In a bid to increase the popularity of its iAds and attract smaller companies to sign up, Apple has reduced the minimum spend on iAd advertisements by half from $1 million to $500,000. It’s hoped the new price for the interactive advertisements will help to fill vacant slots and renew existing contracts for a service that is rumored to be “hurting” following its strong start.

A report published earlier this month noted Apple’s struggle to sell iAd advertisements, but Digital Daily’s John Paczkowski says the company’s lower asking price aims to “reverse that trend, bringing more brands to the platform and an increasingly larger portion of their annual ad spend to Apple.”

Although iAds launched with incredible interest from some major advertisers, the reason for the decline in its popularity is believed to be due to Apple’s tight control over advertisements, which has caused delays in bringing ads to market and has disgruntled many advertisers.

It’s not just Apple who wants the service to succeed, however – it’s also in the interest of iOS users for advertisers to choose iAds as opposed other mobile advertising services. If you’ve ever used an iOS device with an application which is scattered with advertising that isn’t through iAds, you’ll know the majority of it is unattractive, unimaginative, and unhelpful. If ever you do find an ad that interests you, clicking on it will take you away from your application, into Safari, and onto the advertiser’s website; which is often rather frustrating if you were caught up in something.

With an iAd, however, the content is alluring, well-designed, and well-executed. Clicking on an iAd will take you straight to an impressive interactive advert within the application you’re using – there’s no switching to Safari – and once you’re finished, you can close the advert and return instantly to whatever you were doing.

The attraction of an iAd to an iOS user made it easy to see why the service got off to such a strong start, and it’s a shame that advertisers are being discouraged to use the service by Apple’s strict rules. Unfortunately, Apple’s tight control over certain products and services is becoming an all too familiar story.

The report added that “some are weeks — perhaps months — away from having an iAd in the system.” It indicated “an agency exec with several iAds in the works,” as stating, “most advertisers won’t be there on July 1; there just isn’t enough time,” an issue Apple can partly be blamed for.

The report stated that Apple is taking care of “all the technical production of iAds, and telling agencies it will take six to eight weeks to produce an ad after the creative is produced.”

Apple selected July 1st for iAds release date, and “doesn’t necessarily coincide with the objectives of the marketers themselves,” the report said. Apple is telling marketers that the iPad won’t be on the iAd platform until November.

At WWDC earlier this month, Steve Jobs announced that a special build of iOS 4 would be released for iPad users later in the year, bringing support for iAd, as well as features ranging from multitasking and related background services to Home page Folders and a variety of new developer APIs.

The placeholders are easily recognisable as they look a little like the Google AdWords or Admob boxes that surround adverts when served from those networks. No ads are showing right now, but they will surely pop up in the coming days. At the moment all there appears to be is a blank space with the Apple iAds moniker in the border.

As of today 17 advertisers are part of Apple’s advertising network, and there’s around $60 Million worth of advertising budget in the iAd pot from those partners. Meaning a veritable gold rush for $36 Million, which is the cut of the $60 million for app developers who can justify ads in their software.

Have you seen any iAds in your apps yet? Let us know how you feel about them in the comments. We’d particularly like to hear about adverts in paid apps.

I have been saying for quite some time that I believe that Apple’s ad service would have to conform to some pretty high standards for Apple themselves to be happy with it. And because of that I would be very likely to choose them as my ad partner over AdMob if I was going to put adverts into my (free) apps.

This is because not only do I believe that Apple’s iAd service will be tasteful and of high quality in execution, but I also believe that Apple’s advertisers will be of premium quality and pay very well.

This seems very much to be Apple’s aim. The Wall Street Journal is reporting that some advertisers used to paying hundreds of thousands for the kind of ad package Apple is selling are being asked for as much as $10 Million Dollars to be part of Apple’s advertising partners at launch, and around $1 Million Dollars for normal packages after that.

Apple will be charing a penny for every iAd impression (view) a consumer on one of its devices sees. And $2 for each click-through. Ultimately this will all add up and come out of the prepaid $1 Million Dollar, or more package they have bought.

Apple is also said to be being quite picky about who can advertise with them.

For us as consumers this is great news. We are far less inclined to be upset if we get bothered by well executed ads for Movies, Ferraris and Porches in free apps, than if we get hassled for dating and gambling sites.

Likewise as an app developer I would feel more comfortable having a guaranteed level of quality and taste in the iAds I might be foisting on my customers who choose a free version of my app.

Of course, the extra money from these advertisers, who are paying a premium rate to Apple, is also going to filter down to app developers in their cut. Which is very welcome.

Of course the drawback there is that many people may be tempted to put more adverts in their software now. Perhaps even in paid titles. But I think that Apple will be keeping a watchful eye out for that. In fact I wouldn’t be surprised if having iAds in your app is not automatic for all developers or all apps.

Let us know your thoughts on how Apple plans to implement iAd in the comments.

An article in AppleInsider [appleinsider.com] discusses some of the opportunity and ways advertisers plan on exploiting the iPad. Two of the key buzzwords in use in the run up to the iPad launch are interactive advertisements and dynamic content. While the article was not particularly forthcoming about the ways advertisers plan on exploiting the new platform, it did note the iPhone 3.2 SDK now allows for inserting of advertisements in more spots throughout an application. The static placement model most iPhone users are know familiar with will change in ways we can only imagine.

While we don’t yet have any details on how the iPad advertising model will develop, hints at interactive advertisements and dynamic content inevitably lead to video. Traditional video advertisements would be a good match for the iPad as long as it stayed on topic and within the context of the current application. They could fill lulls in the action of a game (in between level loads for example) and the advertiser would have a captive audience for their commercial. If the video somehow promoted a level of interactivity it would also fight the urge a user might have to tune it out. I don’t know about you but I don’t even notice the ads inserted into iPhone apps any more. It is this invisibility factor advertisers need to fight and the iPad may be the perfect device for it.

As with many aspects of media, the iPad is poised to change the world of advertising as well. It will be interesting to see what mobile advertising companies do with the tools the iPad and iPhone OS SDK gives them.

What do you think? Is the iPad platform a golden opportunity for the marketers? Would you just as easily tune out an interactive commercial as a banner ad? Let us know in the comments section.

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