April 9, 2010 7:12 pm

Agencies and developers welcome Apple’s iAd

Advertising agencies and software developers on Friday welcomed Apple’s new iAd network as a potential breakthrough that could give an important boost to the small but fast-growing mobile advertising market.

However, they also warned that making ads for iAd would be expensive and it was likely to take some time for Apple to demonstrate it could build a big enough market to make it worthwhile.

Announcing Apple’s first move into advertising on Thursday, Steve Jobs, the company’s chief executive, promised a new generation of mobile adverts that would be far more engaging than current formats, which he said “suck”.

Thanks to his company’s control of the operating system that underpins the iPhone, iPad and iPod touch, Apple’s network would be able to serve up more creative forms of advertising to run inside the “apps” users download on to these devices, he said.

Advertising inside apps, although still small, has become the hottest corner of the mobile advertising business, prompting a race between Google and Apple.

While Google beat Apple to a deal to buy mobile network AdMob, Apple was now poised to leapfrog Google by enabling more effective “in-app” ads, according to agencies and developers. These would let advertisers do things like run video without forcing them first to leave an app to visit a different website.

“From a developer point of view it’s fantastic,” said Magnus Jern, chief executive of Golden Gekko, a mobile applications developer. “It has lots of advantages because users don’t need to leave the app and there would be higher CPM [ad rates].”

“It’s a major leap forward from the majority of ‘in-app’ iPhone advertising formats that have existed to date, which were just simple slabs of text with a logo and a call to action,” said Nigel Morris, chief executive of Aegis Media North America.

The new ad formats could also create big opportunities for e-commerce groups, as consumers would be able to buy things from inside an app, said Julie Ask, an analyst at Forrester.

Advertisers said iAd had the potential to be the first advertising network to take full advantage of new touch-screen smartphones.

“We are excited about them getting mobile advertising right because nobody has done that so far,” said Mark Cridge, chief executive of Glue London, a digital agency owned by Aegis.

“We are starting to see the whole idea of [touch]screen-based smartphones take root here,” said Jonathan Nelson, head of Omnicom Digital.

Yet, observers warned there could be drawbacks.

Calling the idea a “make or break”, Mr Jern said: “From an advertiser’s point of view, they will be worried about additional ad formats and [iAd] not having huge volume or reach initially.”

Eden Zoller, a principal analyst at Ovum, said producing the ads would be costly and there was a danger they could be intrusive.

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