Apple Inc. plans to charge $1 million for in-application iAd packages and $10 million for launch campaigns. Will brands pony up or say "Thanks, but no thanks"?

The $10 million price tag would reportedly give brands the first-mover distinction of being one of the initial advertisers to run in-application ad campaigns across Apple?s much-hyped iAd platform, with Nike rumored to be readying creative for the launch. While $10 million is obviously a significant barrier to entry, even the $1 million package is five-to-ten times what ad executives typically pay for a mobile sponsorship.

?I think this is a pretty odd tactic if Apple wants to help advertisers get over their issues with spending money on mobile advertising,? said Evan Neufeld, vice president of marketing at Ground Truth, New York. ?Apple is coming to these conversations, it seems, less in the spirit of true back-and-forth partnership with brands, and more with a ?love it or leave it? attitude that I don?t think will resonate.

?Tactics like this, along with their looking to ban or limit third-party application measurement on iPhones, make me think that despite being a great marketer, Apple has a lot to learn about how to be a great?or even adequate?ad seller,? he said.

HiAd
There is great debate as to whether Apple?s iAd will move the needle for mobile advertising (see story).

"It's a great time to be both a buyer and seller of mobile rich media," said Eric Litman, chairman and CEO of Medialets, New York. "Everyone ultimately will win from more choice as richer units become the standard display ad model for mobile."

Some marketers believe that there are key issues surrounding iAd that still need to be addressed (see story).

Hefty price tag aside, Apple has stressed that it wants control over much of the creative, a stance that has the potential to alienate brands and advertising agencies.

?There is probably going to be some reluctance on the part of big-brand marketers to cede creative control to Apple, which, for all its excellence in marketing its own devices, is an unproven quantity in terms of creating advertising for other brands,? said Noah Elkin, senior analyst at eMarketer, New York.

?On the other hand, there?s the desirability of the users of Apple products who are very appealing to marketers for their usage habits and the demographic qualities that they have,? he said. ?This will compel some brands to go along with Apple, at least in the near term, if they want to retain those users.?

Closed circuit
In February, Apple took a stand against location-based advertising within applications for the iPhone and iPod touch, a decision that has ramifications for the mobile advertising industry as a whole (see story).

With iPhone OS 4, Apple reiterated its obdurateness against Adobe Flash (see story).

In addition, Apple will not let developers disclose device data to third parties without express consent, making it hard for developers to deploy crucial analytics to get insight to drive success of their iPhone applications (see story) .

?We?ve seen a lot of moves from Apple, even in the past month, very tightly restricting how it wants advertisers and partners to work on its devices,? Mr. Elkin said. ?For advertisers, there is some element of going along with it because they want access to those users, but it is an open question whether this should continue.

?Will advertisers start to chafe at the restrictions and conditions Apple is imposing, and start to move more of their budgets to growing platforms like Android, where they don?t face the same level of conditions or restrictions imposed by the manufacturer??

Search me
Apple responded to Google?s acquisition of mobile ad network AdMob by acquiring Quattro Wireless (see story), and there has been much speculation that Apple will launch its own search engine to compete with Google (see story).

Apple?s acquisition of Siri, a startup that recently launched an iPhone application that lets users make simple voice commands to execute more complicated tasks, signals that the company is developing voice-based commands for wireless devices.

Interestingly, Android-based devices already feature voice control.

?By purchasing Siri, a company that?s active in mobile search and has a voice search app, it shows that Apple is serious about advertising not just as a complement to its devices, but as  a revenue-generator for its company,? Mr. Elkin said. ?Part of what?s going on with this [iAd] announcement, maybe mobile advertising will not be a big revenue generator this year, but Apple is looking for it to become a revenue-generator in the near future.

?There?s been a lot of discussion as to whether Apple will compete with Google in search, and if they do, Apple will go about it in an Apple way, not necessarily trying to copy Google, but definitely trying to capture some of the interest in search on mobile devices,? he said.

?This acquisition [of Siri] signals how they might do that.?

Home run or strikeout?
Some see iAd as a potential game-changer (see story), while others decry Apple?s tendency to control every aspect of its platforms (see story).

Indeed, Apple is unlikely to win over skeptics by setting an eight-figure price tag for the first in-app campaigns on iAd.

?Obviously, the $10 million price tag for the first Apple iAds is stunning,? said Jeff Hasen, chief marketing officer of Hipcricket, Kirkland, WA. ?It reminds me of the baseball team that signs the $200 million player.

?The expectations for Apple are similarly high,? he said. ?Will the iAd be the home run Apple thinks?

?Sure, it reaches a valued demographic, but one that is still just a subset of the total mobile audience.?

As much as it would like to be, Apple is not an island. Rather, it represents a trifecta of platforms that brands can use to engage with?admittedly high-value?consumers.

However, marketers must have all of their bases covered, from feature phones to all of the various smartphone platforms that their target demographics use.
 
?Mobile needs to be a part of the overall marketing mix, though, just like a ballplayer needs to fit into a team environment,? Mr. Hasen said. ?That can?t really happen if you blow your entire payroll on one player or one huge ad spend.

?Just like baseball has adopted statistical analysis to identify players for ?value,? mobile marketing analytics show that SMS, often combined with display ads via networks and in games and applications, consistently deliver the best return,? he said.

?So while we?re excited that mobile has apparently broken the $10 million barrier, we really see this as opening up greater opportunity across all mobile advertising and marketing.?