Apple’s iAd mobile advertising program continues its rollout: The newest feature, iAd for Developers, will allow iPhone developers to buy iAds to promote their apps within other apps.Until now, Apple has focused on getting big brands to advertise in iAds, such as its two launch advertisers, Nissan and Dove.
But the new iAd for Developers program is Apple’s way of getting more (albeit cheaper) ads in its system to fill its inventory glut, while also moving more app downloads through its App Store, and helping the developers who run its ads in their apps make a little more money. A potential win-win-win, if it works out. (Here’s what the new ads look like.)
Good news for Apple: So far, all of the developers we’ve talked to are interested in the program, even though these sorts of app ad exchanges have existed from other providers for a long time.
How much is it going to cost developers to advertise their app within other apps?
Apple won’t say, but we’re told by a participating developer that Apple will be initially charging 25 cents per click for iAd for Developers.
This is cheaper than Apple’s iAd for brand advertisers program, which includes both a cost-per-impression fee — 1 cent per impression, or $10 per 1,000 impressions — and a hefty $2-per-click “engagement” fee.
While other app-ad-exchange programs run on a cost-per-acquisition basis, Apple’s is not. Not yet, at least. We assume this program will evolve over time, with rates and structures varying based on success.
How does the iAd for Developers rate translate into a cost-per-acquisition basis, if you’re used to that metric?
One developer we spoke to is assuming that good iAds for good free/cheap iOS apps could result in about a 20% conversion rate, suggesting a cost-per-acquisition around $1.25. (One new customer for every five clicks, at 25 cents per click.)
So if the lifetime value of a developer’s app customer is more than $1.25, iAd for Developers could be a profitable way to attract customers.
We’ve recently heard of iPhone-app user acquisition costs through other networks in the $1 range, so it sounds like Apple’s offering could be competitive, but skewing toward the high end.
Apple has also posted an FAQ with some more information on iAd for Developers. Basically:
- The apps being advertised will be available for download in the background from within other apps, without leaving the app, meaning that users won’t be booted into the App Store to download the apps, or won’t be booted into the home screen to watch them install. (Here’s a step-by-step walkthrough of how they work.)
- You can exclude competitors’ ads from your app, based on specific keywords, URLs, and application Apple IDs
- You can’t choose which specific app ads display within your apps; in other words, you can’t tell it only to display ads for your own apps
- Apple is handling all the targeting and you can’t specify which apps you’d like your ads in
Meanwhile, bigger picture, here’s our latest impressions on iAds, after talking to a bunch of developers: So far, it’s a little slow, but it’s still very early.
After a quick burst of launch activity, some developers tell us they’re surprised how slowly the iAd rollout is going; that they only see the two companies’ iAds running; and that fill rates hover in the single-digits to around 10%.
But it appears (and makes sense) that Apple is actually rolling out iAd slowly on purpose, to make sure it doesn’t unleash a monster before it’s happy with the way everything works.
After asking Apple when more iAd campaigns would roll out, one developer tells us that Apple said, “We will ramp up the number of ads served in the weeks and months ahead.”
Important to note: Besides the deliberately slow rollout, it’s also a slow advertising period.
We’ll be able to really judge the iAd program — for developers relying on it for ad income, and for Apple’s prospects in the mobile ad industry — closer to the holidays.
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