Apple Building Mobile Exchange, Shifting Focus To Radio

According to an article in AdWeek, Apple is quietly building an RTB exchange to manage in-app ad buying. This is apparently at the direction of Apple’s Eddy Cue who is now in charge of software, including Maps and Siri.

Apple’s is reportedly concentrating on iTunes Radio advertising. AdWeek says that “In a staff meeting before the holidays, Cue indicated that iTunes Radio is the top priority, and app ads are not.”

Pandora appears to be the model and the iAds team has been redirected to selling radio spots. Pandora reported revenues $181.6 million in the third quarter. On an annualized basis that represents considerable revenue but not necessarily for a company that recorded nearly $38 billion in gross revenue in its most recent quarter.

Apple’s iAd unit has been relatively quiet in the past year or two. Apple bought Quattro Wireless in 2010 for roughly $275 million. For the next couple of years thereafter Apple’s iAd platform was seen as a potentially formidable rival to Google’s AdMob business. It was also seeking to create a new model for the industry, bringing the emotion and engagement of TV advertising to targeted mobile units.

Apple was asking what many considered exorbitant rates for in-app ad placements. Originally there was a minimum $1 million advertising commitment to iAd. But as demand waned over time rates fell dramatically.

A new RTB exchange would automate the entire process of in-app advertising. That’s the direction that much of the industry is going, so it shouldn’t be a problem for major advertisers that are already accustomed to exchanges.

As the AdWeek article points out an RTB exchange could hypothetically become a multi-platform ad selling vehicle for Apple that could deliver ads across smartphones, tablets and Apple TV.