Apple is hitting the road to showcase its new mobile-device advertising capability, dubbed iAd, and has indicated it could charge as much as $10 million to be part of a handful of marketers at the launch, according to a person familiar with the matter.

Ad executives say they are used to paying between $100,000 and $200,000 for similar mobile deals.

Earlier this month, Apple unveiled iAd, a software system to offer ads in the applications available in its App Store. Ads are likely to start appearing in applications on its iPhone and iPod Touch devices in June, and its iPad later in the year, according to the person familiar with the matter.

Apple is making waves on Madison Avenue with its price tag, which comes with initial demands for greater control over advertisers’ marketing campaigns.

“It’s a hefty sum,” says Phuc Truong, managing director at Mobext, a mobile marketing business owned by Havas SA whose clients include Sears, Choice Hotels, Amtrak and Volvo. “What Apple is trying to do is certainly above and beyond what’s been done in the past.”

An Apple spokeswoman said the company will sell and serve the ads and declined further comment, except to reiterate that app developers will receive 60% of the revenue. Apple gets the other 40%.

Apple on Wednesday said it has scheduled a developers’ conference for June 7-11, where it is expected to unveil its next iPhone. It would be up to developers whether they want to include ads in their apps, although the financial incentive is there.

A handful of other companies sell ads that appear in Apple device applications, including AdMob Inc., which Google Inc. announced it would acquire last year for $750 million. AdMob says Apple’s entry into ad selling is going to boost competition and development in the space, says Jason Spero, vice president of AdMob North America.

Zaw Thet, chief executive of mobile ad firm 4INFO Inc., said Apple’s move is likely to spur other mobile ad startups to shift the focus of their developments away from the iPhone to other mobile systems, such as Google’s Android.

Despite the high price, ad executives at agencies from Boston to New York and San Francisco to Los Angeles have crowded into conference rooms in recent weeks to listen to the tech company’s pitch for iAd.

Discussions over possible deals are ongoing but several ad executives said they are beginning to prepare creative ideas for campaigns.

One example Apple has been showing advertisers is an ad for Nike’s Air Jordan basketball shoe, says Baba Shetty, chief media officer at Boston-based ad agency Hill Holiday, owned by Interpublic Group. When a user is in an application, an animated banner ad appears on the border of the screen, along with an iAd logo. If the user taps on the ad, it expands across the screen, displaying a video, an interactive store locator and exclusive offers at local stores, among other features.

“It was very easy to think about the several minutes of interaction time consumers can spend with the ad. It’s incredibly attractive,” Mr. Shetty says.

Apple is planning to charge advertisers a penny each time a consumer sees a banner ad, ad executives say. When a user taps on the banner and the ad pops up, Apple will charge $2. Under large ad buys, such as the $1 million package, costs would rack up to reach $1 million with the various views and taps.

The audience is sizable: Apple has sold 85 million iPhone and iPod Touches so far and estimates that users spend about 30 minutes a day using applications.

Marketers will be able to target ads to groups of users based on consumers’ download preferences from its iTunes store, according to ad executives. For instance, a marketer could choose to show its ads to people who have downloaded financial applications or reggaeton music, horror movies or comedy TV shows.

Marketers also will be able to target ads to users in a general location like a city, although they cannot target ads to individual consumers or access personal details.

Apple is seeking high quality ads from big-name marketers for the launch, ad executives say. The ads will go through an approval process, and Apple will build the ads itself during the first couple of months to make sure they work well and attain a certain aesthetic and functionality, ad executives say. Eventually, Apple plans to create a developer kit so that agencies will be able to design and create the ads themselves.

The process is causing tension among some ad directors, who are hesitant to give up control.

“As a creative director, I can completely understand that they created this new baby and they want to make sure it gets born looking gorgeous. But as a creative director, I don’t feel completely comfortable letting Apple do the creative,” says Lars Bastholm, chief digital creative officer at WPP’s Ogilvy.

Marketers have been much slower to buy mobile ads than expected, largely because consumers had yet to visit mobile Web sites in meaningful numbers and the process of creating mobile ad campaigns was a technical and logistical feat.

Apple isn’t making that any easier, with requirements that advertisers use special technologies for its system, says Jordan Rohan, an Internet analyst with Thomas Weisel Partners.

But, ad executives say that if Apple nails its pitch, it could open up the gates for mobile advertising.

“I think the tipping point has come,” says Mark Read, chief executive of WPP Digital. “The absolute revenues now are tiny, but you can see how these things are starting to fit together.”

Resource:
http://online.wsj.com/article/SB10001424052748703648304575212411500983040.html?mod=rss_Today%27s_Most_Popular

Apple will hold the WWDC from June 7 through June 11 in San Francisco at the Moscone West conference center, a popular venue for local technology conferences.

Naturally, Apple did not make any statements about whether it would launch new hardware at the show, but did make it clear that iPhone OS 4 would be in the spotlight. Apple announced a developer preview of the OS on April 8.

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Not surprisingly, an Apple announcement of a new iPhone will be eagerly anticipated. However, the saga of the lost or stolen prototype iPhone has overshadowed the launch, as Gizmodo has already printed a hands-on evaluation of the new prototype. Consumers, of course, will be interested to see whether the site was indeed right.

That iPhone prototype issue is currently being treated as a potential criminal investigation by the San Mateo Country District Attorney’s office, although no charges have been filed. Police seized computers and servers belonging to Jason Chen, a Gizmodo editor, and reports now say that police know and have interviewed the individual who found the prototype at a Redwood City, Calif. cafe.

Apple said sessions would be concentrated in five areas: application frameworks, the Internet and Web, graphics and media, developer tools and the core OS. Apple will almost certainly encourage and assist developers into implementing HTML 5 technologies into their applications, as Apple has rather vocally criticized Flash and has banned it from even content creation. However, a press release announcing the WWDC show listed just one, “Using HTML5 Local Data Storage”.

Additionally, there will be five iPad and five iPhone Apple Design Award winners announced at WWDC 2010, Apple said. “There is no requirement to enter and winners will be selected from the App Store based on criteria that includes design, technical excellence, innovation, quality, technology adoption and performance,” the company said. Apple has also listed sessions on iAds, its new integrated mobile ad platform, which have already been criticized for misreading customer preferences.

Resource:
http://www.pcmag.com/article2/0,2817,2363173,00.asp

For ABC fans it sounds like a nightmare, and it’s great news for the ABC itself, since its app will remain ad-free. But in fact it’s great news all round: it means high-quality commercial publishing may yet live, not die under the benign, democratic, jackboot of Google.

The true genius of the iPhone, as well as any potential the iPad might have to change the world of publishing, lies in the invention of the application – something that didn’t really become clear until well after the iPhone was released in 2007 and the new app development industry really started hitting its straps.

It’s also a demonstration of the enduring power of great distribution to foster great content. We are learning that distribution is king (not content) but content is the monarch’s prime minister.

Apple created a seamless distribution system with the iPhone and the app store and now 185,000 apps have been created and 4 billion have been downloaded.

I’m now used to reading books on the iPhone. One app has 23,000 free books that are out of copyright that can be quickly downloaded and easily read, while another, Kobo, sells new releases.

So I’m reading books and newspapers, watching TV, playing Scrabble, doing my banking, running my calendar, looking for restaurants, checking the footy scores all through apps on my iPhone. The iPhone is becoming more and more essential every day, thanks to the apps.

The price range of the apps is huge – from zero to $70 (that I know of, for a GPS navigation system) – and some apps are asking for a monthly subscription (not very successfully I suspect).

In a couple of months Apple will launch a series of changes to the iPhone system that will take this system to the next stage, including embedded advertising.

When Apple’s new operating system for the iPhone, OS4, is released soon, it will contain what Apple calls iAd – an advertising platform that will allow app developers to put ads into their applications.

The most popular apps are free, or very cheap, which means no-one is making much money. But it turns it was a kind of Trojan horse strategy – either deliberate or not.

As Apple chief Steve Jobs said when he announced iAd a week ago: “The average iPhone user spends around 30 minutes a day using apps. Now, if we said we wanted to put an ad up every three minutes, that would be 10 ads per device per day. We’re going to soon have 100 million devices [running the iPhone OS]. That’s a billion ad opportunities per day in the iPhone and iPod touch community.”

Publishers thought the internet would be a Trojan horse as well – that they would give the content away for a while and then when everyone was hooked, start charging. But that didn’t work because, as I wrote on Friday in Business Spectator, content is not king, as they thought.

Presumably iAd will work on Apple’s new tablet machines as well, so publishers will be able to replicate and then enhance their traditional business model – charging for the content and putting advertising with it – on two devices, one large and one small.

Consumers will take their pick: one device that includes a phone and goes in your pocket, but has a small screen, or carrying an extra device with a big screen that’s easier to read. Maybe the iPad will eventually be a phone as well, so you just need that.

iAd is a direct assault on Google, or rather it completes the assault that began with the invention of the iPhone and continues with the iPad. Apps are simply a better and more reliable way to get content than the internet browsers on which Google relies.

More importantly, it turned out to be very difficult for a content vendor to make a living selling material of any value in a browser on the internet, distributed by Google.

Rupert Murdoch complains that Google “steals” the content, which is silly, but the effect is the same: content is being distributed for free.

The app store is now becoming much more analogous to the print distribution system that Murdoch grew up with, except for one thing: the barrier to entry into the system is very low, which means prices will be lower.

But at least they won’t have to be zero, and the publishing market will be able to find a new equilibrium that will support decent content.

Apple is taking a big risk, however, in making it a closed system. The new OS4 tightens controls so application developers can use no third party tools and software – mainly designed to prevent them using Adobe’s Flash system.

Jobs is once again betting that his fully integrated product design will prevail against an open platform.

It’s a repeat of the battle that Apple and Microsoft waged in the 1980s, which Microsoft won. This time Google’s Android smart phone operating system and Adobe’s Flash are taking the role of Microsoft.

Jobs is betting that, this time, his devices, the apps and the app store are a sufficiently unique distribution system to give Apple a decisive advantage. With iAd as well, he could be right.

The battle between Google and Adobe’s open system and Apple’s closed one will be a king War of the Worlds. At this stage Apple has the advantage, but that’s how it seemed earlier in the fight between it and Microsoft, until the cheap manufacturers of Asia drove down the prices of clone PCs.

This time manufacturing cost is not an issue – it’s all about distribution of content. And Google doesn’t have iTunes or an app store that channels money to those who make the content.

Resource:
http://www.abc.net.au/news/stories/2010/04/12/2869846.htm