CEO Weekends: iTunes Radio To Launch In September With McDonald’s, Nissan, P&G, Pepsi As Its Partners



Apple’s Pandora, iTunes Radio is set to be launched next month and has support of a number of high profile partnering brands including McDonald’s, Nissan, Pepsi, Procter &Gamble.

What the partners will enjoy, apart from a lamp-some of money, but also a 12 month advertising campaign to run within the streaming music service for each of the participating brands and of course publicity.

In January next year , however, ads on iTunes Radio will become widely available, provided an advertiser agrees to the minimum buy-in of around $1 million.

Advertisements on iTunes Radio will come in three forms: interstitial audio and video ads and “slate” ads; interactive display ads that will take over whatever screen the consumer is using. That includes iPhones, iPads, all desktops and laptops loaded with iTunes (including Windows PCs) and Apple TV, the Apple device that brings Internet connectivity and apps to TVs.

Audio and video ads
Users will be given an audio ad once every 15 minutes and one video ad every hour. The video ads will only be served to consumers at times when they are likely to be looking at their device screen, such as immediately after hitting play or choosing to skip a track.

For the launch, advertisers will be running ads across all devices that iTunes Radio will accessible on.  When the launch goes wide in 2014, advertisers will have to target specific devices for their ads. The cost of iTunes Radio ads will increase with the size of the screen; iPhone ads will be cheapest and Apple TV ads will be the most expensive.

Some of the launch partners will also be curating playlists that have fewer ads than iTunes Radio stations. These branded stations will not be labeled with a brand name, but will most likely involve a short ad saying that brand was sponsoring a user’s block of free listening.

No Ads option
iTunes Radio will be a free, ad-supported service to the public; however Apple will offer an ad-free option to anyone who procures iTunes Match, a cloud-based music storage feature that allows users to access their libraries on any Internet-connected Apple device.

iTunes Radio inventory will be sold via iAd, Apple’s mobile ad network. Like most mobile ad networks, iAd has struggled to take mobile advertising market share away from Facebook and Google since then. Whereas iAd only sold display ads, iTunes Radio gives the network more valuable audio and video inventory.

Because iTunes Radio will not allow users to search and play a song on-demand, it’s most immediate competitor will be Pandora, the No. 3 company in terms of U.S. mobile advertising revenue market share in 2013. Pandora mobile ad revenue is projected to increase 43% year over year, from $376 million this year to $539 in 2014.

Click to get song
Apple and its music industry partners think that iTunes Radio’s greatest revenue generator will be its ability to get users to actually buy music. A purchase button will be placed next to every song played on the service in an attempt to get users to permanently add title to their iTunes library.

A move against other music-streaming companies’ strategy of allowing users to passively listen to songs interrupted by ads or to charge them a premium for the ability to play songs on demand and listen to ad-free digital radio.