Apple cuts minimum iAd buy in half

Even Apple, apparently, is having a tough time making mobile advertising live up to its much-ballyhooed promise. The current reigning champ in tablet sales got realistic this week when it chopped its minimum iAd buy in half. Of course, this being Apple, the numbers are still jaw-dropping. Because the original minimum buy-in was $1 million when iAd debuted on July 1, 2010, with $60 million in commitments, advertisers still have to pony up $500,000.

Initial advertisers, who launched with the iAd initiative, paid at least $10 million for the privilege of exclusivity within their vertical. Advertisers who had signed on to iAd included Nissan, Citibank, Unilever, AT&T, Chanel, GE, Liberty Mutual, State Farm, Geico, Campbell’s Soup, Sears, JCPenney, Best Buy, Target, DirecTV, TBS, Liberty Mutual Group and Walt Disney Studios.

The reason given for lowering the buy-in figure to $500,000 is to attract advertisers with more limited budgets. But prior to the announcement, Apple was clearly having trouble selling iAd campaigns. TechCrunch had reported that the iAd fill rates (meaning the percentage of ad inventory filled with actual advertisements) had fallen from 18 percent to 6 percent; some new apps ran without any ads at all.

The bottom line is that iAd is not booming. AllThingsD reported that “though Apple claims more than 60 successful brand campaigns for iAds and a 100 percent renewal rate, some developers feel the platform has been slow to gain traction.” Some of the reasons given for the slow pickup include Apple’s notorious iron grip on the creative process and, thus, the slow time to market: A typical iAd takes eight weeks to produce. Apple also doesn’t allow advertisers to limit where their ad runs (or doesn’t run) and doesn’t inform them where the iAd campaign will appear.

But don’t count Apple out of the mobile advertising game. The device maker is still a newbie in the ad sales game. And, for at least some iAd developers, the reward was worth following Apple’s rules. TechCrunch reported that “developers earn five times more from iAd campaigns than they do from other networks, even with fill rates flagging.”