Consumer Electronics

Apple to Expand App Store Ads, Flaunting Its iPhone Power

Now that Apple Inc. (NASDAQ: AAPL) has confirmed that iOS 14.5 will be out next week, complete with the Apps Tracking Transparency feature that requires your explicit permission for apps to track your travels around the web, the company apparently feels safe in giving itself a bit more ad space that doesn’t require your okay.

The Financial Times reported Wednesday that “two people familiar with [Apple’s] plans” that the company will add a second advertising slot in the Suggested Apps section of the App Store search page: “This new slot will be rolled out by the end of the month, according to one of the people, and will allow advertisers to promote their apps across the whole network, rather than in response to specific searches.” Of course, advertisers will have to pay Apple for the space.

Just one more ad doesn’t seem like much, but it’s a toe in the door to the $350 billion digital ad business, a business that has made Facebook and Google what they are today. Amazon began growing its ad business in 2017. The company had ad revenue of around $500 million in 2016, and the company posted estimated ad revenue of $15.73 billion in 2020, according to eMarketer estimates.

Potential advertisers, now faced with less highly targeted ads at Facebook, could take more of their ad buys to Apple. In an interview last February with Ben Thompson at the Stratachery blog, mobile industry expert Eric Seufert said that he believes Apple is not satisfied to be just a “distribution engine for apps” and that the company now sees the App Store as “irrelevant as a point of content discovery.”

To reestablish the App Store’s mojo, Apple needs to “[cripple] mobile advertising” to such a degree that the App Store “becomes the primary discovery point for apps again, and Apple decides how people use our iPhones [and] Apple decides which apps are the most popular ….”

Answering Apple’s argument that it is just giving users a choice, Seufert calls the identifier for advertisers (IDFA) that Apple is banning “the hydrocarbon of the mobile advertising ecosystem.” But, he goes on, “Apple is defining privacy as what benefits Apple.”