Apple’s mobile ad service attracts big brands

Apple first unveiled its iAd service in April, and its CEO, Steve Jobs, outlined further details about this offering at the organisation’s annual Worldwide Developers Conference.

To date, Apple has secured $60m in advertising sales from businesses eager to leverage this medium, giving iAd a strong provisional foothold. “We think it’s going to be 48% of the entire US mobile display ad market,” Jobs said. “We think we’re off to a pretty great start.”

Noah Elkin, a senior analyst at eMarketer, the research firm, similarly suggested that Apple’s entry into this sector may finally bring mobile advertising towards the mainstream. “For something that hasn’t been in the market and is unproven, that’s a lot of money,” he said. “By getting behind mobile advertising in this way, Apple could create a rising-tide situation that will give the business a lot of                                                         momentum.”

Julie Ask, an analyst at Forrester, the technology and research specialist, said the minimum charge for advertising through iAd stands at an estimated $1m, but added it may be worth the money. “Advertisers can count on the buzz surrounding iAd’s launch on July 1. That alone may justify the initial buy,” she said. “These initial advertisers are a smart bunch. A few million dollars isn’t much to any one of them, but these are sizeable buys for mobile.”

T&T Comment

In the UK, mobile advertising was worth £37.6m in 2009 and experienced 32% growth on the previous year. That said, mobile advertising represents just 1% of total digital advertising spend.

The increase in mobile advertising growth over the past 12 months is due mainly to the improvements in targeting, immediacy and return on investment. Mobile internet usage has also seen an uptake over the past 12 months, with 18.9m handsets now accessing the internet every month.

Mobile advertising may still be in its infancy in the UK, but in Spain 75% of mobile phone owners receive ads, in France 62% and in Japan 54%.

In Japan today, already 44% of mobile phone owners click on ads they receive on their phones.

Presently, in the UK, the most common form of mobile advertising is still via SMS. This however, has been in decline for a number of years as conversion rates have dropped and technology has advanced.

The launch of Apple’s new iAd service is likely to boost UK mobile advertising spend further. Apple’s dominance over the Smartphone market will most likely lead to dominance over mobile advertising in the same way that Google rule search marketing. We will be keeping a close eye on iAd’s development and advise as and when it becomes a viable advertising medium for consideration.