What Happened
In anticipation of its annual WWDC developer conference that kicks off on Monday, Apple has announced several strategic changes to its App Store.
In an interview with The Verge, Phil Schiller, Apple’s senior VP of global marketing and head of App Store, says that Apple will start displaying ads in App Store search results. Seemingly taking a cue from Google’s Play Store, Apple will start “cautiously” testing paid search ads in the App Store, displaying a single ad per search at the top of the search results. The ad auction system in the App Store search will be “fair to developers and fair for indie developers, too,” according to Schiller.
Schiller also revealed that the company will reduce its take of app revenue for apps that can retain long-term subscriptions. Instead of the existing 70/30 revenue split model, Apple will reduce its take to 15% provided that the app manages to retain a customer subscription for more than a year. If widely adopted, developers will be incentivized to build apps that charge recurring fees for access to content and services, instead of selling them at a one-time cost. Shortly after Apple’s announcements, Google broke the news that it will match Apple’s new model, offering Android developers the same 85/15 revenue split immediately,
Why Brands Should Care
As a harbinger to the upcoming WWDC announcements – which we expect to include a smart Siri, a refreshed iOS, and an updated Apple Pay that works on mobile web – these changes to the App Store signals Apple’s willingness to learn from Google and incentivize its developer community. Google’s counterstrike also shows that they are more than willing to play ball and keep up. For brands, the new search ads in the App Store can help increase their app visibility and drive more downloads, which will undoubtedly come in handy when launching a new app or gearing up for a mobile-based campaign.
For more updates on Apple’s WWDC announcements and the implications they may have for brands, remember to check back next week for our take on the event.