Apple’s iAd is starting to crumble

Bloomberg’s Adam Satariano reports:

Apple has cut the minimum ad purchase from $1 million to $500,000, and it’s offering agencies deals for as low as $300,000 if they bring together multiple campaigns, the two people said.

The minimum purchase — first cut in February — is one of the problems with Apple’s iAd business, but it’s not the only problem. I covered this in depth in March:

But we also hear that iAd salespeople still don’t have freedoms they would have elsewhere, like wiggle room on ad rates; that the minimum buy is still too high for most campaigns; and that salespeople don’t know — or can’t tell customers — what direction the iAd platform is going in.

Then, there is still the control issue. Most agencies and brands want some. Apple still has it all.

Agencies still seem frustrated that they still can’t do things like plug third-party measuring systems into iAds, and still don’t have transparency into things like which apps their clients’ ads appear in.

One top agency executive — the kind of person Apple should really want to have in its pocket — recently told us that while he is happy to work with his clients on iAds, he would never recommend one.

The general consensus seems to be: iAds look cool, but there’s no good reason to buy them. And Apple’s culture — completely different than the rest of the ad business — isn’t helping.

Perhaps the best move Apple could make would be to open up the iAd format for everyone to use and sell: Agencies, rival ad networks, publishers — heck, even Google. Apple could try to collect an ad serving fee, or it could go completely hands-off.

This sounds like a very un-Apple-like idea. But iAds are not a core business for Apple, so eventually, if they’re not doing well, they’re going to get scrapped anyway. And if iAds — the creative format and the technology — are actually any good, they’ll still end up making more money for iOS app developers, which was supposed to be the whole point.

It was telling that Apple didn’t mention iAds once during the WWDC keynote, and Steve Jobs even trashed advertising when describing Apple’s new iCloud email service. If Apple’s annual September event — where iOS 5 and the next iPhone will supposedly be launched — comes and goes without any mention of iAds, that’s not a good sign.