Since Apple announced the iAd mobile advertising service last year, the success of the service has been in question. Now Bloomberg is reporting that Apple is cutting rates for iAds by as much as 70% to attract marquee clients.
As noted in today's post, Apple was initially charging clients US$1 million or more for an ad campaign that ran only in iOS apps that were designed to display the ads. Many of the initial clients, such as J.C. Penney and Citigroup, have abandoned iAd and are now spending their advertising dollars with services like AdMob, Greystripe, and Millenial Media that run on a variety of platforms.
As a result, Apple is apparently dropping the cost of ad packages down to as little as $300,000 when buying multiple campaigns to attract new advertisers and retain existing ones. This strategy appears to be working for the company, as Apple notes that they'll be adding about 50 new iAd campaigns within the next few months.
Still, for many advertisers and advertising companies, there's not much of a value proposition with iAd. Rob Norman, CEO of ad agency GroupM North America, noted that despite the sleek design of iAd, companies must account for the cost. He's quoted by Bloomberg as saying "We'd all like to stay at the Four Seasons, but not if it costs $150,000 a night."