The future of ad sales (1)

Apple’s iAd – On April 8, Apple introduced iAd, an advertising platform that runs ads directly within applications for the company’s popular iPhone smartphone and iPad tablet. Advertisers will love it because in contrast to current web ads, users will not be pulled away from the content within the apps after visiting the link. On top of that, and maybe even more important, iAds will bring much more engaging advertising than online ads currently offer. Apple’s CEO Steve Jobs unveiled iAd during the introduction of iPhone 4.0, stressing that advertisers are better off targeting ads within applications rather than running ads alongside search results (read: Google). He thinks they can offer the opportunity to make 1 billion ad impressions a day on tens of millions of Apple mobile device users. iAds will allow apps developers to use advertisements in their apps, pocketing 60% of the revenue. Apple will sell and host the ads (!).

Well informed ad sales sources are quoted to say that Apple could charge advertisers 5-10x the normal amount for campaigns created for applications running on Apple’s iPhone and iPad. The price could reach as much as $1 million for iPhone and iPad ads, compared with $100k to $200k for comparable mobile ad deals, ad industry officials told the Wall Street Journal. Piper Jaffray analyst Gene Munster says he expects the mobile in-app ad opportunity will be roughly $220 million in 2011, the first full year of iAd, commensurate with the growth of Apple’s mobile device user base.

Ad sales view: Apple may charge advertisers a penny each time a consumer sees a banner ad, and $2 each time someone taps on that banner ad. Apple could also charge up to $10 million for ads in iPhone applications to begin appearing with the launch of the iPhone 4.0 in June, the Journal said.

An analyst view: “It seems the gap between the mobile budgets Apple is going for is much larger than most mobile budgets. The big brands might step in, but the reality is money from mobile still comes out of emerging media test budgets, which are smaller budgets. That said, if anyone is going to pull it off, it’s going to be Apple.”