It appears that Apple’s mobile advertising business iAd, isn’t doing too well for the iOS company as apparently due to certain marquee clients shifting from iAd to rivals, Apple has cut iAd rate by as much as 70%, and sign they Apple is struggling to grab a large hold on the advertising indurtry.

According to the Times of India, Apple cutting the iAd rate comes via “two people with knowledge of the matter,” and as usual unnamed. IAd was rolled out roughly a year ago and such firms as J.C. Penney Co, and Citigroup Inc being charged a million or more for running adverts.

The result is those companies no longer use iAd and according to the unnamed sources, Apple is offering iAd packages for as low as $300,000. However apparently even at the lower prices some advertising agencies are “bulking” at the cost, due to said adverts only reaching Apple users.

Those advertising agencies are apparently shunning iAd in favour of Google’s AdMob, Greystripe and Millennial Media, that serve a range of devices and means that Apple risks losing ground in the advertising market that has been predicted by EMarketer Inc to generate $2.5 billion by 2014.

The senior VP of strategy for the Young & Rubicam advertising agency in New York, Thom Kennon has said, “Apple’s closed ecosystem may have been interesting in the short run for advertisers, but in the long run they priced themselves out.”

According to Mobclix, and exchange for buying and selling smobile ads, apparently app makers that benefit from iAd by selling adverts are receiving just 5% to 15% of their space filled by Apple’s system.

As for the lower prices, according two people, Apple has slashed the minimum ad purchase to $500,000 down from $1 million, and if offering agencies deals hitting as low as $300,000 as long as they bring together multiple campaigns.

Apple spokeswoman, Natalie Kerris has stated that Apple continues to sign some of the world’s leading brands and remarked, “In its first year iAd has launched more than 100 campaigns in seven countries.”

20 firms have all used iAd in the past month including iPhone carrier AT&T, insurance provider Geico Corp, and Walt Disney Co, whose biggest shareholder just happens to be Apple CEO Steve Jobs. According to Apple roughly 50 campaigns will be joining the platform in the coming months.

EMarketer analyst Noah Elkin has said that the iAd system carried unrealistic expectations from both advertisers and developers, and remarked, “It has been successful in that it created a beacon for mobile advertising. Advertising was always going to be a minor revenue source for them.”