Apple will announce the first brands to use iAds in Europe this week, after a mixed reception to its new mobile advertising service in the US.
Agencies gave Apple’s entry to the mobile ads market a rapturous reception in April, hoping it would add fuel to a slow-burning format that has yet to live up to its potential.
But that enthusiasm has waned amid high prices for ads, a slow production process and client withdrawals.
“They are expensive and a pain to deal with,” said one media agency’s digital chief.
Apple has twice delayed iAd’s European launch in recent weeks, and in some cases been prepared to discuss running campaigns for less than its $1m minimum spend in order to attract good names as advertisers.
“Apple is in a weaker position than you’d think,” said another agency’s digital leader.
The European launch will allow developers and advertisers in the region to target iPhone users the same way as their peers have in the US. Early adopters could include L’Oréal, Renault and Nestlé, with two or three campaigns running on iPhone and iPod touch apps in early December. Most will not run until next year, however.
“Apple is still figuring out how to sell advertising,” said one senior marketing group executive. “You don’t just become a sell-side media company overnight. The infrastructure is missing at Apple right now.”
The executive added: “Clients don’t really take it that seriously yet. It goes in the experimental category, along with most of the rest of mobile advertising.”
In June, Steve Jobs, Apple chief executive, said it had received $60m in commitments from advertisers including Nissan and Unilever for the programme, the first designed for high-quality, interactive creative content within smartphone applications.
Mr Jobs crowed that Apple had captured half the projected US spending on display ads for mobile devices.
Last week, Apple announced it would bring iAds to Japan in partnership with Dentsu, the country’s largest agency group.
“The sheer number and profile of iPod touch and iPhone users is valuable,” said Christophe Cauvy, head of digital for EMEA at McCann-Erickson. “The targeting aspect, using iTunes data in addition to demographics and location, is a great tool for advertisers. It’s a rich experience for users.”
Most advertisers have been happy with their results, said Alexandre Mars, chief executive of Phonevalley, Publicis Groupe’s mobile agency, but added: “They had some issues with the timing. The interaction with Apple was not easy.”
Patti McGreal, manager of interactive marketing at Campbell Soup, said iAds with features that appeared to “steam up” the screen on viewer’s phones and offered quizzes and recipes, had garnered a 0.8 per cent click-through rate – three to 10 times higher than ordinary banner ads.
“We wanted to make sure that once a consumer clicked in they engaged for a long time and they are engaging for over a minute on average,” she said.
But not everything has gone as planned. Of the 17 initial ad client partners Apple announced when it unveiled iAds in June, at least two have pulled out: Chanel and Adidas.
Apple’s US mobile ads should bring in about $105m in 2010, said Karsten Weide, analyst at IDC, against $400m in US sales for Google’s search and display ads. “Five to 10 years out, I think Android and possibly others will crush Apple.”
But Mr Mars said the “halo effect” of Apple’s brand should not be discounted. “It’s always easier [to attract clients] if Steve Jobs is sending an e-mail to the CEO.”