Tech

Apple plans to sell ads in new spots in the App Store by year-end

Key Points
  • Apple is planning to release new ad "placements" as soon as the holiday season.
  • The new ad units represent a significant expansion in Apple's advertising inventory, which is focused on its App Store.
  • The expansion comes as the tech giant's advertising business is under increasing scrutiny.

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Apple CEO Tim Cook holds the new iPhone 14 at an Apple event at their headquarters in Cupertino, California, September 7, 2022.
Carlos Barria | Reuters

Apple plans to release new ad "placements" as soon as the holiday season, according to a message sent to developers on Tuesday inviting them to an online session to encourage them to buy ads.

The new spots represent a significant expansion in Apple's advertising inventory, which is focused on its App Store. In recent years, Apple's advertising inventory has been limited to one unit in the Search tab on the App Store and one on the search results page.

"With new opportunities coming to Apple Search Ads, you can promote your apps across the App Store to engage even more customers this holiday season," according to the message, which was posted by Mobile Dev Memo founder Eric Seufert and confirmed to CNBC by a developer who received the invitation.

The message to developers didn't specify where the new ad placements will be offered, but in July Apple announced it was planning to expand its menu with an ad unit on the Today tab, which is the front page of the App Store, and another sponsored unit on app product pages under the banner "You Might Also Like."

"Apple Search Ads provides opportunities for developers of all sizes to grow their business. Like our other advertising offerings, these new ad placements are built upon the same foundation—they will only contain content from apps' approved App Store product pages, and will adhere to the same rigorous privacy standards," an Apple representative told CNBC.

The expansion in inventory comes as Apple's advertising business is under increased scrutiny.

Apple's advertising revenue is reported as part of its services business, which also includes warranties, search engine licensing, App Store sales, and online subscription revenue, among other things. Apple reported more than $68 billion in services revenue in 2021.

Bank of America analyst Wamsi Mohan estimated in July that Apple could generate $5 billion of advertising revenue from Apple Search Ads alone in 2022.

In 2021, Apple released App Tracking Transparency (ATT) to give iPhone users the option of either sharing a unique ID with app developers, or declining to share it. Most iPhone owners choose not to share, preventing online advertisers from accurately tracking the performance of their ads.

Apple says it made the change because of its corporate position on user privacy. It allows its own users to turn off Apple-personalized ads on the App Store and prevent Apple from using data like account information and previous purchases to target search ads. 78% of users turn off Apple's personal ads, a similar rate to some estimates of users that turn off ATT.

Advertising companies including Facebook parent Meta have blasted ATT as anticompetitive and self-serving. Meta said Apple's change could cost it $10 billion this year.