Apple Bringing Full-Screen Video iAds to Mobile

iPhone Maker May Sell the Ads Thru Company's New Ad Exchange

By Published on .

Credit: Apple

Coming to an iPad near you: iAds that look a lot like TV ads.

Apple will roll out new video iAds this year that will automatically play full-screen within iPhone and iPad apps, according to people with knowledge of Apple's plans. Currently someone has to click a mobile banner for a brand's video iAd to play.

The people described these new video ads as "interstitials," suggesting that they'll interrupt whatever someone is doing in app. More likely the ads will play at moments of transition, like after completing a game's level or finishing an article.

It's not clear how Apple plans to sell the video iAds or at what price. One person said Apple may sell the units through its ad exchange that quietly rolled out "a couple weeks ago." Adweek had reported in December that Apple was looking to launch an ad exchange. Details of the exchange are scarce, but auctioned-off ads are typically less lucrative than ones pitched by a direct sales team.

Apple did not respond to a request for comment.

The in-app video ads may be a way for Apple to rekindle advertisers' interests in its fancy-but-flawed iAds. The ad product line was unveiled in 2010 with all the pomp and circumstance of a new iPhone, but they've struggled to gain traction in the market. Advertisers were initially asked to drop $1 million for the rich-media units, which more closely resemble a mobile microsite than a banner. That price tag has dropped to $100,000 over the years, even as Apple has added features like maps.

Apple doesn't report its ad revenues but is said to not have official sales targets for its ad business. It also doesn't have a big sales staff, GroupM chief innovation officer Cary Tilds recently told Ad Age.

A major player in mobile hardware and software, Apple remains a relatively newcomer to the mobile ad business.

Apple reaped $125 million from mobile ad sales in 2012, according to research firm IDC. By comparison Google's mobile ad network — powered by AdMob, which Google acquired within months of iAds' launch -- grossed $243 million that year, and mobile ad network Millennial Media generated $151 million.

EMarketer projects that this year only 3% of net U.S. mobile ad revenue will go to Apple, while Google cleans up with 49% followed by Facebook with 15%. Even the company formerly known as Yellow Pages is expected to slightly outdo Apple's market share this year -- although eMarketer predicts Apple will surpass it in 2015.

Magna Global's managing director of programmatic, Neeraj Kochar, said advertisers would likely find the new video iAds' full-screen real estate "compelling." However they may not immediately throw a bunch of money at Apple to buy them. "Advertisers will test into it, potentially as part of bigger deals with Apple," he said.

Apple has proven recently that it can get big-budget brands to open their wallets. A handful of marketers wrote checks for up to $10 million to become iTunes Radio launch sponsors last year. Those advertisers are already familiar with Apple-run full-screen video ads -- albeit ones limited to the company's streaming music service. For now.

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