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Apple’s $60 Million iAd Experiment

November 30, 2010 by Ed Busby, Dominic Field, and John Rose
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This piece is an excerpt from the BCG report, The CMO's Imperative: Tackling New Digital Realities.

  • Apple's iAd has attracted more than $60 million from premium advertisers for 2010.

  • Demos for iAd have been visually impressive, but marketers are still evaluating this new advertising platform.

 

Earlier this year, Apple completed the acquisition (and subsequent closure) of Quattro Wireless, one of the largest mobile ad networks in the United States. The company soon after announced the creation of iAd, an effort to create more-effective mobile advertising to drive revenue to its application developers.

The new ad units would enable users to view ads without leaving the applications and would feature very rich media. Apple attracted more than $60 million from premium advertisers, each of which pledged a minimum of $1 million, for the second half of 2010—essentially doubling the size of the mobile display market.

The early demos have been visually impressive, but questions remain about the relative effectiveness of these new ad vehicles. The mobile medium is widely perceived as a natural fit for coupons, promotions, and location-based services. However, it remains an open question whether the new displays and formats will be effective media for brand advertising. Progress has been cautious, as Apple, advertisers, and creative agencies learn to work together effectively on developing appropriate mobile campaigns.

If the results of this $60 million experiment are positive, several developments could finally take mobile advertising off the sidelines. First, advertisers experimenting now have expressed a willingness to increase their commitments. Moreover, other advertisers will likely begin to make greater use of these mobile ad vehicles. And we would expect other ad-based platforms, such as Google’s AdMob, to follow in iAd’s tracks to develop new types of innovative ad inventory as well.

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