iTunes drums up marketing ties

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ITunes has become hot marketing currency, with companies from Pepsi and Gap to 7-Eleven offering free downloads in promotions.

"If you want to be hip and stylish and in-line with Generation Y, get yourself attached to the iPod or iTunes in any way you can," said Gary Peterson of San Diego market researcher Gap Intelligence (no relation to the retailer).

In return for loaning its cool to other marketers, Apple ends up with a load of free media, from Pepsi's 2005 Super Bowl ads to The Gap's fall campaign. And with digital music still in its infancy, Apple is driving usage at iTunes and winning converts. Its share of digital downloads in 2004 was 67%, according to NPD Group, but during promotion periods such as the one with Pepsi, it's spiked as high as 75%.

"Anytime Apple can get consumers aware and trying iTunes, there's a huge benefit," said Russ Crupnick, analyst and president of NPD Group's music and movies business unit.

Still, there are those who fear Apple may spread its marketing currency too freely. "Using iTunes as a marketing tool is a good strategy for mainstream brands to lend some street cred to their `mainstream-ness,"' said Lucian James, president of the marketing consultancy Agenda. "But it is a law of diminishing returns. ITunes ... has now moved from early adopter and leading edge to the extreme mainstream."

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