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Facing Challenges Apple Softening Approach to win Over Customers for iAd

Launched in July 2010, by late Steve Jobs, iAd, is Apple’s service for selling ads within mobile apps on iPhones, iPads and iPod touches. The cupertino company is now making some changes to its iAd mobile advertising service to show its willingness to bargain on the entry level spending commitment it requires of advertisers.

To this end, Apple has lowered its originally asked entry level cost for marketers from $1 million–(which was later dropped to $500,000)–Apple is now discussing ad deals with a minimum commitment of just $400,000.

Apple iAd vs. Google AdMobAccording to Wall Street Journal, Apple’s move is the result of tepid response that the iAds as received so far: “Marketers say they have been turned off by iAd’s high price tag as well as Apple’s hard-charging sales tactics and its stringent control over the creative process.”

Apple has also introduced more flexibility to a pricing structure that had befuddled advertisers, ad executives say. Instead of charging marketers every time a user taps on an ad–a policy which often led to ad budgets quickly being exhausted–Apple is willing to put a cap on what it charges for the taps, according to the person. Advertisers pay $10 every time an ad is viewed a thousand times and $2 every time it is tapped on.

To woo more advertisers, Apple is also establishing a training program, arranged in conjunction with its media buying agency OMD, part of Omnicom Group Inc., to teach the firm and its clients about the mobile marketing landscape.

In recent weeks, execs from Pepsi, Clorox, and JC Penny have visited Apple’s campus to talk. OMD is planning a trip to Apple in February with more of its advertiser clients.

The event demonstrated that Apple is trying to adapt to the ways of Madison Avenue. Inviting marketers for campus visits has long been a standard tactic for ad-dependent Silicon Valley firms like Google, Yahoo Inc. and Facebook Inc. While it has hosted big customers of its electronics products at its campus, this is one of the first times Apple has tried such an approach with advertisers.

“They are still learning the advertising world,” says Shiv Singh, head of digital at PepsiCo Beverages.

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