Apple Is Building an RTB Platform to Sell In-App Ads

iTunes Radio is top priority

Apple leadership has given the iAds team a new mission: always be selling iTunes Radio. And while the sales team is busy pushing Apple radio inventory, the company will build a real-time bidding exchange to automate selling in-app ads, multiple sources said.

Indeed, there is a new focus within the company’s advertising unit, and the mantra came direct from Eddy Cue, Apple’s head of software. In a staff meeting before the holidays, Cue indicated that iTunes Radio is the top priority, and app ads are not.

“The message that came across was basically if you’re not working on iTunes Radio, you’re irrelevant,” an Apple insider said.

Apple’s iAds business has undergone a number of changes since launching in 2010. Its sales team has been integral in helping developers monetize apps; most of the revenue from iAds comes from in-app advertising,

However, Apple is trying to ramp up revenue from iTunes Radio, a Pandora-like service that was released widely this fall. Pandora has been on an advertising push, manning local sales forces with hundreds of new hires in the past year. And just last week, Spotify introduced its ad-supported mobile radio service. All these companies are chasing traditional and digital radio dollars.

A source familiar with iAds said Apple has kept its real-time initiative under close wraps and is “not casting a wide net.” That may be because the company is figuring out how to gradually transition from earlier aggressive sales efforts that had iAd prices starting at $1 million a pop. “It’s a rare advertiser that is going to be willing to pay those rates,” said the source.

It’s not clear whether the new Apple exchange will be limited to mobile, because it could sell real-time iAds across devices—or even through Apple TV, the insider said.

Many developers and brands already comfortable with Apple’s self-serve tools should welcome the changes coming. But those more accustomed to hand-holding from the company would have to adjust. However, the introduction of RTB would potentially open iAds up to far more advertisers, while lowering prices.