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Apple iAds Slump Again

Published Monday, July 18th, 2011 at 11:45 am by

Apple has once again cut the price of its mobile advertising platform iAd, according to a report. What is iAds? How does it work, you ask? Apple’s CEO pointed to what he believes is a flaw of both standard online advertising and TV advertising — the combination of interaction and emotion. The key is that ads will keep users within an app, rather than redirecting users to a browser window.

When you click on an iAd advertisement, it will take up the screen using HTML5. Once it is open, you can explore the ad. Apple demoed an advertisement for Toy Story 3, demonstrating the ability to not only see information about the movie, but to watch trailers, play games and more — all within the same application from which you launched the ad. You will even be able to buy products within ads.

Just like the iPhone app store, there will be a simple revenue split. Developers will keep 60% of revenues, however, rather than the 70% they are awarded for iPhone apps. In return, Apple will host and deliver all of the iAds.

When it was introduced with much hoopla in April 2010, iAds were only open to advertisers spending $1 million or more, including JCPenney, Citigroup and Nissan. In February, though, reports surfaced that the bar had fallen to $500,000. Now Bloomberg‘s reporting that the campaigns can be had for as little as $300,000 — a 70% drop from the initial price.

Reps from Apple could not be reached for comment.

The price-cutting is a setback for iAds, which Apple CEO Steve Jobs dubbed “mobile ads with emotion.”

Noah Elkin, an analyst at eMarketer, says Apple may be trying to make the ads less exclusive. “Apple is never about mass appeal, but this is really about making the upfront cost more manageable for a greater variety of advertisers,” he says. “[It] rekindles marketer interest in something that got a lot of fanfare last year, but hasn’t been talked about that much lately.”

To address the lack of demand for the platform, Apple has been “quietly staffing up” a sales force in New York for iAds, according to Advertising Age. Last month Apple hired Carrie Frolich, former head of digital for media-buying firm MEC, as head of agency relations. Frolich reports to iAd chief Andy Miller, who reports to Steve Jobs.