In addition to basking in all the publicity that comes with a
heavily-anticipated Apple product launch, the launch partners get
exclusivity within their respective industries through the end of
2013. Come January 2014, however, ads on iTunes Radio will become
widely available, provided an advertiser agrees to the minimum
buy-in of around $1 million, according to sources briefed on the
Advertisements on iTunes Radio will come in three forms:
interstitial audio and video ads and "slate" ads; interactive
display ads that will take over whatever screen the consumer is
using. That includes iPhones, iPads, all desktops and laptops
loaded with iTunes (including Windows PCs) and Apple TV, the Apple
device that brings Internet connectivity and apps to TVs.
Audio and video ads
Users will be served an audio ad once every 15 minutes and one
video ad every hour, the sources said. The video ads will only be
served to consumers at times when they are likely to be looking at
their device screen, such as immediately after hitting play or
choosing to skip a track.
For the launch, advertisers will be running ads across all of
the devices that iTunes Radio will accessible on (that is, anything
that runs iTunes). When the launch goes wide in 2014, advertisers
will have the ability to target specific devices for their ads. The
cost of iTunes Radio ads will increase with the size of the screen,
according to agency executives; iPhone ads will be cheapest and
Apple TV ads will be the most expensive.
Some of the launch partners will also be curating playlists that
have fewer ads than typical iTunes Radio stations. These branded
stations will not be labeled with a brand name, but will most
likely involve a short ad saying that brand was sponsoring a user's
block of free listening.
Of course, consumers can choose to have no ads at all. iTunes Radio
will be a free, ad-supported service to the public, but Apple will
be offering an ad-free option to anyone who purchases iTunes Match,
a cloud-based music storage feature that allows users to access
their libraries on any Internet-connected Apple device.
iTunes Radio inventory will be sold via iAd, Apple's mobile ad
network. No surprise then that the debut of the ad-supported iTunes
Radio service closely resembles iAd's 2010 launch; a select
few launch partners, high minimum buy-ins and lots of fanfare.
Like most mobile ad networks, iAd has struggled to take mobile
advertising market share away from Facebook and Google since then, but iTunes
Radio may give it a boost. Whereas iAd only sold display ads,
iTunes Radio gives the network more valuable audio and video
Because iTunes Radio will not allow users to search and play a
song on-demand, it's most immediate competitor will be Pandora, the
No. 3 company in terms of U.S. mobile advertising revenue market
share in 2013, according to eMarketer. Pandora mobile ad revenue is
projected to increase 43% year over year, from $376 million this
year to $539 in 2014.
Push to buy
Apple and its music industry partners think that iTunes Radio's
greatest revenue generator will be its ability to get users to
actually buy music. A purchase button will be placed next to every
song played on the service in an attempt to get users to
permanently add title to their iTunes library.
It's a move against other music-streaming companies' strategy of
allowing users to passively listen to songs interrupted by ads or
to charge them a premium for the ability to play songs on demand
and listen to ad-free digital radio. Regardless, the caliber of
iTunes Radio's launch partners proves that, at least initially,
there's enough interest in the service to garner attention from
some of the most recognizable brands and biggest ad spenders in the