Apple’s Latest Controversy: Expanded App Store Ads – Computerworld | Hot Mobile Press

Depending on how you look at it, Apple might be expanding the ways developers can reach customers directly through its App Store — or building its own business at the expense of others.

What Apple is doing

Apple has had its own advertising business since Steve Jobs, Apple’s CEO at the time, introduced us to iAds in 2010. The scope of this offering was always limited to the Apple platform, but the service arguably failed as its technology lives on in the form of ad slots on Apple News and the App Store.

Apple’s App Store currently only hosts two ad slots, one in the Search tab and the other in the search results. You can tell when you’re seeing an ad by the blue shading behind the graphic and a small blue badge that says “Ad” – these ads are hard to confuse with content.

Apple now intends to add more ad slots to the App Store:

  • A new slot will appear on the second row of the Today section of his store.
  • Another may appear at the bottom of an App Store app listing under the “You May Also Like” banner.

What Apple says about the ads

According to Apple, search ads offer developers of all sizes opportunities to grow their businesses. “Like our other promotional offerings, these new ad placements will be based on the same foundation – they will only include content from apps’ approved App Store product pages and will adhere to the same strict privacy standards,” the company said in a statement to 9to5Mac.

According to Apple, developers will likely use these slots to reach customers browsing specific ad categories, although they won’t be able to target specific competing apps.

At the same time, ads deemed relevant to the app you are viewing are displayed, which means apps from competing developers can be seen on some app pages.

What is interesting is how effective these ads seem to be. The company says that 70% of App Store visitors use search to find their next app; that 65% of all downloads are after search; and that it sees a conversion rate of more than 50% for search ads.

“Apple Search Ads was the most efficient and scalable payment channel for our relaunch. We’ve reached a broader audience with higher intent while maintaining efficiency,” said Brooke Tarabochia, Peloton Digital’s director of growth marketing, in a statement on Apple’s website.

Apple seems to want to expand this business

Apple made several brief references to its digital advertising business during its latest financial call.

The general opinion it shares appears to be that Apple’s ad business isn’t really living up to expectations, which Apple CEO Tim Cook says reflects the macroeconomic environment. Cook also pointed out, “We want to empower our users and care about their privacy. We offer wanted ads.”

Apple CFO Luca Maestri said a little more.

“[Tim Cook] mentioned that there are some vulnerabilities, mainly in digital advertising, that we need to work on. But at the same time, our service business grew a lot a year ago….”

Apple has been criticized for expanding ad serving

Apple is facing some resistance because it decided to add a few extra ad placements to its service. Some argue that these ads mean Apple places ads on top of users’ own results and adds ads to a listing page once a developer lures a user to the page.

Some developers are angry about the ads that appear at the bottom of their app listing. They believe that the presence of competitor ads could hurt conversion rates after they have done the necessary work to bring a potential user to their page. (The Today list is a curated selection of apps, which means the ads can dilute the value of these sites a bit.)

The other problem concerns consistency.

Despite its privacy stance, the company’s website explains that advertisers can target ads to specific customer segments, as long as each segment contains at least 5,000 people to prevent personal targeting.

The ad system also uses account information, app store data, transaction data, and a variety of contextual clues like device type, iOS version, and more. The system appears to be able to use personal data collected by individual developers through customer relationships.

However, there are significant differences between third-party ads and Apple’s own, not least that these ads can’t be for products or services available outside of the store, and ads are very clearly labeled, at least so far.

Still, Apple’s decision to expand ad placement in the App Store is a very easy target for some critics, who will argue that recent moves to prevent things like app tracking show the company is using privacy as a weapon against competitors. Apple will argue that its system is inherently private, while those used by others have already been abused to everyone’s detriment.

How to depersonalize Apple advertising

It is possible to completely disable personalized advertising on Apple’s platforms in Account Settings in the App Store app. You must turn off Personalized Recommendations, which is the part of the app that uses your app usage, downloads, purchases, and other activity to improve the recommendations you receive on the App Store and across other Apple services.

Earlier this year, Apple stated that about 78% of iOS users dislike these ads, noting that it has little impact on the effectiveness of conversion rates.

Advertisers are claimed to have seen 62.1% conversions from customers who opted into personalized ads, compared to 62.5% from customers who opted out.

Where to learn more about Apple Search Ads

Apple offers a full certification course on using Apple Search Ads, which registered developers can explore here.

At a time when controversy already rages over Apple’s attempts to quash competing advertising services by invoking privacy rules, I have little doubt that developers and regulators will pay close attention to this course.

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