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Thursday, February 10, 2011, 10:50 am PT (01:50 pm ET)

Apple's iAd business is 'hurting,' fill rates dropping - report

Application developers and advertising industry insiders reportedly claim that after a strong start, Apple's fledgling iAd interactive advertising business for iOS is "hurting" to fill slots and renew contracts.

A number of developers and advertising executives spoke anonymously with TechCrunch for a report that paints a grim picture for Apple's iAd business. Developers indicated that after the new year, the fill rate — or what percentage of ad inventory is actually filled with an ad — dropped from 18 percent to 6 percent.

iAds launched in the U.S. in July and got off to an initial strong start. While Apple managed to carve out a significant market share, there were some issues, as some advertisers found Apple's ad creation process too limiting. Two of the initial 17 advertisers who joined iAd opted out of the program and went to alternative networks.

While Apple made a strong initial push to secure those first iAd contracts by selling them directly to CEOs, the relationships were then "dumped into the laps of junior account managers in Apple's advertising business," author Erick Schonfeld wrote. Those employees came from Apple's $275 million acquisition of mobile advertising firm Quattro Wireless in late 2009.

Those account managers are now attempting to secure renewals from advertising partners, but their counterparts at ad agencies and brands are allegedly having a hard time securing $1-million-plus for a mobile advertising campaign with iAds. One anonymous ad executive said iAd people have been "calling a lot more and becoming very aggressive in pushing for renewals."

Other problems with the iAd network are said to be the fact that it isn't cross-platform and do not allow companies to access users on other devices and platforms, as well as the fact that Apple employs a "black box" approach that does not allow advertisers to control what applications their ads appear in.