How Apple plans to monetise the app surplus

Apple: introducing paid search to the App Store
Apple: introducing paid search to the App Store

In the past few weeks there have been two major announcements from Apple, writes Jed Hallam, head of digital strategy at Mindshare.

While most people will be paying attention to the new iOS and the revamp of iMessage, marketers should be paying close attention to two developments that have flown a little lower under the radar –the introduction of paid search results in the App Store and the redesign of Apple News.

These developments both have implications for advertisers, and mark a significant strategic move from Apple to begin competing with Google, Facebook, and Amazon. 

By far the most intriguing development is the introduction of paid search placements in the App Store. 

Apple has, for many years, spoken disparagingly about advertising as a revenue stream (and its efforts to monetise data through advertising with iAd was a flop too), so this move will surprise many.

But this move marks what many will see as direct posturing against Google and Facebook. Not so long ago, the big four (Google, Apple, Facebook, and Amazon) had distinct markets of their own, but as each begins to explore new revenue models, they are increasingly bumping into each other as competitors.

Each wants to ‘own’ the web (or rather create their own version of the web), and Apple will see this as a clear route to monetising one of its largest assets - the app ecosystem. 

As Benedict Evans at Andreessen Horowitz recently said; the first wave of digital was web, the second wave was apps, and the third wave is likely to be bots. Apple is in a position of strength with regards to hardware and devices.

This development will provide the choke of supply that paid search relies on, and also gives it a significant opportunity to trial paid search placements - possibly with a view to introducing paid search placements into Siri. 

For advertisers this is mixed news. Much like Facebook’s NewsFeed algorithm, it looks like an effort to reward creators of popular content (through the increased revenue share), and charge those with unpopular content for the opportunity to be seen.

If the decline of organic reach on Facebook’s NewsFeed is anything to go by, then every app developer should be preparing to pay for their place in the App Store in the near future.

What all advertisers should be taking from this is not that there are now paid opportunities to promote below average apps, but rather there is now an opportunity to trump competitors who have to pay to promote their apps - and putting people at the heart of everything you create as an advertiser is the first step.

The reinvention of Apple News

The second (and most recent) announcement from Apple was the revamp of News, and this too marks a significant moment for marketers. 

Everyone is trying to own the direct interface that people have with content. For Facebook, it’s the news feed, for Google it’s the results page and for Amazon it’s their devices.

The redesign of Apple News will be (as ever) carefully designed to have user experience at its heart, but the real trick will be convincing publishers that Apple News should be a primary distribution platform.

Facebook ramped up its ownership of the content interface with Instant Articles, and this looks to be Apple’s riposte to that.

After years of playing in their own territories, it finally looks like Google, Apple, Facebook, and Amazon are starting to directly compete. Things are going to get very interesting as the race to own the internet heats up, but the winner will always be those that put people at the heart of their product. The technology doesn’t matter, but Being Human always will. 

Ultimately the big four represent organisations that put people at the heart of their product, and advertisers can learn from this.

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