As Apple tightens the screws on ad tracking, it's preparing a new ad format of its own. People briefed on the plans reveal its pricing model and targeting options.

  • Apple is preparing a new ad unit that will sit atop the “Suggested Apps” page in the App Store.
  • Execs briefed on the format said it would be charged on a CPM basis, with some targeting options.
  • The news comes as Apple rolls out its privacy update, which puts the squeeze on ad tracking.
  • See more stories on Insider’s business page.

Apple is getting ready to launch a new advertising format, Suggested Apps, that will give developers a valuable piece of real estate to help get their apps discovered.

The move comes as Apple rolls out a new privacy update, AppTrackingTransparency, on Monday that will require app owners like Facebook to get users’ permission to track them across other apps and websites. Mobile-marketing experts expect consumer opt-in rates to be low, which would hamper advertisers’ ability to precision-target users with ads within apps and measure the effectiveness of their advertising.

If developers find it harder to recruit new users via targeted in-app ads, they will most likely look to shift their ad budgets to other venues to promote their apps. They might spend more with traditional media such as television or outdoor advertising. They could also spend more on Apple’s App Store search ads, bidding on keywords related to their apps. Or they might look to a blend of the two approaches.

Now Apple is about to offer another option: Suggested App ads.

First reported by the Financial Times last week, Suggested App ads will sit atop the list of “suggested apps” when a user visits the search section of the App Store. Unlike Apple’s App Search ads, these ads will be served to users before they type in the search bar.

Insider spoke with five people with knowledge of Apple’s Suggested App ads pitch to advertisers about how the new format will be bought and what types of targeting options will be available. They declined to be named. Apple declined to comment.

Apple is expected to offer CPM pricing and some limited targeting

Apple’s Suggested App ads will be available to buy through the Apple Search Platform. But unlike Apple’s search ads, which it charges for on a cost-per-tap basis, Suggested Ads will be sold on a CPM model, or cost per thousand impressions. The pricing model suggests Apple is directing this product at advertisers trying to raise awareness of their apps, versus those looking to drive a specific action, such as an app installation.

The targeting options are expected to be similar to those available to search advertisers: location, age, gender, device type, and types of customer — such as the ability to target just new users or users of that developers’ other apps.

The imagery and text in the creative will be pulled using the metadata from the App Store, much like the way its search ads work today, people said.

Apple will also use metadata from its App Store to determine the predicted relevance and predicted performance of an ad before serving it to a particular user. The ad served will also be determined on how much the advertiser was willing to bid.

The timing of Apple’s new paid-search ad opportunity could create some confusion in the ad community, which is focused on mitigating the fallout of the tech giant’s privacy changes, Thomas Husson, a vice president and principal analyst at the market-research company Forrester, said.

Critics of those changes have said Apple is applying one rule for its own ad services and another for other app developers. While the update forces app developers to gain permission up front to track users for advertising purposes, Apple’s personalized-ads setting works on an opt-out basis. Users can disable Apple’s apps from serving personalized advertising within their device’s privacy settings. Apple has said it’s applying its AppTrackingTransparency framework equally to all developers, including itself. 

“The rules should be the same for all, including for Apple services and apps. Otherwise, it could be interpreted as an unfair advantage and an opportunity for Apple to grow its advertising business,” Husson said.

Apple’s Suggested Apps ad format opens up a potentially lucrative new revenue stream at a time when other major ad-funded tech platforms, including Facebook and Snap, have said the new AppTrackingTransparency changes could hurt their businesses.

“I think it’s going to be really effective for a lot of brands and clients we work with where we spend money” on Apple Search ads, said Matt Zeiger, the vice president of technology at the digital agency Adlucent who hasn’t yet been briefed on the format by Apple.

But, he added, the new format is unlikely to make up for what advertisers are likely to lose in targeting and measurement after the rollout of Apple’s AppTrackingTransparency changes this week.

“It’s a play for more dollars,” Zeiger said, adding that “brands lose” generally, even as he moves dollars to Apple’s own ads formats.

“I end up paying more money to achieve the same results,” he said, “because I have less data, targeting is less effective, that loss of data and loss of signal makes advertising less effective.”

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