Apple's mobile advertising platform iAd, which displays ads in iPhone and, soon, iPad apps, will certainly benefit Apple and the developers it shares ad revenue with. But is it an effective tool for advertisers of all sizes?
When Steve Jobs first introduced iAd, he heralded the program as the next dominant player in mobile marketing, predicting that it would swallow up 48% of spending in the field through December. That gigantic market share brought hope to small and medium size businesses that would benefit most from inexpensive digital advertising. However, a recent report  by Cross Forward Consulting suggests the ads are anything but cost-effective.
According to founder David Smith, the results of an August ad campaign the firm ran for its growing AudioBooks Premium app revealed the iAd platform to be "disappointing" and financially unsustainable. TUAW  parses the details:
Cross Forward Consulting spent a total of $1251.75 ($0.25 cost per click) on iAds over the course of six days that displayed 2,052,929 ads, generated 5,007 clicks (a click-through rate of 0.24%) and a grand total of 84 in-ad sales. The cost per acquisition comes out to a staggering nearly $15; in other words, for a $0.99 app they paid around $14 for every sale.
While those numbers are terribly underwhelming, Smith believes this problem is not necessarily unique to Apple's iAd program, but to the effectiveness of mobile advertising in general (Google AdMob, etc.), especially for lesser known companies. "I have tried just about every advertising platform around and have generally found none of them to be demonstrably effective," he writes. "However, I think that Apple has found itself falling foul of exactly the same problems they called out when the unveiled iAd. The ads lack engagement and emotion. Clicking on the banner just shows you a simulated App Store page. There is nothing to draw the user in."
There is the possibility that Cross Forward's ad lacked engagement and emotion, or more likely that AudioBooks Premium offered nothing to draw users in. The iAd program has seen effective and engaging advertisements: Major brands such as Nike (seen in the video below) have produced clever ads that provide interactive fun--like the ability to browse every Nike Air shoe by year of release. But those ads not only cost a huge amount to create, but require a major ad buy  in order to effectively reach the iPhone user base.
Though Apple says  iAd provides developers new opportunities to "promote their apps," the platform isn't geared toward the small and medium size businesses who need advertising the most.
But Smith goes one further, suggesting that customers download apps based on word-of-mouth recommendations or an app's ranking on Apple's charts--not mobile advertisements.
Apple declined Tuesday to comment on Cross Forward's report.