How iPhone 5 Might Rescue Apple's Torpid Mobile Ad Business


Photo: Methodshop / Flickr, CC

The launch of Apple’s iPhone 5 today might inject some new life into Apple’s mobile ad business, iAd, because its new screen is bigger.Apple’s domination of the phone and tablet mobile space tends to overshadow its failure to generate significant revenues from mobile advertising. Google, Pandora, Twitter, Millennial Media, and Velti all probably make more money than Apple’s iAd, even though Apple owns the two most popular mobile ad platforms, iPhone and iPad.

Apple is expected to make only $75 million in iAd sales this year, according to eMarketer.

The iPhone 5 will have a 4-inch retina display that’s a half-inch larger than the iPhone 4S, according to AdExchanger. And that has ad execs salivating. Although it doesn’t sound like much, the mobile ad world is working on a much smaller canvas than other media, so an extra half inch is like a step up from a vacuum tube TV to a giant flat screen.

Here’s what they’re saying:

Michael Collins, CEO of WPP mobile agency Joule: “To start, mobile, unlike online, is not a cluttered environment, so you’re already starting and ending with one banner per page … So your ability to make an impact with a larger palette is even higher, whether it’s in-app or on the mobile web.

Zach Kubin, account manager for Joule: “When we compared screens of a variety of smartphones in the market, including iPhone, Android and Blackberry, we saw 200x to 300x higher consumption for phones with a larger screen size.”

Rachel Pasqua, VP of mobile at Hearst digital agency iCrossing: “I talk to VCs a lot and the questions I get about mobile advertising tend to be a variation of ‘Is this space over-hyped?’ and I have to think that the new iPhone is going to make a difference. After all, 176 extra vertical pixels doesn’t sound like much, but it’s just enough to make the creative more engaging.”

Not everyone is enthused, however.

Ben Schachter, analyst for Macquarie Securities: “I don’t expect much of an impact on iAds, but what we are following closely is the continued move away from Google products by Apple.”


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