$2 billion for Search Ads by 2020? What Apple is looking for from its “service” business?
According to some analytics, Search Ads by Apple would generate $500 million in fiscal year 2018 alone, with possible growth by 200% by the year of 2020 — without any extra promotions by Apple or policy change about the ad prices.
Apple broke the record for “services” revenue with a $9.5 billion income this July, which is a 31% increase year-over-year. It was because the Search Ads business was categorized to “services”, that contributed to the substantial growth on “services” revenue.
In a note seen by AppleInsider Bernstein analyst Toni Sacconaghi claims that the $2 billion figure is “conservative”. Should the goals be reached, Search Ads alone will generate as much revenue as Apple Music did in fiscal year 2017, but given that it has to pay almost nothing for acquisition costs, the margins are dramatically higher.
Launched in 2016, Search Ads is an easy way for developers to get discovered on the App Store. The app developers and marketers could locate the target groups via searching keywords, types of devices, location, schedules and more.
In December 2017, Apple introduced a new basic tier that both offers a simplified developer payment option and a streamlined sign-up process. Unlike the original Search Ads, which was renamed Search Ads Advanced when Basic rolled out at December 2017, fees are based on app installments, not ad interactions.
In August 2018, Apple expanded Search Ads services to 13 countries globally, including United States, United Kingdom, Australia, New Zealand, Mexico, Canada, Switzerland, France, Germany, Italy, Spain, Japan and South Korea.
As the $2 billion figure mentioned above is “conservative”, AppBi believes that if Apple is expecting a greater number in growth, Search Ads must and has to be a dark horse among all. And China shall gain more attention as a “Blue Ocean” market with lots of potentials. Based on some statistics, iPhone ranks №3 in the market shares of smart phones, with 14.2% of occupancy. It could be predicted that more and more app developers would come to App Store China, and it’s a must that Search Ads would get into China market.
Back in June this year, the simplied Chinese version of Search Ads website was launched without much notice. Based on the history, every time a new version of language was added in the official website, the Search Ads service in that country would be possibly launched within 3 months. However, we still couldn’t figure out the reason that China is still at the waiting list. In the mean while, we’re optimistic about the fact that Apple is valuing China as a market with huge potential. AppBi is expecting the announcement of Search Ads’ launch in mainland China in WWDC19.
