Apple Launches iAd On iPad — Will It Be A Hit Or A Flop?

Tron On Iad

Apple’s iAd advertising platform hit the iPad today with an ad that perfectly matches up with the pluses and minuses of the Apple (NSDQ: AAPL) system. The ad is promoting the Disney’s Tron Legacy, a big budget science fiction flick that has expectations of blockbuster written all over it, but still might disappoint diehard fans. Just like iAds.

As AdAge, which first reported the launch of iAds on the iPad, noted, the graphics are stunning, and it includes all the usual touch navigation and video that have become common on iAds for the iPhone and iPod touch. The ad starts with a full screen takeover of the app — TV Guide’s app was mentioned as one of the apps that will run the Tron ad. Along with the movie images, there’s also 10 minutes of video, a list of nearby showtimes and the ability to preview and purchase songs from the soundtrack via iTunes, all within the app itself. Users can share the details with friends via e-mail, a first for iAds, though it doesn’t appear to have any other sharing functions.

That kind of limit is small — how many people tend to share an ad anyway? — but in this case, it could make a small difference. It also highlights the closed nature of the iAds system, which could hinder Apple’s otherwise competitive advantages against the more open Google (NSDQ: GOOG) Android system.

For one thing, Apple iAds is set up to be exclusive. Marketers have pay at least $1 million to be allowed into Apple’s iAd system in the first place. Secondly, they have to cede a good deal of creative control to Apple. In that sense, iAds is perfect for something like Tron, as opposed to a packaged goods product. iAds is meant to be an event, something special, at least for now.

Overtime, as these kinds of in-app ads become as plain vanilla as any TV commercial, Apple will probably have to lower the bar for entry. And it will probably loosen its grip a bit on creative control. If it doesn’t, that will mean that Apple has decided that it only views iAds as a supplement to its business of selling iPhones and iPads — much like it’s iTunes music store was primarily viewed as a way to drive sales of iPods, not become the next Sam Goody.

As it stands now, Google has quickly pulled ahead of Apple when it comes to the share of the mobile ad market. Google previously said that it should end the year with $1 billion in mobile ad dollars. According to IDC, Google accounts for 59 percent of all mobile ad revenue in the U.S., Apple, although it’s number two, is distantly far behind with just an 8.4 percent share of the market, worth $877 million overall (the difference due to the fact that people actually user their mobile web browser to search — it’s not an all-app world by any means).

So both the Tron and iAds probably deserve the fanfare for their respective debut sequels. It’s not clear if Tron will get a third try for the box office after this one, but Apple is already planning for its third and fourth big openings of iAds, in Europe and Japan. After successive sequels, movie franchises tend to get a major reboot. By this time next year, depending on whether or not this current iAds program is a hit with advertisers, we could be seeing a very different iAds product, one that’s more like Google’s Android system.

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