Roughly two weeks after Apple (NASDAQ:AAPL) first introduced its iAd mobile advertising network, some developers are reporting impressive revenue spikes, but others question whether the initial results are sustainable over the long haul. Jason Ting, developer of the iPhone flashlight application Light, reported first-day iAd revenues of $1,372.20 on 9,300 ad impressions, translating to a click-through rate of 11.8 percent; in an email to Business Insider, Ting writes "I was quite surprised at the first day numbers... I hope it keeps up!" App Cubby founder David Barnard tells The Wall Street Journal his Mirror Free app initially fared even better than Light, but revenues quickly fell back to earth, adding he believes developers will eventually earn between $15 and $30 for every thousand iAds, compared to the $148 per thousand reported by Ting. Still another developer, Kenneth Ballenegger, writes on his blog that he is earning $10 to $15 for every thousand iAds, but notes that Apple's media-rich advertisements don't refresh as quickly as other mobile ads, further calling into question the network's revenue potential.
iAd launched with campaigns from only two advertiser partners, Nissan and Unilever, limiting the number of total ads Apple can insert into iPhone applications. Although marketers committed $60 million to rolling out advertisements across the iAd platform, most campaigns missed the network's official July 1 launch, with the majority of declared iAd advertisers still fine-tuning their concepts and creative. AdAge reports Apple itself is a major contributor to the delays: The computing giant is handling all iAd technical production, telling agencies it needs six to eight weeks to build an ad after the creative is completed. Most marketers are spending a minimum of $1 million to launch on the iAd network, with some paying more than $10 million for levels of exclusivity within their respective industry vertical--for example, Nissan is the sole automaker advertising on iAd, and Citi is the lone bank. Apple is charging $10.00 per thousand impressions for each iAd banner as well as a cost-per-click fee of $2.00.
iAd could yield developer revenues reaching $825 million this year, according to a research note published in May by Bernstein Research analyst Toni Sacconaghi. Estimating that iPhone developers presently generate $1 billion to $1.8 billion in annual App Store sales, Sacconaghi notes that iAd revenues will herald an annual increase between 40 percent and 80 percent. Sacconaghi anticipates Apple will collect about $815 million from iAd this year: $550 million from apps and $265 million from media providers like publishers and television networks. He adds Apple will generate roughly $58 billion in total worldwide sales this year.
For more on the initial iAd returns:
- read this Wall Street Journal article
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