While Apple will certainly make money from this program, the main rationale appears to be app discovery. Google has had search ads in the Play store for well over a year.
Search Ads will be delineated with a blue background. Apple will generate the ad images and copy from the app metadata supplied by the publisher or developer, so there’s no ad copy per se. It appears there will only be one ad per search.
Developers set a max daily budget and an overall campaign budget. Apple’s Search Ads use the familiar “second price auction” to set winning bid prices. Apple says that relevance and bid price will determine which ads show. (Developers will pay on a “cost per tap” basis.)
Search Ads allow for bidding on the iPhone or iPad individually. There’s a keyword suggestion tool, with popularity indicators and negative keyword capabilities. There are audience targeting features, including customer type (e.g., has not downloaded) gender, age, and location. And of course there are analytics.
App store search is the dominant way that apps are discovered. However other discovery channels are now growing in relative importance according to comScore.
Beyond this, comScore says that roughly 50 percent of smartphone owners don’t download any new apps in a given month, while the average user downloads two apps per month.
Search Ads will go live in the App Store on October 5. Developers also receive a $100 credit for the first campaign.