Apple’s Search Ads business is becoming an increasingly important part of its Services revenue. In a presentation to advertising clients today, obtained by 9to5Mac, the company emphasizes that even as Search Ads continue to grow, the vast majority of users are opting for an experience that doesn’t rely on personalized advertising.
App Store Search Ads and personalized ads
Apple is presenting this briefing to advertising partners today, explaining that Apple Search Ads help “advertisers grow their business, while giving users control over how their information is used.” For those unfamiliar, Apple Search Ads are the ads you see in the App Store at the top of search results when you search for a specific app or category of apps.
Apple’s emphasis in today’s presentation, according to a slide deck obtained by 9to5Mac, is that Search Ads rely very little on personalized targeting, and conversion rates are virtually unaffected.
With iOS 15, Apple added a new prompt when a user opens the App Store for the first time. The prompt explains personalized ads “help you discover apps, products, and services that are relevant to you.” The prompt gives users the ability to turn on personalized ads or to turn them off.
According to data aggregated by Apple, 78% of iOS search volume on the App Store came from devices with personalized ads turned off. This effectively means that 78% of users are opting to “Turn Off Personalized Ads” when they see the prompt for the first time in the App Store.
Furthermore, additional data from Apple indicates that the average conversion rate between users with personalized ads enabled and personalized ads disabled is nearly identical. For customers who opted in to personalized ads, advertisers see a 62.1% conversion rate. Among users with personalized ads disabled, that conversion rate is 62.5%.
In the presentation to advertisers, Apple explains that many developers would be better off by targeting users who have personalized ads disabled. This is because the pool of users with personalized ads disabled is larger than the pool of users who opted in is much smaller.
App Store Search Ads are priced with auction-based, bidding system. This means there is a larger supply of users with personalized ads disabled, which drives prices lower. And again, the ads are just as effective, if not more effective.
Finally, it’s important to remember that this data applies solely to Apple’s first-part advertising efforts in the App Store. It is not referring to App Tracking Transparency, which applies to third-party advertising.
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