“As part of Apple’s refresh of the iPhone operating system software, the company last month unveiled the iAd mobile advertising platform,” Eric Savitz blogs for Barron’s. “iAds could be a boon to app developers, giving them a new way to generate revenue for free or low cost application sold in the App Store.”
“Bernstein Research analyst Toni Sacconaghi this morning took a close look at the economics of iAds, and concludes that this could turn out to be a substantial business for Apple – and soon,” Savitz reports. “‘iAd’s unique value proposition is that it can serve interactive, multimedia advertisements within apps; moreover, these ads are likely to be highly targeted based on location, intent and demographics,’ he writes in a research note.”
Savitz reports, “Sacconaghi sees big potential. He estimates FY 2010 run-rate iAd revenue could be over $800 million for Apple by the end of FY 2010; that includes an estimated $550 million in annualized revenue from apps, and another $265 million or so for ads placed in videos, newspapers and other media… Given his view that Apple’s installed base of iPhones and iPod Touches will likely double by the end of FY 2011, he says iAd revenue from iAds in apps could likewise double, which would mean a run-rate existing FY ‘11 of more than $1 billion – or more than $1.6 billion, if you assume a similar doubling for media iAds.”
Full article here.