Apple makes a stealth appearance at Mobile World Congress with iAd party

By Kim-Mai Cutler Comment

It may be beneath Apple to have a formal presence at any event that isn’t its own.

But the company is making a secret appearance at Mobile World Congress, an event it has long shunned despite the revolutionary impact the iPhone has had on the entire industry.

iAd, the mobile advertising network Apple built through the acquisition of Quattro two years ago, is having a secret party at a hotel off Barcelona’s main tourist drag, Las Ramblas, on early Tuesday evening, sources tell us.

After slashing minimum buys in the face of increasing competition from Google’s AdMob and other emerging networks, Apple’s iAd needs to do more to build mindshare and market share among developers. We hear that the minimum buy for smaller publishers (not the agencies representing big brands) is around $20,000. For certain developers, they’ll go as low as $5,000. Apple is also bumping up the revenue share it gives to developers to 70 percent starting April 1, up from the previous 60 percent rate.

Over the last month, we’ve seen several players in the mobile advertising industry slash minimum bids. A few weeks ago, Google’s Admob moved towards a more classic AdWords-style auction system with no minimum bid whatsoever. It also eliminated targeting fees.

Tapjoy, another user acquisition channel that has migrated to Android after being unceremoniously pushed off iOS by Apple, also recently cut its minimum bid to as low as 10 cents per install.

At our conference Inside Social Apps two weeks ago, Tapjoy’s chief executive Mihir Shah insisted that there are actually developers who are able to get their cost-per-install down to 10 cents a pop. That’s quite low considering that the average cost to get a loyal mobile user on iOS is around $1.81, according to Fiksu, a company that finds cheaper and more effective ways to get users for mobile apps from across many different ad networks.

At the time that both AdMob and Tapjoy cut their minimum bids, they told me their decisions had to do with the maturity of the mobile advertising market. AdMob’s service needed to be more streamlined into the way that Google sold ads for the desktop web.

“There’s enough volume in advertisers now where this makes sense,” Google’s George Meredith, who handles global sales and product strategy, told us in an on-stage interview two weeks ago. “Now that we’re getting closer to a unified system where AdMob display ads are being integrated with [Google’s other ad products], this move makes sense.”

By cutting minimum bids, it will be easier for many kinds of mobile developers beyond cash-rich gaming studios and consumer brands to participate and pay to get quality users.

Shah said in the same on-stage interview, “Not everyone there will want [Zynga’s] Dream Zoo. They may want communication apps. The big players can basically outbid everybody else.”

All of this makes for a very competitive environment that has undermined Apple iAd’s original positioning as the premium mobile ad network. Spending on user acquisition has become more important for developers over the past year as both the iOS and Android app stores have become filled with close to 1,000,000 apps vying for consumer attention. Google said today that Android Market has 450,000 apps, up from 150,000 a year ago.