Apple quietly buying app ads that funnel users to the App Store, developers claim [u]

Posted:
in General Discussion edited November 2021
Apple is said to be quietly buying Google search ads for high-value apps on the App Store -- and some developers are concerned that it's hurting their revenue.

Credit: Laurenz Heymann/Unsplash
Credit: Laurenz Heymann/Unsplash


Multiple app publishers have told Forbes that Apple is "secretly" buying Google ads that direct users to an app's App Store listing, rather than the developer's website.

"Apple is trying maximize the money they're making by driving in-app purchases that people buy through the Apple Store," one source told Forbes. "Apple has figured out that they can make more money off these developers if they push people to the App Store to purchase there versus a web flow."

According to the report, apps that have been advertised in Google searches include Masterclass, HBO, Babble, Tinder, and Bundle. The ads themselves don't disclose the advertiser, though they all have nearly identical tracking parameters -- likely indicating that a single entity is purchasing them.

Forbes, it's worth noting, could not verify that Apple was indeed the purchaser of the ad spots. That information came from developers. It's likely based on the fact that the app makers did not purchase the ads and that the ads go straight to an App Store link.

Some developers told the publication that the ads could be hurting their businesses because of the 15% to 30% cut that Apple takes of app and in-app purchases.

An average user who clicks on an ad might not know that the developers didn't place the ad. If a new user signs up through the App Store instead of the app's website, the subscription is subject to that 15% to 30% cut.

"You're building your growth based on what you think a customer is worth, and if a customer is worth 30% less, your margin is gone," said one source who chose to remain anonymous for fear of retaliation.

Additionally, the report notes that the ad spots are making advertising more expensive for the actual developers of the app. That's because prices rise when multiple parties bid on the same ad slots.

At least one marketer told Forbes that many of the brands represented by the ad spots had aggressively tried to circumvent Apple's App Store payment policies in the past.

Apple did not respond to Forbes' request for comment.

The App Store commission has proven controversial in the past -- it's among the reasons Epic Games cited in its antitrust lawsuit against Apple. In fact, it's Epic Games' bypassing of the App Store payment system -- and Apple's commission -- that kicked off the ongoing legal battle.

Back in September, a U.S. District Court judge ruled that Apple was not a monopolist but ordered the company to open up some of its restrictions on developers communicating with their customers on the App Store. Apple filed for a stay on that decisions, but was denied.

Update Nov. 15, 12 p.m. Eastern: In a statement to AppleInsider, Apple called the idea that it was secretly buying ads a "gross mischaracterization." Additionally, Apple also said that it regularly discusses App Store ad placement with developers, many of whom express appreciation for the support.

Apple says it has been placing ads to promote products it distributes, and likened the practice to retailers running ads for products they sell. The company pointed out that the ads are clearly marked as being from the App Store.

The practice is in accordance to standard business models Apple maintains, and it is granted the right to do so in its legal agreements with developers.

Read on AppleInsider
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Comments

  • Reply 1 of 36
    genovellegenovelle Posts: 1,354member
    So Apple is promoting your App being in their store and likely spending lots of cash. And developers have a problem.  They should remove their apps if they don’t think Apple should make their money. 
    darelrexwilliamlondongeorgie01Beats9secondkox2maximarawatto_cobranarwhallolliverbeowulfschmidt
  • Reply 2 of 36
    These App Store whiners get more bizarre every day.

    1. What's "quiet" about this operation — are Apple's ads not flashy and annoying, like all other ads purchased from Google? Perhaps they are subliminally blinked/whispered at the very threshold of human sight/hearing.

    2. When Kroger advertises that it sells Coke, the ad doesn't tell you to go to anywhere other than Kroger to get the Coke. Why would it? And why would Coke be anything but thrilled that Kroger is footing the bill to advertise Coke? More sales for Coke — even with Kroger keeping the retail markup.
    genovellewilliamlondongeorgie01Beats9secondkox2applguymaximarawatto_cobranarwhalalanh
  • Reply 3 of 36
    genovellegenovelle Posts: 1,354member
    darelrex said:
    These App Store whiners get more bizarre every day.

    1. What's "quiet" about this operation — are Apple's ads not flashy and annoying, like all other ads purchased from Google? Perhaps they are subliminally blinked/whispered at the very threshold of human sight/hearing.

    2. When Kroger advertises that it sells Coke, the ad doesn't tell you to go to anywhere other than Kroger to get the Coke. Why would it? And why would Coke be anything but thrilled that Kroger is footing the bill to advertise Coke? More sales for Coke — even with Kroger keeping the retail markup.
    These complaints in search of a problem. 
    williamlondondarelrexBeats9secondkox2maximarawatto_cobralolliver
  • Reply 4 of 36
    crowleycrowley Posts: 9,995member
    Weird and slightly underhand that Apple would do this without informing the developers.  Others claim that Apple aren’t selling apps, just providing a platform. Unsolicited advertising services goes a bit beyond a simple platform.

    If true, of course.
    shareef7779secondkox2muthuk_vanalingam
  • Reply 5 of 36
    It amazes me to see more and more developers who feel entitled to have their app on the App Store with free distribution, investing very little money for Apple’s developer program (which used to be far more costly with far less benefits) and zero investment to be on the App Store. Many of them weren’t even in meaningful existence as developers prior to Apple’s work.
    williamlondon9secondkox2tommikelewatto_cobra
  • Reply 6 of 36
    One of the biggest things to take away from the brouhaha over Apple's, and others' app stores is that a lot of developers make for rotten businessmen, and a lot of the general public have little clue how businesses operate.  One hint -- they don't wear gloves in the business arena.  And it's not just the giants like Apple; the two little bodegas in your neighborhood are just as likely to engage in some intense wrangling.
    Hedwarewatto_cobralolliver
  • Reply 7 of 36
    These developers should be happy that Apple Developer Program annual fee is only 99 USD. 
    Renting space on stores/malls is very expensive.
    maximarawatto_cobralolliver
  • Reply 8 of 36
    Whoever is complaining about this is idiotic. 

    Walmart buys tv add snd search ads in the same kind of way. Apple is advertising a product you sell on the App Store. It leads to people shopping on the amazing App Store which they love snd trust and spending money on your product. And you’d not even have the exposure without it. 

    Ingrates. 
    maximarawatto_cobranarwhal
  • Reply 9 of 36
    What this says to me is that Apple needs to enter the wider search arena. Don’t pay for ads. Put them on your own www search engine, which doesn’t spy on everyone. Have others pay YOU to put ads on your search engine. 

    People would flock to Apples engine nowadays. Everyone is so aware of Googles practices now. 

    All Apple has to do is build it. And no. Spotlight search and Siri aren’t the same. Just call it Apple search or iSearch and roll. 

    I don’t want to look at googles ugly design, ugly layout, and kindergarten logo anymore. Give the search engine the nice, minimal Apple UI and let’s go. 
    edited November 2021 watto_cobra
  • Reply 10 of 36
    They are complaining about free advertising. Unbelievable. I like the supermarket store analogy 
    maximarawilliamlondonwatto_cobralolliverdarelrex
  • Reply 11 of 36
    Realised my comment didn't post before but I used a similar supermarket and advertising Coca Cola analogy, or even a telco advertising an iPhone.

    If developers are calling foul on the impact to margins, I daresay they need to reconsider how they price or assess the viability of their product given the distribution costs (through an App Store/Apple for example) are still part of their costs. It's not like the Apple store tax is a constantly fluctuating variable like other costs in shipping a product, and it should be relatively easy to forecast in the valuation estimates.
    carthusiawatto_cobralolliver
  • Reply 12 of 36
    I wonder what the App Store developer agreement/contract says about this. I don’t know, but I’ll guess it says Apple can use their apps to promote the App Store. 

    These developers have an easy solution to this problem — just pull their apps from the store. Problem solved! 

    Wait, what? They don’t want to do that? Why?
    williamlondonwatto_cobralolliver
  • Reply 13 of 36
    This situation does more to reveal how completely out of touch some developers are with commerce and the business of apps - I would not be at all surprised to see an overlap between these complaints and those that don't seem to grasp that contributions to the app store via some fee structure are never going away. 

    Firstly there is no harm to their business, they are the primary beneficiary to the advertising and none of these apps have saturation rates which would imply even a modest amount of cannibalisation let alone the significant % needed to make the 15/30% fees produce a negative outcome. (Which is also trivial to check since they can merely review their profit growth from before and after the ads - one can be almost guaranteed that their profit rate has increased from the extra advertising activity that they didn't pay for.)

    We call this a win:win scenario. Whoever Apple has engaged to drive traffic to the app store can claim a win, and the developers profits have increased which is the other somewhat obvious win.

    When someone isn't happy with a win:win scenario - it's called greed. Greed is more often based on fantasy rather than reality - the developers think that given more time they would have acquired these users as full rate customers (that's the fantasy). They don't at all understand momentum, competition and user choice. More users in a shorter timespan lead to faster growth and stymies their competitors, meaning on both short and long timescales having someone advertising for you is always a good thing.

    The fears of this pushing up bid prices are negligible since both theirs and the app store ads aren't in scarcity volumes. One may ask: would they rather the ads point to someone else in the app store?
    edited November 2021 carthusiawilliamlondonwatto_cobralolliver
  • Reply 14 of 36
    danoxdanox Posts: 837member
    Apple apps and the golden 10,000 third party apps that’s all it would take to sell Apple hardware, 2 millions apps in the AppStore? those days are over.
    watto_cobra
  • Reply 15 of 36
    mejsric said:
    These developers should be happy that Apple Developer Program annual fee is only 99 USD. 
    Renting space on stores/malls is very expensive.
    A friend of mine ran a little shops you see in the middle of indoor malls (about the size of a walk-in closet) back in the early 1990s.  He was paying $1000/month.
    edited November 2021 watto_cobralolliverDogperson
  • Reply 16 of 36
    maximara said:
    mejsric said:
    These developers should be happy that Apple Developer Program annual fee is only 99 USD. 
    Renting space on stores/malls is very expensive.
    A friend of mine ran a little shops you see in the middle of indoor malls (about the size of a walk-in closet) back in the early 1990s.  He was paying $1000/month.
    Did your friend have to ask permission from the mall every time he wanted to sell a new product in his store?
  • Reply 17 of 36
    georgie01 said:
    It amazes me to see more and more developers who feel entitled to have their app on the App Store with free distribution, investing very little money for Apple’s developer program (which used to be far more costly with far less benefits) and zero investment to be on the App Store. Many of them weren’t even in meaningful existence as developers prior to Apple’s work.
    It amazes me that I don't see more users who feel entitled to run any apps they want on the devices they own. You are missing out on so many amazing apps that can never exist because they don't follow the rules Apple created only to benefit themselves. For example, having Steam running games in a virtual machine would be great to have on iOS.
    edited November 2021
  • Reply 18 of 36
    Beats said:
    They’re bit*hing that Apple may be advertising for them?!?!


    W T F!!!???

    If I was a small developer* I’d love for Apple to develop for me!! I’d let them take 50% of the damn revenue! I’d bend over and let Tim rape me for those free ads!

    *I know these are big developers. I’m just further proving how entitled and ungrateful they’ve become.
    OK how would Apple react if someone placed ads for Apple apps on the App Store that directed people to some other web site which had legal tools to jailbreak iPhones?
  • Reply 19 of 36
    crowleycrowley Posts: 9,995member
    georgie01 said:
    It amazes me to see more and more developers who feel entitled to have their app on the App Store with free distribution, investing very little money for Apple’s developer program (which used to be far more costly with far less benefits) and zero investment to be on the App Store. Many of them weren’t even in meaningful existence as developers prior to Apple’s work.
    It amazes me that I don't see more users who feel entitled to run any apps they want on the devices they own. You are missing out on so many amazing apps that can never exist because they don't follow the rules Apple created only to benefit themselves. For example, having Steam running games in a virtual machine would be great to have on iOS.
    I absolutely love playing Steam games in a virtual machine on my Android device!

    ... oh wait, that's not actually a thing.

    Everything is amazing when your imagination isn't constrained by reality.
    watto_cobralolliver
  • Reply 20 of 36
    Everyone loves capitalism until it hurts their bottom line.
    watto_cobra
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