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Tracking Update Could Net Apple Billions In Search Ads Revenue

Apple Search Ads revenue and market share have ballooned since IDFA died with the iOS14 rollout. Competitors and analysts have questions.

Tracking Update Could Net Apple Billions In Search Ads Revenue

The privacy changes that came with the iOS14 rollout earlier this year have benefitted Apple by way of major gains in Search Ads market share, iPhone app downloads, and revenue, according to a Financial Times report.

Its app tracking transparency initiative has been a good business move for Apple, as evidenced by the brand’s advertising business more than tripling its market share in the six months following the update.

It wasn’t great news for everyone.

Killing off the Identifier for Advertisers (IDFA), the random device identifier Apple had assigned to user devices, has seriously impacted advertisers’ abilities to deliver personalized advertising on other platforms.

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Brian Bowman, CEO of Consumer Acquisition, told VentureBeat in July that advertisers had seen revenue fall 15% to 20%, with some experiencing losses of up to 40%.

In a statement last year, Apple explained its motivations for adding an opt-in prompt for targeted ad tracking:

“We believe technology should protect users’ fundamental right to privacy, and that means giving users tools to understand which apps and websites may be sharing their data with other companies for advertising or advertising measurement purposes, as well as the tools to revoke permission for this tracking.”

However, this commitment to privacy comes at a cost that has raised the ire of many – perhaps none more than Facebook.

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Facebook warned its own advertisers that Apple’s change could “significantly limit your marketing efforts” and “will harm the growth of small businesses and the free Internet.”

An advertising behemoth in its own right, Facebook said in a statement:

“Apple’s proposed changes will limit your ability to effectively reach, understand and engage people on mobile devices and across the web.

They will affect your ability to understand performance, control who sees your ads and make informed decisions about your advertising budgets.

As these changes take effect, over time, you may see an overall decrease in ad performance and personalisation and an increase in cost per action.”

As Sean Johnston reported in July, just 10% of users were opting into tracking at that time. Given the option to protect their privacy, consumers are exercising it.

And advertisers’ losses on other platforms are turning out to be Apple’s gains.

FT cited data from mobile marketing tool Branch in its reporting that Apple Search Ads now drive 58% of all iPhone app downloads, as compared to just 17% one year ago.

Some analysts predict Apple’s advertising revenue will top $5 billion this fiscal year, increasing to $20 billion annually in just three years.

Apple’s Search Ads give advertisers prime real estate in the App Store, where developers, editorial stories, in-app purchases, categories, and more vie for visibility. Search Ads appear above organic search results in 61 geographic regions.

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According to Apple:

  • 70% of App Store visitors use search to find apps.
  • 65% of all App Store downloads are downstream from search.
  • The average rate for Apple Search Ads is greater than 50%.

Another analyst cited by FT estimates that marketing spend on mobile apps for both iPhones and Android phones will double year-over-year to surpass $118 billion in 2022.

App Store search is big business for Apple. And while the brand’s commitment to consumer privacy is admirable, it is evidently not entirely altruistic in nature.

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The brand has said:

“The technologies are part of one comprehensive system designed to help developers implement safe advertising practices and protect users — not to advantage Apple.”

However, the advantage to Apple is now clear.

Facebook said last month that it has “gotten harder to measure (the effectiveness of ad) campaigns on our platform” and that the impact of Apple retiring the IDFA has had a greater impact on businesses than expected.

As long as competitors and advertisers continue to feel the crunch while Apple profits from its own privacy initiatives, we can expect the pointed questions to continue.


Source: Financial Times

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Featured Image: sdecoret/Shutterstock

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Miranda Miller

Managing Editor at Search Engine Journal

Writer, editor & marketing professional; digital nomad, feminist and mother bear. 15 years of experience planning & executing engaging digital ... [Read full bio]

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