Apple is reportedly testing an AI-powered App Store ads product

Apple is delving into the realm of AI-powered advertising for its App Store, as revealed by two people familiar with the matter to Business Insider. The tech giant has initiated trials of the new product with a select group of advertisers, employing artificial intelligence to autonomously determine optimal ad placements within the App Store—a concept reminiscent of Google’s Performance Max and Meta’s Advantage+.

Apple’s existing ad formats include two primary types visible within the search tab and on the search-results page, as well as “you might also like” ads on app product pages and those featured on the “Today” tab upon opening the App Store. In this new campaign approach, advertisers input their budget, cost-per-acquisition targets, preferred audiences, and targeted countries. Subsequently, Apple’s algorithm dynamically selects the most effective placements across the available formats.

While Apple communicates that these tests aim to enhance the performance of its Apple Search Ads, people familiar with the matter anticipate the official introduction of the product in the coming months.

Notably, Performance Max and Advantage+ have proven instrumental for Google and Meta, acknowledged as key growth drivers during their respective earnings calls. Google extols the superior results of Performance Max, though skepticism among advertisers persists due to the lack of detailed breakdowns regarding ad placements. In contrast, Meta discloses Advantage+ placement reports.

While the current scope of Apple’s new tool appears confined to placements within the App Store, mobile-advertising experts posit a logical expansion to other properties. Eric Seufert, an analyst, investor, and founder of Mobile Dev Memo, emphasizes that any Performance Max-style automated tool requires diverse placement types to deliver value. While skepticism remains regarding mobile app-install ads in News and Stock apps, the tool could serve as a precursor to new ad placements in Apple’s other assets, such as Maps, Apple TV+, and its Books app. The recent introduction of the Sports app adds to speculation about potential new ad spots.

Apple’s ad business is poised to generate $7 billion in revenue this year, marking a $1 billion increase from 2023, according to analysts at research firm Omdia. While the majority of this revenue stems from App Store search ads, recent strides in other areas are evident. Apple now offers sponsorships and ad integrations within broadcasts of Major League Soccer games on Apple TV. Strategic hires in adtech and TV-ad sales suggest broader advertising ambitions, potentially including the addition of an advertising tier to Apple TV+ in alignment with competitors like Netflix.