Placement in Apple's iAd program could cost $10 million at launch

Citing a person familiar with the matter, the Journal reported Thursday that Apple's iAd mobile advertising platform will come at a much higher cost than the $100,000 to $200,000 companies pay with existing mobile deals. While those who wish to be a part of the iAd launch could pay as much as $10 million to be first in the door, Apple reportedly aims to charge close to $1 million for ads on its mobile devices this year.

Advertisers would be charged a penny each time a user sees a banner ad under the proposed plan. Tapping on the banner brings up the advertisement within a mobile application, and Apple charges the advertiser $2. A $1 million ad buy would gain an advertiser $1 million worth of ad views and user taps.

The report said that Apple is out pitching its new advertising business to companies, and the handset maker is currently "making waves on Madison Avenue with its price tag." In addition to the high cost, Apple also seeks to have greater control over advertisers' marketing campaigns, author Emily Steel wrote. But those facts have not hurt interest in iAd.

"Despite the high price, ad executives at agencies from Boston to New York and San Francisco to Los Angeles have crowded into conference rooms in recent weeks to listen to the tech company's pitch for iAd," the Journal wrote.

Those pitches have included an advertisement for Nike's Air Jordan basketball shoe, which includes an animated banner and the iAd logo. Selecting the ad brings up a video, an interactive store locator, and exclusive offers at local stores. That same demo was shown off earlier this month at Apple's iPhone OS 4 preview event, where iAd was formally introduced.

The report cited experts who said Apple's entrance into the mobile advertising market is likely to convince others who sell mobile ads for software on Apple's App Store to move to other platforms, such as Google's Android mobile operating system.

Some on Wall Street have very high hopes for iAd, with at least one analyst calling it a billion dollar opportunity for Apple. In-application advertising was a relatively small market in 2009, with an estimated $45 million total size. But with 200,000 applications available on the App Store for the iPhone, iPod touch and iPad, and more than 80 million devices sold, Apple, developers and advertisers see the potential to reach a wide audience.