July 07, 2011, 2:06 PM — Faced with the loss of major customers, Apple is slashing rates for its iAd mobile-advertising by up to 70 percent, according to Bloomberg:
When Apple rolled out iAd a year ago, companies such as Citigroup Inc. and J.C. Penney Co. were being charged $1 million or more to run ad campaigns. Today those brands aren’t using iAd, and Apple is offering packages for as little as $300,000, said the people, who asked not to be named because the rates are private.
The reason those brands aren't using iAd is because they instead can use rivals such as Google's AdMob, Millennial Media and Greystripe, all of which can serve up ads on multiple devices. Apple, of course, can only promise advertisers that iAd will reach Apple customers, who comprise about one in four mobile device owners in the U.S.
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That'd be fine if you were selling products and services of value specifically to Apple customers. Beyond that, though, a company is missing most of its target market by running something on iAd.
Bloomberg, quoting two people "familiar with the matter," reports that Apple "has cut the minimum ad purchase from $1 million to $500,000, and it’s offering agencies deals for as low as $300,000 if they bring together multiple campaigns."
It's not as if Apple's mobile-ad platform has been completely abandoned. As Bloomberg notes, 20 companies have had ads run on iAd over the past month, including AT&T, Geico and Walt Disney.
However, a recent comScore report on the growth of mobile advertising (see link above) showed 689 advertisers deployed mobile display ads in April. So Apple is getting about 3 percent of companies paying for mobile ads.
Moreover, iAd's less-than-dazzling performance serves as reminder that advertising is not Apple's core competency, and that expecting the company to jump into a new business and excel is not realistic. Especially if it's charging top dollar out of the box.