Apple will expand its advertising business, according to two people familiar with its plans, as well as bring new privacy rules for iPhones that are likely to paralyze the ads offered by its rivals, including Facebook.
The iPhone maker is already selling search ads for the App Store, which allow developers to pay for the top result. In “Twitter” searches, for example, the first result is currently TikTok.
Apple now plans to add a second ad slot in the “suggested” apps section of its App Store search page. This new slot will be launched by the end of the month, according to one of the people, and will allow advertisers to promote their applications across the network, rather than in response to specific searches.
Apple declined to comment.
The expansion is the first concrete sign that Apple intends to improve its own advertising business at a time when it is shaking the industry of more than 350 billion dollars, led by Facebook and Google.
The upcoming Apple software update, iOS 14.5, will prohibit apps and advertisers from collecting data about iPhone users without their explicit consent. Most users are not expected to be followed, giving a huge blow to the way the mobile advertising industry works.
Apple said the changes will improve the privacy of its users, but some critics have accused the company of hoping to boost its own advertising business. Mark Zuckerberg, Facebook’s chief executive, said: “Apple may say they are doing this to help people, but the moves are clearly in their competitive interests.”
IPhone App Store search page, showing the “Suggested” section © FT
Apple has long wanted to be a major player in mobile advertising. In 2010, it paid $ 275 million to buy Quattro Wireless, a mobile advertising company, after being beaten by Google in the $ 750 million AdMob auction.
In the same year, he launched iAd, a multi-year effort to build an advertising business.
At launch, iAd had a minimum contract price of $ 1 million, but within a year it halved the requirement. Apple has tried to maintain creative control over ads and has been reluctant to share user data with marketers, according to Bernstein analysts. Two years later, Apple reduced the minimum contract to just $ 50 and the entire effort was closed in early 2016.
Meanwhile, the online advertising market has grown, with annual sales of $ 378 billion, according to market research group Insider Intelligence.
Google and Facebook are the biggest players on the market, but Tim Cook, Apple’s chief executive, has repeatedly attacked his business models as unsustainable because of the way he accumulates important data to target his ads.
Bernstein estimates that Apple currently earns about $ 2 billion a year from search ads in the App Store, with a margin of 80%. Apple also sells ads in its stock and news apps.
A second ad slot in the App Store is likely to attract advertisers after iPhone privacy changes reduce the effectiveness of targeted ads. But there is more than money at stake, according to Eric Seufert, a mobile advertising expert.
A decade ago, the App Store played a critical role in how consumers discovered new content. Seufert told technical site Stratechery earlier this year that Apple was “the king’s maker – if you were introduced, your company’s valuation could increase by a hundred million dollars.”
He suggested that Apple now wants to regain that level of control. “If Apple ruins mobile advertising, then the App Store is once again the main point of discovery for apps, and Apple decides how people use our iPhones, Apple decides which apps are the most popular,” he said.