Apple’s new Search Ads have been publicly available to developers for about a month now and already we’re seeing the app-install ads deliver promising results to our users, who manage marketing budgets for some of the most-downloaded apps in the world.
We at Singular analyzed the ad spending patterns of 402 apps on our platform that purchased Apple Search Ads since they publicly launched in early October and found that Search Ads consistently ranked among the top-performing ad channels for marketers, driving the highest average conversion rate and the highest-spending users at the lowest cost to marketers.
In many cases, Apple Search Ads outperformed reigning ad channels on iOS including Facebook, AdWords and Chartboost.
Average Conversion Rate (installs/impressions) of major ad channels:
App Store Search Ads: 4.9%
Social Ad Channels (e.g., Facebook): .12%
Search Ad Channels (e.g., AdWords): .03%
Display and Video Ad Channels (e.g., Chartboost): .01%
Average Cost Per Install (CPI) of major ad channels:
App Store Search Ads: $1.31
Display and Video Ad Channels: $2.99
Social Ad Channels: $5.84
Search Ad Channels: $8.63
Percentage of total mobile ad spend:
Display and Video Ad Channels: 47.6%
Social Ad Channels: 41.9%
Search Ad Channels: 7.3%
App Store Search Ads: 3.2%
While marketers spent on average only around 3% of their ad budgets on Search Ads in October, compared to the roughly 40% spent on average on Facebook, initial performance data suggests Search Ads could evolve into a much larger source of qualified and valuable traffic for app marketers.
Notably, we dug deeper into the data to uncover how much users who installed an app after tapping a Search Ad actually spent inside that app and how much developers paid Apple for that revenue. This metric, also known as an ad channel’s “ROI”, is particularly tough to track as it requires marketers to combine data from a third-party ad channel (like Facebook or Apple) with data from their attribution provider (the tool used to measure in-app activity including revenue and down-funnel events).
Singular, which specializes in combining such data sources for mobile marketers, found that out of the 11 most commonly used ad channels Apple Search Ads drove the highest ROI. And while the average revenue per install (ARPI) was roughly the same as the average ARPI across other major ad channels on iOS, a key factor driving the high ROI of Search Ads is the fact that the ads are relatively cheap to buy right now.
Average CPI for Search Ads was 67% cheaper than the average CPI across other ad channels in October. That’s largely because Apple Search Ads, similar to Google AdWords, are purchased via an auction-based model and demand for Search Ads at this early stage is relatively low, which has kept prices down.
Already, however, as more bidders have entered the fray, Singular data shows the cost of Search Ads is gradually climbing. In October, the average CPI of Search Ads grew 25% week over week, reaching an average CPI of $1.86 in the last week of the month.
Beyond the low prices, we at Singular believe a primary reason Search Ads are giving marketers such a big bang for their buck is their ability to capture user intent at the install decision point. As Apple has noted, 65% of downloads in the U.S. come directly from a search on the App Store.
Some industry observers have questioned the intent behind those searches. They claim users typically open the App Store to search for specific apps by name and not to plug in general search queries such as “shopping” or “fitness” to discover new apps.
Meanwhile, Apple has touted Search Ads as a way for indie developers to get discovered by bidding against related keywords and achieving favorable rankings through high tap-through rates. But the tech giant first needs to convince developers that users actually use the App Store to discover new apps; otherwise, Search Ads risk creating a conflict between the actions advertisers are incentivized to take (targeting competitor names) and the resulting user experience.
One recent study, however, suggests user behavior in the App Store is in fact leaning towards discovery. Attribution provider AppsFlyer analyzed 50 apps that bought Search Ads in October and found that 72 percent of search queries that resulted in an install were not based on the actual name of the app.
While it remains to be seen whether Search Ads can deliver sustained ROI to mobile marketers over time, one thing is for sure: We at Singular see new marketing platforms and ad channels emerge all the time, but it’s not very often that we witness such a dramatic change that impacts both marketers and users in such a profound way.
Keep an eye out for mobile marketing insights from Singular.