Apple is venturing into AI-powered advertising for its App Store, according to two sources familiar with the matter who spoke to Business Insider. The tech giant is currently trialing the new product with select advertisers, utilizing artificial intelligence to autonomously determine optimal ad placements within the App Store—a strategy reminiscent of Google’s Performance Max and Meta’s Advantage+.

Apple's current ad formats within the App Store include two primary types visible within the search tab and on search-results pages, 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 approach, advertisers input their budget, cost-per-acquisition targets, preferred audiences, and targeted countries. Apple's algorithm then dynamically selects the most effective placements across available formats.

While Apple states that these tests aim to enhance the performance of its Apple Search Ads, insiders anticipate the official introduction of the product in the coming months. Notably, Performance Max and Advantage+ have proven instrumental for Google and Meta, recognized as key growth drivers during their respective earnings calls. Google praises the superior results of Performance Max, although advertiser skepticism persists due to the lack of detailed breakdowns regarding ad placements. Conversely, Meta provides Advantage+ placement reports.

While Apple's new tool currently focuses on placements within the App Store, mobile-advertising experts suggest 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 pave the way for 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 projected 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 developments 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.

Source: adapted from an article by Sophie Blake, Author for Mobile Marketing Reads.