How Apple’s App Store search ads will affect developers and users

Apple’s App Store has gotten so big since launching in 2008 that apps are getting buried in search results and developers are missing out on users and revenue. Today, Apple announced a new approach to solving that problem: advertising.

That’s right. Ads will start showing up at the top of Apple’s App Store (for U.S. users). The beta program begins this summer, Apple said in a blog post. (In the same blog post, Apple also announced that automatically renewing subscriptions will be coming to the App Store for all app categories in the fall, and that after one year, developers can get 85 percent of revenue, not just 70 percent.)

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It’s not a complete surprise, given that Bloomberg reported Apple was looking into the concept of “paid search,” which would put certain apps at the top of search results in exchange for money from developers. And last year, Google took a similar step by bringing search ads to the Play Store. (Google is also moving from a 70/30 revenue split to an 85/15 split, although developers won’t have to wait a year to get that, Re/code reported today.)

But now that Apple’s plans have been cemented and the details of the scheme made public, it’s possible to speculate on how this change could affect both app developers and end users — even if the ads won’t be live for some time.

Let’s talk first about developers.

• Developers with apps that need more users will get a chance to inorganically get more eyeballs on their apps. And, as the App Store has become bloated — it’s got more than 1.5 million apps at this point — this addresses a very real concern. Witness, for example, Pigment, a coloring book-like iPhone app from Pixite.
• They’ll be able to target exactly the types of users that they want. This could be useful for developers interested in changing the demographics of their user base, for whatever reason. In the past year and a half, Pinterest, for example, has gone after male users, after it gained a reputation for being mostly popular among women. “You can focus your ads on acquiring new customers, or target your app’s existing users, or even customers of your other apps,” Apple says on a new page about search ads on its website. “Additional targeting options include gender, age, device type and device location, so if you have an app that serves only certain cities or demographics, Search Ads gives you a new way to target those specific user groups that matter to you. You can also choose to show ads at specific times of the day or days of the week.”
• Marketers who work at companies pushing iOS apps will immediately recognize that this new ad format represents a novel format for promotion. An App Store search ad placed right as these ads begin showing up for everyone could be just the right nudge to get some people to finally download the app and become regular users.
• Unlike the implementation of search ads in the Google Play Store — which lets developers come up with little lines of text that appear between the app and developer names and the rating — you don’t have to devise any clever new ad copy for App Store ads, and you don’t have to pay for new feature art. Unless, of course, you want to swap out the description and art given to your app with more catchy material. That’s on you. But generally, this ad unit will be low-maintenance. That could make it more worthy of an experiment.

For users, search ads will be an interesting addition to the App Store. In some ways it will be good, and in other ways, not so good:

• The ads, which will have a light blue background and will have the designation “Ad” under the app’s name, may expose you to some apps that you haven’t heard of. Apple won’t be showing ads for apps that you’ve already installed — sort of like how Apple TV’s store is now no longer showing apps that you’ve already installed in the Top Charts section. And you’ll only see an ad if Apple thinks it’s relevant to the query you entered in the search box.
• At least Apple isn’t going to bombard users with ads at the top and bottom of search results. There will be just one ad, if any, at the top of the results, and no more than that.
• Apple isn’t discriminating — it’s not going to refuse to display an ad for a junky app. That means you may have to scroll down a little further to get to the apps with the more positive reviews, just like with Google search results.
• Apps decorated with their editorially curated Editors’ Choice or Essentials designations will be naturally de-emphasized because the app ads will have a higher placement in the search results. That could leave you feeling more unsure than ever about which app you should download. I guess it will get closer to being the digital equivalent of the wine section in a grocery store — so many things vying for your attention that you don’t know what to choose unless you take the time to evaluate.
• You will be able to avoid “targeted” ads altogether if you want. All you have to do, Apple says, is go to Settings > Privacy > Advertising > Limit Ad Tracking, and turn it on.
• If you like the ads but don’t want to be targeted based on where you go, you can do that too. Go to Settings > Privacy > Location Services > System Services > Location-Based iAds, and turn it off.

It’s good that Apple decided not to lump this in with all of the other announcements it will make at its WWDC developer conference in San Francisco next week. These new search ads are a big addition to the App Store. They’ll have an impact for years to come.