Report: Apple iAds deals could cost $1 million

Apple's fee structure could mean charges to advertisers of $1 million or more to display mobile ads through its new iAd platform for iPhone, iPod Touch, and iPad apps.

Advertisers eager to hawk their products via apps on the iPhone, iPod Touch, and iPad may have to cough up $1 million or more for the advertising space, according to an article in Thursday's Wall Street Journal.

A Nike ad created with iAd was demoed during Apple's iPhone 4.0 event.
A Nike ad created with iAd was demoed during Apple's iPhone 4.0 event. James Martin/CNET

And marketers who want to be part of the launch of iAd, Apple's new platform for serving ads on its mobile devices, could pay as much as $10 million for the privilege, said the Journal, citing a source familiar with the matter. At the moment, advertisers reportedly pay somewhere between $100,000 and $200,000 for similar placement on mobile phone apps.

Set to launch with Apple's new iPhone OS 4.0 in June, iAd will give marketers the ability to embed dynamic and interactive ads within a mobile app. In his iPhone OS 4.0 demo earlier this month, Apple CEO Steve Jobs touted the ability of iAd to smoothly display ads within an app rather than bring the user to a separate Web page.

The process and price scheme for advertisers starts with the banner ads that attempt to lure people to view the full ad. Advertisers will have to pay Apple a penny each time a user sees a banner ad and then an additional $2 if the user clicks on the ad, according to the Journal. Given enough views and clicks, a large ad buy could easily cost an advertiser $1 million.

Advertisers will be able to target specific ads to users based on such factors as their iTunes download choices and their location, though they won't be able to direct ads based on a user's personal information. Initially, Apple will create the ads itself to ensure that they meet a certain style, format, and functionality. But the company plans to eventually release a developers kit to allow advertisers to build their own ads. Even then, each ad will also have to go through a review process at Apple to determine if it meets the company's approval.

Despite the high visibility and potential profits, at least one advertiser quoted in the Journal story expressed concern over Apple's initial control of the ads.

"As a creative director, I can completely understand that they created this new baby and they want to make sure it gets born looking gorgeous," said Lars Bastholm, chief digital creative officer at WPP's Ogilvy, according to the Journal. "But as a creative director, I don't feel completely comfortable letting Apple do the creative."

Jobs has also promoted iAd as a way for developers offering free and inexpensive apps to recoup some of their development costs. On its end, Apple would sell and serve the ads, taking in 40 percent of the sales and leaving 60 percent for developers who embed the ads in their apps.

Apple has set a date of June 7-11 for its upcoming World Wide Developers Conference , at which time the company will offer sessions for developers interested in creating apps for the upcoming iPhone OS 4.0. The new iAd advertisements should start popping up on the iPhone and iPod Touch in June, followed by the iPad later in the year, according to the source cited by the Journal.

 

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