Apple's iAd drops minimum spend to $50 in bid to win over developers
By Chantal Tode
June 14, 2013
In a significant reworking of its iAd offering, Apple recently dropped the minimum spend to $50 and introduced self-service tools as it looks to open up the platform to a much wider base of potential advertisers.
IAd was originally introduced as a premium mobile advertising platform for big brands – initially requiring a $1 million minimum spend – with Apple exerting its usual tight control over the experience. Following several previous price reductions, the latest news adds to the evidence that Apple’s initial vision for iAd did not work.
“I suppose it's an admission that they got it very wrong in the first place,” said Jason Barrett, head of monetization at Grapple, London. “IAd was completely un-affordable to all but the highest-spending brands, and Apple took total control of the creative process on their behalf.
“Now any brand can advertise, and they can create their own campaign collateral,” he said.
“The brand count for iAd will inevitably increase sharply as a result, but Apple will no longer be able to dictate the look and feel of the advertising that they carry which may, as far as Apple are concerned, have a negative effect on the visual/design quality of their advertising environment.”
Driving app downloads
IAd Workbench, which went live on Monday, enables registered iOS developers to create, manage and optimize ad campaigns to promote their mobile apps.
The platform provides tools enabling developers to target their campaigns, build customized banners and track the performance of their efforts so they can drive downloads.
Developers will be able to optimize campaigns in real-time.
Previously, advertisers were required to do more on the technical end, with Apple handling much of the back-end work for iAd campaigns.
The move could help address the shortage of mobile ad campaigns compared to available ad inventory.
“It will certainly increase the number of available campaigns, though the CPC range that each campaign delivers to the developers will drop and drive down yields for some publishers,” Mr. Barrett said.
“It will come down to the relative value of the audience for each app based on the targeting criteria that the advertiser selects when launching a campaign,” he said.
“The apps with the most engaged and active audiences will win out.”
By removing some of the technical hurdles and lowering the price, Apple is hoping to reach those small to mid-sized developers who are used to working with Google or Facebook.
Apple has also increased the revenue share for developers from 60 percent to 70 percent as another incentive.
"IAd Workbench gives advertisers direct access to apps in the iAd network," said Alex Cohen, senior manager of acquisition marketing at Seamless, New York.
"Because it's self-service, you can quickly launch campaigns and monitor results directly," he said. "It's an easy way to get access to inventory you might not be able to get through other exchanges."
Apple is positioning Workbench as an expansion of iAd as it plans to continue to work with big brands to develop premium campaigns for iOS users. For example, the recently introduced iTunes Radio music streaming service will be ad supported and is expected to be a draw for big brands.
There are currently six million registered iOS developers.
By offering ads starting at such a low price point, this could encourage developers to test different looks and messages to find which ones deliver the best results before they make a bigger commitment.
“IAd has never performed the way apple wanted, and this should help fill the hungry beast of inventory,” said Scott Michaels, e xecutive vice president at Atimi Software, Vancouver, Canada.
“The main point of having a low entry is so you can decide to run multiple campaigns with a low cost for A/B testing your message before you commit to the larger spend,” he said. “The advice is to A/B test your art and message separately so you can get the best result.”
Developers will also be able to test icons, as a compelling icon still goes a long way towards driving downloads on the Apple App Store, per Mr. Michaels.
Workbench will enable developers to try multiple versions of their app icon with everything else remaining the same.
Other benefits for developers using Workbench include that it is the only way to have an ad with a direct download for their app.
The downside of Workbench is that it could result in an abundance of ads that look the same if developers simply use stock templates without any customization.
Another minus is Workbench is limited to only apps with the iAd network running.
“The Workbench initiative has completely removed the barrier of the prohibitive entry cost of advertising on the iAd platform,” Grapple’s Mr. Barrett said. “The entry cost at launch was $1m which then reduced to $300k, then $100k.
“Now an affordable daily spend limit of $50 means any brand, developer, or small business can afford to advertise their products, services, applications and games within a familiar self-serve platform,” he said.
“It's a massive change in direction and now any business can run advertising campaigns within the app ecosystem.”
Chantal Tode is associate editor on Mobile Marketer, New York
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