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Rivals win as iAd boosts business

aus bus pix Jobs Apple chief executive Steve Jobs Source: AP

APPLE'S iAd interactive mobile ad service is having an unintended impact on rivals: It is helping them by generating advertiser interest.

When Apple launched iAd last July, some industry executives worried that they would lose mobile advertising business to the computing giant.

Competitive concerns were sparked after the July rollout of iAd included commitments from top brands such as Unilever and Nissan to pay $US1 million or more to have interactive ads placed inside iPhone apps.

But instead of losing business, ad executives say Apple's entry into the market is giving them a boost. That's because iAds has made big marketers to pay attention to mobile advertising in the first place

Apple has "brought sexiness to mobile ads", said Carnet Williams, chief executive of Sprout, which helps create and deliver interactive.

Mr Williams said it has received roughly four times as many calls from publishers and agencies since Apple turned the spotlight on iAds.

Until recently, the mobile advertising market was a small fraction of the $US25.1 billion US online advertising market, according to researcher eMarketer.

Now that's changing as Apple has joined pre-existing providers of interactive mobile ads, such as Google's AdMob unit, in offering ads that let consumers play a mini-game or interact with the ad without having to leave or the close the app they were using.

Google said during its third quarter earnings call that mobile advertising is adding $US1bn annually in revenue.

Some ad executives say Apple's foray into mobile advertising particularly spurred marketers to boost their spending in the broader category.

And not all those dollars are being allocated from digital budgets, with some coming from more traditional ad spending like TV or direct response, said Phuc Truong, managing director at Mobext, a mobile ad agency owned by French ad company Havas.

Alexandre Mars, head of mobile for Publicis Groupe, adds Apple's cachet with big brands has helped legitimise the entire market.

"The mobile marketing business is different now," said Mr Mars, noting that none of the other mobile advertising companies could have attracted the interest that Apple has gotten from top brands.

Yet many ad agencies and brands find Apple's rates too high, giving competitors like Google, Medialets, Crisp Wireless and 4INFO an opening to grow their businesses by offering cheaper rates to do similar things.

People familiar with the matter have said Apple requires a minimum $US1m iAd commitment, but rival agencies said they can put together an ad campaign for as little as tens of thousands of dollars.

"A seven-figure mobile media spend historically has been few and far between, so if we're able to create a beautiful unit similar to the iAd but without the spending commitment, that's always a good alternative," said Mr Truong.

Rivals have also stepped in when some brands have grown frustrated with iAds.

People familiar with the situation have said marketers were experiencing delays in getting their iAds to market as Apple kept a tight rein on the creative aspects of ad-making.

Overall, "it's become easier to make a pitch," said Crisp Wireless chief executive Boris Fridman, adding that his company has seen between 30 per cent and 40 per cent increase in its business since iAds launched.

Apple has also upped its game since it launched iAd, beefing up its staff, reducing the time it takes to produce the ads, and loosening its tight control, according to a person familiar with the situation.

Apple recently expanded iAd to Japan and is expected to soon offer it in Europe.

Even though it's currently only available for iPhone apps, Apple watchers believe it's likely a matter of time before it is also available for iPad apps.

"When Apple gets into the game, it raises the stakes for everyone else," Mr Truong says. "It is like the tide raising all ships."