iAds to cost a pretty penny

Australian Macworld staff
30 April, 2010
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Apple is reportedly looking to charge a premium for its iAd service when it launches later in the year (presumably June to coincide with WWDC and a probable iPhone release).

The Wall Street Journal is reporting that Apple plans to charge close to US$1 million for iAds on its mobile devices. It could even be asking as much as US$10 million for ads to be included at the service’s launch.

As a matter of reference, ad executives say that for similar mobile deals, they would normally expect to pay around US$100,000 to US$200,000.

iAd allows developers to include ads directly into their apps. The ads, in turn, are designed to provide a rich promotional environment, complete with what are essentially mini apps-inside-the-app. It’s this level of interactivity that Apple is likely using to sell the iAd service and allowing them to demand such a premium.

According to Jobs (speaking at the preview event for iPhone OS 4.0 in early April) the average iPhone user spends around 30 minutes a day using apps. “Now, if we said we wanted to put an ad up every three minutes, that would be 10 ads per device per day. We’re going to soon have 100 million devices [running the iPhone OS]. That’s a billion ad opportunities per day in the iPhone and iPod touch community,” Jobs said. “This is a pretty serious opportunity.”

A serious opportunity, indeed. And one that Apple is clearly looking to make a lot of cash from if these early murmurings are correct.

According to the WSJ report:

Apple is planning to charge advertisers a penny each time a consumer sees a banner ad, ad executives say. When a user taps on the banner and the ad pops up, Apple will charge $2. Under large ad buys, such as the $1 million package, costs would rack up to reach $1 million with the various views and taps.

Of course, such deals are likely to be a huge benefit to developers – especially those providing free apps – as they stand to make 60 percent of the revenue from iAd, with Apple taking the rest.

The company will clearly be targeting the big names for the launch ads, having made example ads to show off featuring Toy Story 3, Nike, and Target.

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