Apple’s Walled Garden Still Suffocating iAds

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ADOTAS – “Mobile ads suck,” CEO Steve Jobs said when Apple launched its mobile advertising product iAd, basically turning an ad into an app inside another app (so meta!), but about about a year after its much touted launch, it seems that iAd is struggling to swim above the… mobile masses.

The biggest sign? Apple chopped the $1 million dollar minimum spend on iAd down to $500,000 in February, but Bloomberg reports that the company is now offering agencies a minimum spend of $300,000 if they agree to multiple campaigns.

Apple says it has run 100 campaigns from 20 companies in seven countries and has 50 more in development, which honestly doesn’t sound very impressive. Even lamer, apps on the iOS platform are reporting 5% to 15% fill rates from iAds.

While initially agencies were flustered with Apple’s micromanagement approach to developing the ad products, in December Apple loosened its grip and gave agencies Producer for assisting in the construction of iAds. Then Apple chopped the price floor, but still the revenue is less than impressive. What’s clogging the cash pipe?

“Apple’s closed ecosystem may have been interesting in the short run for advertisers, but in the long run they priced themselves out,” Thom Kennon, senior vice president of strategy for Young & Rubicam, told Bloomberg.

Sounds a lot like what Adotas suggested would happen last year when the iAd was introduced — long before Android-powered smartphones became the most prevalent in the U.S. Advertisers are attracted to rivals like Google’s AdMob and ValueClick’s Greystripe’s iAd-esque products not just because they’re cheaper, but mainly because they’re cross-platform.

iAds could be the greatest ads ever conceived, but Apple’s walled garden will continue to suffocate the project.

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