Apple to Begin Running App Install Ads
Following a model that has yielded great success for both Facebook and Google, Apple yesterday announced plans to start running app install ads in its App Store. The ads, for which app makers would pay a premium so their apps show up higher in App Store search results, reportedly will start running this summer. The ads are expected to be free for a limited test run before Apple starts monetizing them.
eMarketer reported recently that these types of ads, geared toward increasing app downloads, are on the rise. Advertisers spent more than $3 billion on them last year alone, eMarketer found.
Paid search would give Apple a new way to make money from the App Store, which has become a vital part of the company's business since it was introduced in 2008. The App Store currently lists about 1.5 million apps; Apple gets a share of each one downloaded through the App Store.
Paid ads "may help boil down the overcrowded App Store to fewer, better products," AppsFlyer CEO Oren Kaniel said in an email to CRM magazine.
Kaniel further maintains that paid ads, coupled with other changes Apple is making to the App Store, "will shake up a stagnant ecosystem and give new opportunities [for developers] to compete."
But, that will also create some problems. For one, "small and medium developers are about to get squeezed even harder," he said. "Organic discovery is a major source of new users for many apps, and including ads will indisputably decrease organic traffic from search."
Another potential problem that Kaniel sees is the small screens on most mobile phones, which he says could mean that "ads will take away from organic search even more than they do on the Web."
Users, he adds, "rarely look beyond the first couple of results, including the inevitable search result."
Apple has also come under fire for the poor search functionality in its App Store, which Kaniel says the ads do nothing to address. "The hope would be that pressure from a more-effective ad platform will force search to improve," he says. "But if search doesn't improve, the App Store will become even more of a basket case, with developers feeling that they have to pay money to simply be listed."