Rumor: Apple’s Mobile Devices May Soon Get Full-Screen Video Ads

Source: Apple.com

Apple (NASDAQ:AAPL) may soon be launching mobile video advertisements that automatically play full-screen via apps on iPhones and iPads, reports advertising industry news site AdAge. According to AdAge’s insider sources, the video “interstitials” will likely pop up after the completion of a game level or during other similar app intervals. Per the sources, Apple may sell the new video ads through its recently unveiled ad exchange.

The move will likely be welcomed by investors that have long called for Apple to expand its ad offerings beyond mobile banners. Although Apple is one of the foremost hardware and software vendors in the market, the Cupertino-based company has yet to significantly monetize its users through mobile advertisements. According to data from market research firm IDC, Apple made $125 million from mobile advertising sales in 2012. Meanwhile, Google (NASDAQ:GOOG) pulled in $243 million in sales through its lucrative AdMob network. EMarketer recently forecast that Google and Facebook (NASDAQ:FB) will take the lion’s share of U.S. mobile ad revenues this year with a 49.2 percent share and 15.2 percent share of net mobile ad revenue, respectively.

Although Apple investors may applaud the video iAd initiative, Apple users may be less enthralled with ads that may potentially interrupt their in-app activities. Apple has a vested interest in maintaining the high quality of its premium ecosystem and it will have to walk a fine line between providing advertisers with an effective service while maintaining the overall quality of the mobile user’s experience.  However, like the banner ads that it currently sells through its iAd network, Apple is likely to maintain some degree of control over the design and relevancy of any full-screen video advertisements that it displays.

As noted by AdAge, advertisers may initially approach Apple’s latest mobile advertising venture with some caution after the company’s relatively expensive iAd rich-media units that launched in 2010 drastically dropped in price after several years. Although the initial starting price for Apple’s rich media units was $1 million, now the mobile campaigns can be acquired for as little as $100,000.

On the other hand, companies such as McDonald’s (NYSE:MCD), Nissan, Pepsi (NYSE:PEP), and Proctor & Gamble (NYSE:PG) recently paid in excess of $10 million for the privilege of advertising on iTunes Radio through the end of last year. If advertisers were pleased with the effectiveness of Apple’s iTunes Radio ads, they may be more willing to pay a premium price for Apple’s full-screen video iAds. “Advertisers will test into it, potentially as part of bigger deals with Apple,” said Neeraj Kochar, Managing Director of Programmatic at Magna Global, via AdAge.

Apple’s full-screen video advertisements may also herald an upcoming iPhone screen size increase. Companies may be more willing to pay a premium price for video iAds if they know that the ads will be displayed on a screen that is larger than four inches. Earlier this year, the Wall Street Journal reported that Apple will release two iPhones with larger screens. One iPhone model will have a screen over 4.5 inches and the other will have a screen over five inches.

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