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Apple's Tim Cook and an iPad
Apple has lowered the minimum entry point for running a campaign on iAd, its mobile ad system, to $50.
When it launched in 2010, the minimum buy-in price was $1 million.
Previously, Apple hoped big corporate brands would run splashy campaigns on iAd.
Apple was hoping that iAd — offering space on apps running on people's iPads and iPhones — would be a bit like glossy magazine ads: Expensive and tasteful.
But it turns out that mobile advertising is more nitty gritty than that. It's about driving app downloads, and e-commerce. It's more like search advertising than TV advertising, in other words.
The minimum price of an iAd run has been declining for a while.
The current entry point is now 0.005% of the original price.
Reality appears to have arrived at Apple: The advertisers whose budgets are really driving mobile ads tend to be small, direct-response driven companies. Those clients want to spend a few dollars at a time, tweak their campaign, and then spend a few more dollars, and so on, until they perfect the ROI on the money they're spending.
It's non-glamorous, turnkey stuff.
But there are hundreds of thousands of those $50 advertisers, and only a handful of big corporate clients willing to spend six figures or more on a branding campaign.
The real test comes when Apple launches iTunes Radio, which will be fuelled by iAd money. Ads on that music streaming service could look/sound a lot like those on Pandora. Sure, there will be big corporate brands. But there are plenty of small local and regional businesses running on Pandora too. That's why Pandora books ~$100 million in mobile advertising annually whereas iAd only gets ~$125 million.
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