Apple’s iAd App Network, which debuted in 2010 as an ads developer platform for the company’s iPhone, iPod Touch, and iPad devices, is officially shutting down on Thursday. Taking its place in the minds of industry watchers will be the Apple Store’s app-install ads, which some beta users will start seeing in their search results for the first time this summer. Others will likely begin noticing them after a larger expected rollout this fall.
Could the new ads give Apple a shot of redemption? The endeavor will certainly be challenged.
App-install ads have long been vital to the revenue streams of Facebook, Twitter, Google, Instagram and Yahoo. They were particularly important to Facebook turning around its post-IPO earnings slump a few years ago. It’s now a multibillion-dollar business for CEO Mark Zuckerberg’s company. So it’s no wonder Apple CEO Tim Cook wants his brand to get a meaningful piece of the market, which represented $3 billion in ad spending last year, per eMarketer, and will generate nearly $7 billion annually by the end of 2019, according to Business Insider’s BI Intelligence.
“There is potential for Apple’s search ads to perform better than those advertisers can place across the likes of Facebook, Twitter, Instagram, etc. because the intent to search for, buy and download within the app store is much higher in this kind of environment,” said Valerie Davis, svp of paid digital media at PMX Agency.
And thanks to the huge popularity of the iPhone, the Apple Store seems to be one of the best places to run such ads. Downloading apps, after all, is why folks are in the store.
“App store search is more often the place consumers are going to browse apps with the intent to purchase. It’s more self-selecting interest versus prospecting, which is more closely tied to social media placements,” Davis said.
Erick Brownstein, chief strategy officer and partner at Shareability, commented, “Apple is making a smart move claiming their piece by introducing a differentiated ad product, i.e., a search and discovery-based ad versus a display-based push ad. Obviously, a big part of their success will depend on the relevance of the search results as our ad-blocking generation has little patience for anything intrusive that doesn’t bring value.”
Apple’s search ads will indeed be designed with relevancy in mind, and they will allow marketers to conquest—in other words, they will be able to run ads when a consumer searches for a competitor. The conquesting feature will likely appear lucrative to smaller marketers whose apps don’t have the name recognition to drive many organic search queries.
“This changes the game for brands and app developers where they no longer have to try to game the system organically by driving downloads during a period of time in order to make it on the most downloaded list,” said Chris Tuff, evp and director of business development and partnerships at 22Squared.
“This will succeed,” Tuff added.
Though, Topher Burns, group director of product innovation at Deep Focus, said he sees data as a potential relevancy problem for marketers when compared with ad targeting on social channels such as Facebook.
“Apple will be able offer ads in an important consumer context, but the data that can inform app-install ads on social networks is far more nuanced than search history in an app store,” he said. “Discovery remains an enormous hurdle in the app space. No doubt Apple will see success in monetizing this new offering, but the social-based ads still have plenty of opportunity as well.”
Meanwhile, PMX’s Davis also believes Apple’s move into the app-install-ad space could be a response to Google’s launch last month of Universal App Campaigns, which let advertisers tap into audiences across the search giant’s platforms.
“[Apple needs] to provide app owners with an advertising vehicle similar to Google’s offer,” she said.
Whatever the case, it will be fascinating to see how the Apple versus Everyone Else matchup plays out in the space. Tuff said he understands why some may have doubts about how well the new app-install-ads will be executed.
“Time and time again, Apple has introduced advertising products for brands and has failed,” he said. “Remember the iAd?”
Yes. Yes, we do. RIP, iAd.