Apple’s iAd a ‘billion dollar opportunity‚Äô

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AppleInsider is reporting that at least one analyst believes iAd could generate as much as $4.7 billion in revenue per year for the company.

Brian Marshall with Broadpoint AmTech said Friday that Apple could employ a "hybrid" ad pricing model that would include cost per click, cost per action, and cost per 1,000 viewers. In a wide-ranging sensitivity analysis issued in a note to investors, the high-end pricing assumption could generate $32 per 1,000 viewers, at a price of $0.032 per ad, generating $4.67 billion in revenue in one year. 

Gene Munster of Piper Jaffray has said iAd "could act as a significant catalyst for mobile media as it will be the first solution to deliver rich media to a significant user base in a friendly format on the mobile web," 

Munster sees Apple's advertising business in 2011 amounting to $220 million. He said the total market for in-application mobile advertising was just $45 million 2009.

Apple's presence in the mobile display advertising space has led Piper Jaffray to increase its estimates for the market. While they originally expected mobile ads to top $1 billion in 2013, they now believe that threshold will be reached in 2012. 

Though they expect Apple to be a significant player, revenue from mobile ads is "unlikely to be meaningful in the scope of Apple's broader business."

Shaw Wu with Kaufman Bros., said iAd has the potential to "uproot and redefine" the mobile advertising market. However, he doesn't see it as a strong direct financial opportunity for Apple. 

"Mobile advertising is particularly important for free apps, which we estimate represent approximately 25%-30% of total apps," Wu said. "We continue to believe the financial impact to AAPL will be minor to negligible as this is more a service for app developers to make money."

Charlie Wolf with Needham & Company called iAd a "game changer." Revealed on Thursday, iAd seeks to redefine mobile advertising with interactive, media-driven content. 

Steve Jobs showed off a sample advertisement for Toy Story 3 at last weeks iPhone event. The ad included character views, sound and video clips, even a miniature game, all within the ad. The advertisement could be closed at any time by clicking an 'X' in the upper left corner, taking the user instantly back to the application they were using.

The new platform's genesis came from Apple's purchase of mobile advertising firm Quattro Wireless, acquired for $275 million earlier this year. Jobs admitted that Apple's first choice was competing firm AdMob, but Google acquired them before Apple could.

In the end AdMob may fall victim here, if iAds provide better eCPM Based on ad format and the fact that Apple is trying to bring some class to mobile ad space, there is a good chance that eCPM may be higher on iAds platform.

Whatever happens one thing is sure the Apps store gold rush is not over.


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