Google And Apple Lower Ad Costs

Google and Apple have both lowered the minimum price for mobile advertising in an attempt to encourage more marketers and application developers to use their technologies, ahead of Facebook and LinkedIn's expected entries to the market.

Mobile advertising is quickly emerging as a battleground between the technology giants as a growing portion of users' shift to smartphones and tablets over their PCs.

However, with many brands still unsure how to tailor their messaging for the small screen, available ad slots in apps and on mobile websites are often left unsold. As supply outstrips demand, the rates which mobile platforms are able to charge for an ad still lags behind the desktop web, a contributory factor in Google's earnings disappointment last month.

To counter these issues, Google and Apple, as well as some independent mobile ad networks, are lowering their prices to lure more first-time advertisers on to the platform, hoping the incentive will lift overall volumes. "These changes will definitely make prices more attractive in the short term," said Thomas Schultz, international chief executive at Somo, a mobile marketing agency. "We're seeing the two big players go head-to-head to try to disrupt the market and secure those budgets."

Their efforts come as Facebook plans to unveil advertising on its mobile apps in the run-up to its initial public offering. In addition, LinkedIn's chief executive, Jeff Weiner, said last week that the professional network plans to run some tests for some of its marketing services on mobile, where its page views have increased by 350 per cent in the last year.

"It's a very interesting period for all of us," said Alexandre Mars, chief executive of Phonevalley, a Publicis-owned mobile agency. "The big players are all eager to grab this mobile business. They are playing chess."

With new competition on the horizon, Apple has cut the minimum required spend for its iAd product, which displays brand advertising within iPhone and iPad apps, to $100,000 a campaign. The cut is the second major reduction after Apple's late chief executive Steve Jobs introduced iAd in 2010 for brands, such as Unilever and L'Oréal, who were prepared to pay at least $1m. Apple then reduced the minimum to $500,000 last year after limited enthusiasm from marketers.

The Cupertino-based company has also improved terms for developers, giving them a 70 per cent share of revenue, instead of 60 per cent previously, as well as simplifying how it charges advertisers.

Apple declined to comment on the plans, which were first reported by Advertising Age magazine and confirmed to the Financial Times by marketing industry insiders.

On Wednesday, Google removed the 10 cent minimum bid and targeting fees for "cost per click" ads on its AdMob platform. After acquiring AdMob in 2010, the move brings its auction-pricing system into line with AdWords on the desktop.

"Advertisers will benefit from more efficient pricing and could receive cheaper clicks depending on the inventory on which they bid," said Chrix Finne, product manager at Google's mobile advertising unit, in a blog post announcing the changes.

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