Strict Apple controls prompt Adidas to pull iAd campaign

iadThe world’s second largest apparel company, Adidas, is set to exercise its option of abandoning an extensive advertising campaign on Apple’s new iAd advertising Internet network, worth as much as $12-million, according to a person familiar with the matter who spoke on condition of anonymity because the decision was not yet made public.

The decision comes as Apple failed to accept up to five different advertising campaigns the company had created for Apple to run primarily on websites designed for the iPhone.

Adidas subsequently pulled out of the agreement, following the time consuming and costly process of repeatedly creating different campaigns that never seemed to fully satisfy Apple executives.

 The approval process was said to be unreasonable as top Apple executives repeatedly denied the campaigns over very marginal issues.

Our source says Adidas is still interested in advertising on Apple’s platform, but it would need to see concessions and more flexibility in how its ads are displayed.

Adidas has thousands of other options in advertiser networks, including the biggest Internet-based advertising networked owned by the world’s top search engine, Google.

Google also recently launched its own mobile specific advertising platform within AdSense, in order to better compete against Apple.
Google chief executive Eric Schmidt recently said during a technology conference that mobile advertising sales are believed to become the primary source of revenue for the company in the longer-run.

Google’s Internet advertising business currently generated more than 95-percent of total revenue for the company.

According to Gartner Research, in the first quarter of 2010 alone, about 315-million mobile phones were sold, of which about 17.3-percent were smartphones, representing a 17-percent increase in smartphone sales over the same period last year.

Trends indicate the mobile space continues to grow at a very fast pace, and given the exponential growth of Apple iOS devices, such as the iPhone, iAd perfectly complements the company’s mobile business, which is quickly growing into a primary business for the company.

Apple has traditionally maintained very tight control measures over what applications run on its products, most famously: the company’s ambiguous application approval process for its hugely successful App Store that allows developers to submit free and paid apps which can be downloaded on iOS devices like the iPhone and iPad.

Apple’s reasoning on the tight control measures are to ensure the security of the phones, and to serve as anti-piracy controls to protect core businesses such as music sales from iTunes.

The strict control measures have prompted anti-trust investigations prompted by anti-compete allegations from top rivals such as Google, who is only now about to have its mobile version of Google Voice approved for use on the iPhone following a shift to more relaxed policies that could even allow developers to use the Adobe Flash platform to develop applications.

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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to [email protected]
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