When Apple announced its iAd mobile ad platform a few weeks ago, speculation was high that the company would soon dominate mobile advertising, and drive consumers to new levels of frustration with endless ads populating the iPhone and other devices. However, that may not exactly happen, for at least one reason: The $1 million cost of entry for advertisers.
AdAge reports that early adopters of iAd:
[M]ay have to shell out as much as $1 million in media spending, according to figures first reported by the Wall Street Journal and confirmed by Ad Age. They’ll pay not only a $10 cost-per-thousand, but also a $2 fee every time a person interacts with the ad. And they’ll have to give up creative autonomy. Like all those early adopters every time Apple drops a device, marketers are asking, is it worth it?
Apple is reinventing mobile ad pricing — and not in a good way. They’re essentially double-dipping by simultaneously charging a rate for 1,000 impressions (CPM) and a rate for click-throughs (CPC). That’s different from other mobile ad networks that usually charge one or the other, not both.
For a campaign with a 1% click-through rate, that works out to about a $30 CPM, rich for a mobile ad campaign but in line with mobile video, where inventory is tightly constrained.
Advertisers contacted by AdAge were generally taking more of a wait-and-see approach, rather than rushing to the new platform.
“You’re going to have a small list of advertisers that are going to be able to invest at that level from day one,” said Maria Mandel, executive director of Ogilvy Digital Labs, of the iAd. “You’re going to have others that will want to see more proof points, dip a toe in the water, wait and see, and then invest at that level.”