After six years of trying to gain market share with an end-to-end mobile advertising solution, Apple (NASDAQ: AAPL) will reportedly stop directly selling units of its iAd business.
BuzzFeed reported that the iPhone maker plans to stop being directly involved in the creation, sales and management of iAd units, leaving those responsibilities to publishers. Citing "multiple sources familiar with the company's plans," BuzzFeed said Apple will phase out its sales force completely as early as this week and will update its ad platform to enable publishers to sell through it directly. Publishers will pocket 100 percent of the revenues they generate.
The move marks an about-face for Apple, which had insisted on handling the technical and creative aspects of iAd since the platform's 2010 launch. (The company also insisted advertisers pay $1 million just to be part of the platform.) That strategy proved to be a stumbling block right out of the gate, though, forcing campaigns to be delayed by weeks or months. Apple was also criticized for its unwillingness to share marketing data.
Major brands such as Citi, DirecTV and Nissan were early iAd partners, and Steve Jobs predicted that Apple would claim 48 percent of all mobile ad revenues in the second half of 2010. Instead, eMarketer estimated that Apple took 2.6 percent of net U.S. mobile ad revenues in 2014 and was expected to account for 2.8 percent in 2015.
Worldwide mobile ad spending is expected to top $100 billion this year, according to eMarketer, driven largely by grown in video ads. And carriers continue to chase that market: AT&T (NYSE: T) is hoping to leverage its acquisition of DirecTV by selling cross-screen ads through its AdWorks division, and Verizon (NYSE: VZ) reportedly acquired Millennial Media (via its AOL business) in part to strengthen its ad platform as it ramps up its Go90 mobile video service.
Carriers haven't played a major role in mobile advertising since the iPhone ushered in the era of the smartphone, which paved the way for in-app advertising. If they can find an audience for their mobile video offerings, though, they may be able to carve out a significant share of the mobile ad market. And Apple's move to allow publishers to sell ads themselves may give iAd a much-needed boost.
- see this BuzzFeed report
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