads may be more interactive, but that does not make up for the lack of people actually seeing them.
Apple’s iAd program is in need of some changes, and the company has recently put new pieces in place. The platform has been under new leadership since January, when former vice president and general manager of media solutions at Adobe Todd Teresi took the job. Teresi inherited a slumping platform from former iAd head Andy Miller and may need some time to right the ship.
These new price cuts may be a necessary evil, but if Apple once again lowers prices for advertisers in six months, the drop will serve as a clear indication that the platform is not heading in the right direction, making it time for the company to reconsider the iAd program’s direction.