Performance vs. Brand Advertising on iAd
I’ve got some more thoughts on iAd after trying iAd out on one of my apps for about a month now.
As I noted in an earlier post, Apple responded to a really low fill rate on their iAd program by enabling developer ads. Developer ads are simple banner ads that entice a user to download an iPhone app. Here’s what the use case looks like via Business Insider:
To Apple’s credit, the workflow is actually pretty good. It doesn’t require users to leave the app to download another one.
Since developers can’t really afford the insane $2 cost per click that the big media customers pay, Apple is charging $.25 a click instead, and no cost per impression. Theoretically, this should mean that the fill rate would be very high (as long as developers are not maxing out on their daily spend limit or too aggressively filtering out apps). Yet I’ve noticed a pretty big fall in fill rate (from about 30% to 20%) in the last month.
I think the main issue is that Apple never really intended iAd to be used for performance advertising. Performance advertising is about getting that direct action (in this case, an app download). Apple’s been pushing iAd as a great Brand advertising solution (where the user is not expected to go out and buy Dove soap from their phone). That’s why the premium brands are willing to pay so much per click and impression. By comparison, AdMob ads on the iPhone seem to be more geared toward performance advertising.
By introducing developer ads, I think Apple has tried to appease publishers at the cost of the perceived premium value of iAds. Sure, the developer ads aren’t as flashy as the premium advertisers’, but $.25 versus $2 a click for the same piece of real estate is quite a difference. Add the perception that iAds for developers are not cost-effective and you could come to the conclusion that Apple is doing it wrong. It doesn’t help that the premium brand advertisers seem to be frustrated with the process of dealing with Apple as a gatekeeper.
So what can Apple do to fix this? They should go back to their specialization: doing one or a few things really well. They should focus on iAd as a brand advertising platform. They should work on getting as many large partners onto iAd as quickly as possible. This will alleviate the growing pains that publishers (including me) are feeling with fill rates. Right now it seems like Apple is reacting rather than acting; following rather than leading. They need to show that they’re serious about carving their own niche in the mobile advertising space.