Apple, the tech giant typically known for its privacy-centric approach, is reportedly testing a new AI-powered advertising tool that will leverage artificial intelligence to streamline and optimize ad placements within its App Store.
How will Apple’s AI-powered ad system work?
According to Business Insider, Apple’s new advertising system aims to simplify the ad-buying process for advertisers.
Instead of painstakingly selecting where ads should appear, advertisers will reportedly provide Apple with the following:
- Budget: Their overall spending limit
- Target audience: Key demographics and interests
- Desired countries: The locations they wish to reach
Once this information is established, Apple’s AI system takes over. The AI will automatically analyze the advertiser’s input and find the most effective existing ad slots across various sections of the App Store.
These include:
- Search tags: Ads shown when users use the App Store search bar
- Search results: Ads displayed within search results themselves
- You might also like: Recommendations shown on app product pages
- Today tab: Ads placed on the App Store’s main landing page
Why is Apple might be doing this?
Apple, like any company, seeks new revenue streams. Hardware sales are a mainstay, but subscription services and software have become increasingly important. Advertising offers a significant potential for growth, especially considering Apple’s massive user base.
Recent changes in the Digital Markets Act (DMA) could potentially loosen Apple’s control over in-app purchases and its commission structure (often referred to as the “Apple Tax”). This could lead to a decrease in App Store revenue, making advertising an attractive alternative.
The DMA mandates that app stores allow for alternative in-app payment methods. This could lead to a decline in revenue from the current App Store payment system. Apple’s advertising platform could potentially offset some of these potential losses.
Taking Apple’s recent decision to cancel the Apple car project to focus on AI development into account, Apple’s move towards AI advertising seems to be a well-timed strategic maneuver. The company is likely looking to diversify its revenue streams, potentially mitigate the impact of the DMA, and capitalize on a lucrative market opportunity.
Featured image credit: James Yarema/Unsplash.
