Turns Out the Pricey Walled Garden Approach Doesn’t Work with Mobile Ads, But Don’t Count iAd Out Just Yet

When Steve Jobs launched iAd last July, the idea was to provide a mobile advertising platform that took its cues more from television advertising than online advertising, which he deemed “irritating.” As with all things Apple, iAd only works within the walled garden—selling ads within apps on iOS devices like iPhones, iPads and iPod Touches.

Advertisers would pay a premium, but could expect an advertising experience perfectly built for its environment.

According to information from the research firm IDC, however, the sales strategy that works so well to sell Apple devices hasn’t necessarily paid off in the case of Apple’s attempt to dominate mobile ad sales.

The Wall Street Journal says:

“But response so far has been tepid: Marketers say they have been turned off by iAd’s high price tag as well as Apple’s hard-charging sales tactics and its stringent control over the creative process.”

Apple Insider’s Daniel Eran Dilger, however, points out that the situation may not be as dire as IDC is making it seem. Last year IDC reported that Apple tied with Google for 19 percent of the market for mobile display ads. This year it’s down to the no. 3 with only 15 percent share. Millenium Media took the no. 2 spot and Google’s AdMob pulled in first thanks in part to more reasonable prices and the act that its device agnostic.

But as Mr. Dilger points out, Apple, which started with just 9 percent of the market of the market in 2009 (launching into mobile advertising with the acquisition of Quattro Wireless after losing a bid on AdMob to Google) has grown significantly and is still ahead of Jumptap, Microsoft, and Yahoo for example. Google, on the other hand, which 27 percent share in 2009 now has 24 percent share.

With iAd, the Journal reports, Apple is making a rare decision to compromise. In July it lowered the minimum commitment from advertisers and it’s now making the pricing more flexible, and is even hosting advertisers on campus—a first for Apple, but standard fare for the likes of Google, Yahoo, and Facebook.

Weighing those moves against the poor overall market for mobile ads, Mr. Dilger says

“Apple’s share is actually larger than Microsoft and Yahoo combined, making it curious why the Wall Street Journal and IDC worked so hard to portray iAd’s $95 million in revenue as a fumbling failure destined for certain death.”

Turns Out the Pricey Walled Garden Approach Doesn’t Work with Mobile Ads, But Don’t Count iAd Out Just Yet