Apple Opens iAd to All: Can It Steal Ad Dollars From Google?

Source: Thinkstock

Source: Thinkstock

Apple (NASDAQ:AAPL) has opened its iAd platform to anyone with an Apple ID as the company seeks to cut into Google (NASDAQ:GOOG) and Facebook’s (NASDAQ:FB) domination of web and mobile advertising. According to a report from AdAge, starting on April 1 any company could create an account with iAd Workbench and launch a campaign within two days, something that had previously only been open to app developers.

This open platform approach is inspired by Google and is Apple’s alternative to an expensive ad option it had offered companies in the past. When iAd was first introduced, it included huge clients like Unilever and State Farm, but it suffered on its extremely high ad prices. Apple cut prices in 2012, but it still only gets a tiny slice of the mobile ad pie. According to data from eMarketer, Apple made just $260 million in mobile ad revenue in 2013 while Facebook and Google scooped up the vast majority of the $17.96 billion market.

Combined, Facebook and Google accounted for 75 percent of new mobile ad spending and 66 percent of total mobile ad spending during the year. Google alone accounted for 49.3 percent of total mobile ad spending for 2013, although it’s seeing its position being eroded slightly by Facebook’s success at monetizing mobile. EMarketer estimates that by 2017 digital mobile advertising will be a $31.45 billion industry, and Apple wants to get in on the action.

The campaigns the company is offering involve the option to run video ads that pop up while a user is viewing other content and can point viewers towards a website or promoted iTunes content, AdAge said. The website has previously reported that Apple would soon introduce full-screen video ads on mobile.

Apple has a few key aspects it can take advantage of with this new open platform. While companies may not be willing to pay what Apple was asking when iAd was launched, they will pay more to advertise on iOS than other mobile platforms for one big reason; iOS users have repeatedly been shown to spend more money via mobile than any other operating system. Even though Google’s Android is the most popular mobile operating system, iOS is worth more in term of ad dollars since users are more likely to actually buy what’s being advertised.

Another key thing Apple can take advantage of is new iTunes Radio service. The music streaming service has grown by leaps and bounds since it was introduced with iOS 7 back in the fall and is now the third most popular music streaming service, beating out Spotify to come in behind Pandora (NYSE:P) and iHeartRadio. The more people that use iTunes for their online music streaming, the more money Apple can make from selling ads on the service. Workbench doesn’t offer iTunes Radio ads for now, but AdAge said it likely will soon.

Google’s ad revenue, though still enormous, has been declining with the switch to mobile as mobile ads typically don’t command as much money as desktop ones. Google is coping by investing in up-and-coming technologies that it believes will be the top earners of the future. Apple could move in to the mobile ad space left by Google based on the popularity of iOS and through selling ads at a more reasonable price.

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