iTunes Radio goes for the big advertisers

Macworld Australia Staff
21 August, 2013
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The issue regarding monetisation of iTunes Radio has now been explained in detail. According to Ad Age, when Apple’s new music streaming app launches in September, it will do so with a group of ultra high profile band partners on board.

For at least three months, each advertiser will have exclusivity within its industry. The names announced so far include McDonald’s, Procter & Gamble, Nissan and Pepsi, and the “deals range from the high single-digit millions of dollars to tens of millions of dollars” according to Ad Age.

Each of the launch partners has signed a 12-month deal with Apple, but the exclusivity clause will only last until the end of this year.

From January 2014, ads will be widely available on iTunes Radio.

Of course, with Apple renowned for the huge level of publicity surrounded any of its product launches, the knock-on effect for those original advertisers will be significant to say the least.

Ad Age explains the format breakdown with: “Advertisements on iTunes Radio will come in three forms: interstitial audio and video ads and ‘slate’ ads; interactive display ads that will take over whatever screen the consumer is using.”

The online marketing news source goes on to report that the format will comprise of one audio ad every 15 minutes and one video ad every hour, with the latter targeted at users at appropriate times; i.e. when they’re looking at their screens after hitting play or skipping a track.

Some of the launch partners won’t run regular ads, but will instead sponsor blocks of curated playlists, using a short ad to brand the block.

The iTunes Radio service with ads will be free to listeners, but for those wanting an ad-free service, it will be available. All they have to do is subscribe to the cloud-based storage feature iTunes Match (currently $34.99 a year in Australia).

If that launch set-up sounds familiar, it may be because Apple employed a similar tactic when it launched its mobile ad network, iAd, in 2010. That also kicked off with plenty of publicity, high minimum buy-ins and a select group of launch partners. It hasn’t exactly thrived since then, facing the Google and Facebook powerhouses, but Apple will be hoping that by using iAd to sell iTunes Radio inventory, the network will experience a lift too via more valuable audio and video inventory.

Apple believes, however, that iTunes Radio’s greatest source of revenue will be from its application as a selling tool, with a buy button placed next to each song played on the service. Every time a user listens to a song and then proceeds to buy that song, Apple will profit.

Add that to the tens of millions of dollars associated with the initial buy-in detailed above and the whole enterprise could prove lucrative for the Cupertino California company.

by Macworld Australia staff

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