HAVE $400,000 TO SPEND?

December 14, 2011

As I’ve pointed out in my book and in this blog, mobile advertising is on the verge of becoming very big. The problem is that most people offering it don’t really understand who will buy the ads. This was made even more clear by a story in the Wall St. Journal by Emily Steel and Jessica E. Vascellaro.

According to their story, Apple’s iAd mobile advertising service, which sells ads within mobile apps on iPhones, iPads and iPod touches, has been a dud. They report that marketers have been turned off by the price tag, hard-charging sales tactics, and Apple’s control over creative. Advertisers pay a $10 CPM (cost per thousand) and $2 for every click-thru. Apple has decided to reduce the minimum annual commitment of $1 million to just $400,000!

Apple’s major competitor, Google’s AdMob service, which is available on all mobile devices, charges a $4 to $12 CPM. The reports states that Apple is running training programs to teach the ad firms and clients about the mobile marketing landscape. Good idea, perhaps, but who is teaching Apple and Google?

By its very nature, mobile advertising’s greatest advantage will be for smaller local firms that can target info to people within a few miles of their place of business. Mobile will become a powerful retail tool, not a traditional branding tool. When people offering mobile ads understand this and price it for smaller advertisers it will boom.

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