Brief:

• Apple updated its software for search ads in a way that suggests the company may expand ad placements beyond the App Store and into more of its apps, Adweek reported. The changes are found in Apple's Search Ads Campaign Management application programming interface (API), which lets developers build software to manage programmatic campaigns, per its website.
• Apple added the parameters "supplySources" and "adChannelType" to its search ads API as possible placeholders for search ad inventory on other Apple apps such as Maps, News and Stocks, or the "Top Hit" section in its Safari mobile browser, Adweek reported.
• The "supplySources" parameter is used to indicate where Apple's platform can find the source of ads in a campaign, while "adChannelType" specifies other conditions for search campaigns, per Apple's developer documentation.

Insight:

Apple's updates to its search campaign software may mean that app marketers will have more ways to advertise their products outside of the App Store, which is the only way that the tech giant's customers can download software for their iPhones, iPads and Apple Watches. Those ads currently appear at the top of search results in the App Store, giving them special prominence when Apple's customers enter search terms like "strategy games" or "educational apps." By adding search ads to other apps like Maps and News, Apple would offer app marketers a way to reach engaged audiences.

Almost three quarters (70%) of App Store visitors use search to find apps, while 65% of app downloads occur directly after a search in the online store, per metrics provided by Apple. The company says Apple Search Ads have an average conversion rate of 50%, indicating their power to reach customers when they're most likely to download an app. Apple Search Ads last year delivered high returns on investment for advertisers of mobile apps, rivaling other platforms such as Google and Facebook among ad networks, researcher Singular said in a report that ranked ad networks by ROI.

Apple's updates come a month after the company revised its developer guidelines to let developers integrate their apps more closely with its SKAdNetwork, which lets advertisers measure ad campaigns while maintaining user privacy. Apple also updated its App Store Review guidelines to let apps send advertising as push notifications, among other changes. The company started requiring app developers to seek explicit permission from consumers to receive those notifications and allow them to opt out. Apple's new guidelines on marketing push notifications were a positive development for mobile marketers, helping them to reach self-selecting customer groups that are most amenable to those notifications.

Apple's expansion of its search ads to more apps may be another attempt to develop an ad network. The company had created an advertising business in 2010 called iAds to let app developers run advertising in their apps, but shut down the platform in 2016. Its focus on the user experience (UX) and privacy limited the ability to target audiences, critics said. Because search audiences demonstrate higher purchase intent with their online queries, Apple's possible expansion of search ads could provide a way to reach audiences based on their interests while protecting their privacy.

Apple's new search ad features may indicate the company is taking more direct aim at Google, which pays the iPhone maker billions a year for web traffic referrals. Apple also has worked to diversify its revenue away from an overdependence on the iPhone by expanding the range of services that generate ongoing sales. Apple's services business, which includes the App Store, Apple Music, Apple TV+ and iCloud storage, saw a revenue gain of 17% to $12.7 billion in Q1 from a year earlier, outpacing the company's overall 9% growth to a record $91.8 billion.