Apple is planning to get into the Search Engine Marketing (SEM) business with paid search for the app developers. Couple of months ago in April, the prospect of an Adwords-like paid search model for the iOS App Store was raised in a Bloomberg report.
Apple is one of those rare few companies that can take an ongoing evolution and focus and distill it into a revolutionary change. According to a report that was published in the Verge, Apple will unveil paid-search ads for the App Store at the Apple Worldwide Developers Conference (WWDC) that will take place next week.
Moreover, the company is also going to introduce a new app-subscription revenue sharing model. The actual product itself is supposed to be launched in the fall but invitations are being sent to developers to join the beta today. According to a copy on the Apple site:
“Search Ads is an efficient and easy way for you to promote your app within the U.S. App Store search results, helping people discover or reengage with your app at the very moment they are searching for apps like yours. Designed to give users a safe search experience, Search Ads sets a new standard for delivering relevant ads while respecting user privacy”
Apple is following the footsteps of Google as a little less than a year ago, they introduced search ads to the Google Play Store. At the moment there is no information about the ranking or bidding but it highly likely that it will be further explained in detail at the WWDC next week. It is also likely that iOS developers’ app-discovery problems will be solved through paid search ads.
Barring the first year, developers will also be keeping a larger chunk of profits. Apple will keep 30% of the revenue in the first year but in the subsequent years, the rate will drop to 15%. Apple will encourage developers to use a subscription model to generate recurring revenue by giving them a larger cut of the pie after the first year where they will keep 30% of the revenue.
The new subscription option will also be launched at the WWDC next week. Apple will be expanding the app categories that can sell subscriptions. Previously, only a few had access to subscriptions.
It was also announced last year that Apple had roughly $6 billion in ‘services’ revenue and that includes the App Store revenues. In 2015, Apple said they saw $20 billion in App Store revenue. Not only will these moves benefit developers, but they could help benefit Apple’s bottom line.