Advertiser interest in Apple's iAds also boosting rivals

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Interest in mobile advertising generated by Apple's iAd service appears to be aiding rival mobile advertising companies rather than taking business away, according to a new report.

Rival advertising executives claim that Apple's new interactive iAd platform has been good for their businesses too, the The Wall Street Journal reports. Apple announced the advertising program in April, then launched it in July with high-profile campaigns for Unilever and Nissan. Developers, who receive a 60 percent cut of the advertising revenue, were quick to implement the ads into their applications.

Industry executives who had been worried that Apple's entrance into the mobile advertising business would cut into their profits have been pleasantly surprised to discover the opposite. Carnet Williams, CEO of interactive ad company Sprout, says Apple has "brought sexiness to mobile ads," noting that his company has received about 4 times as many calls from publishers and agencies since Apple introduced iAd.

Alexandre Mars, head of mobile for Publicis Groupe SA, says Apple has changed the mobile marketing business and legitimized the entire market, claiming that no other mobile advertising company could have attracted the same level of interest as Apple has.

iAd's high cost of entry may be driving smaller advertisers to Apple's rivals. After iAd was announced, early reports suggested that placement in the program at launch would require as much as a $10 million commitment. According to the Journal, the figure may have dropped to a minimum $1 million iAd commitment, but few companies can afford even the seven-figure minimum. Rival agencies are willing to put together ad campaigns for as little as tens of thousands of dollars, the report notes.

Apple's tight control over the iAd process could be another factor in the lift that rivals are experiencing. Adidas reportedly canceled its iAd contract with Apple after it found the iPhone maker too controlling. Chanel SA dropped plans to join the iAd program this summer, choosing instead to work with Medialets, which placed an interactive Chanel ad in the New York Times' iPad application. A Chanel spokesperson said the company was "very happy with the experience."

Apple won't be content to let its competitors ride its coattails, though. Truong says that Apple has "raised the stakes for everyone else" by getting into the advertising game. iAd recently went global by expanding outside of the U.K. and U.S. Apple announced earlier this week that it is partnering with the Dentsu Group to bring iAd to Japan in early 2011. The Cupertino, Calif., company's forthcoming iOS 4.2 update will bring iAds to the iPad, giving advertisers millions of new consumers to target with their ads.