Mobile ads are adding up… for some developers, at least

Jason AnkenyApple (NASDAQ:AAPL) last week pulled the plug on Quattro Wireless, the mobile advertising network it acquired earlier this year for a reported $275 million--moving forward, the computing giant will focus its mobile ad efforts squarely on the fledgling iAd platform. Apple's vice president for iAd (and former Quattro CEO) Andy Miller confirmed the move in a message sent to developers and advertisers, stating the company is no longer accepting new campaigns on Quattro and will work to wind down existing marketing initiatives. As of Sept. 30, all iPhone and iPod touch campaigns will run exclusively across iAd. "Since the launch of the iAd Network just over a month ago, advertisers and developers have been telling us how much they love this powerful new way to reach iPhone and iPod touch users right in their favorite apps," Miller writes. "We believe iAd is the best mobile ad network in the world, and starting next month we're going to focus all of our resources on the iAd advertising platform." Miller adds that developers and marketers with questions about the transition should contact their account manager.

More than 10,000 iPhone and iPod touch developers have already signed up for iAd, according to a recent report in The Wall Street Journal. iAd promises more interactive and immersive rich media advertisements that keep users within an application instead of transporting them somewhere else--developers receive 60 percent of revenues derived from iAd campaigns integrated into their apps, with Apple claiming the remaining 40 percent. Initial developer reaction has been mixed: Last month, 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 wrote "I was quite surprised at the first day numbers... I hope it keeps up!") App Cubby founder David Barnard told 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, wrote on his blog that he is earning $10 to $15 for every thousand iAds, but noted that Apple's media-rich advertisements don't refresh as quickly as other mobile ads, further calling into question the network's revenue potential. 

A month later, iAd remains a work in progress. NuGames lead developer Giles Chanot blogs that his firm's new iPhone title Poodle Jumper generated a total of 1,714 downloads worldwide in its first week of release, yielding more than 31,000 iAd requests during the same period--according to Chanot, that's about 20 ad requests per average user. Sounds promising, right? Think again. "If Apple was able to fulfill all these requests, then even with a modest 1 percent clickthrough we'd be looking at around $900 revenue," Chanot writes. "Sadly, the fill rate has hovered around the 12.5 percent mark, so actual revenue has been much lower ($15.76 to be exact, after Apple took their 40 percent cut)." As Chanot points out, more advertisers are slated to make their iAd debut in the weeks ahead, which should improve the situation--marketers say Apple's insistence on retaining tight creative control over the platform has resulted in significant campaign rollout delays, with at least one previously announced iAd partner, luxury brand Chanel, scrapping its plans for the foreseeable future.  

But there is optimism for developers exploring ad-supported app revenue models. Arron La, the developer behind the Android Market application Advanced Task Manager, is also opening up on his experiences in the mobile software arena--on his blog, La writes that the premium 99-cent version of Advanced Task Manager yielded $18,060 in 2009 and $30,400 during the first eight months of 2010; according to revenue totals from mobile ad network partner AdMob, the free version of Advanced Task Manager, issued in November 2009, added another $29,000 to La's coffers, racking up $6200 in revenue last month alone. "AdMob is a viable revenue stream," La concludes. "At one point, it generated more revenue for me than my paid application. My free version was never in the highlighted list but it still accumulated a lot of users. I have around 700,000 downloads, daily requests of 300,000, and daily clicks of 3500." Without a larger study sample, it's probably unwise to draw conclusions regarding La's success or Chanot's struggles--suffice it to say developers can derive significant revenues from mobile ads, but there are still no guarantees. -Jason

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