UPDATED 13:30 EDT / JULY 08 2011

Millennial Media May Be a Good Buy for Apple

Apple’s iAd mobile marketing platform is certainly not the company’s biggest money maker, but the consumer electronics giant is still trying to expand its foothold in a market, which is expected to be worth $2.5 billion by 2010, according to eMarketer. Sources say that Apple, which reportedly used to charge high profile customers some $1 million to run an ad campaign, has drastically slashed its prices in light of the growing competition.

“When Apple rolled out iAd a year ago, companies such as Citigroup Inc. (C) and J.C. Penney Co. were being charged $1 million or more to run ad campaigns. Today those brands aren’t using iAd, and Apple is offering packages for as little as $300,000, said the people, who asked not to be named because the rates are private.”

Another thing that has been driving companies away from iAd is that it only serves Apple’s closed ecosystem of devices.  Google’s AdMob, Greystripe, and Millennial Media, however, serve other devices in addition to Apple’s, and often have much lower rates.

Millennial Media is currently the only major mobile ad network that has yet to be acquired.  The company that recently hired a former iAd exec may be exactly what Apple needs to boost its share of the mobile ad market, but Millennial would most likely come with a pretty hefty price tag. The ad network operator refused to be acquired by RIM , and has seen continued growth ever since.

Millennial recently raised $27.5 million in funding from Bessemer Venture Partners, Columbia Capital, Charles River Ventures, and New Enterprise Associates. It’s also heading towards an IPO that may raise its valuation to anywhere from $700 million to $1 billion.

Apple announced iAd last year following the acquisition of Quattro Wireless. In theory Millenial would make a great addition to its portfolio, though the company also needs to address a different type of ad competition as well.  Starcom Mediavest in collaboration with inMobi and Cooliris launched a new 3D ad format for the iPad, and the first advertiser is Samsung. Furthermore, the product appearing in its campaigns is the one that Apple is suing the manufacturer over.


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