Big Brands Are Already Targeting Their Competitors With Apple Search Ads

Domino's, Amazon push for app downloads

When Apple made its foray into mobile advertising in 2010, big names like Nike, McDonald's and Coca-Cola were willing to shill out $1 million just to serve their ads to iPhones and iPads.

While iAd's flashy banner ads ultimately failed, big brands are once again lining up to buy into the technology giant's month-old app-install ads, Search Ads, which let marketers pay to promote their apps at the top of search results within the App Store with a listing that's labeled as an ad. App-install ads have proven to be big businesses for Facebook, Google, Twitter and Yahoo, and Apple's search-based targeting seems ripe for conquesting, the practice of targeting competitors.

For example, Domino's is currently buying ads against the keyword "McDonald's." Meanwhile, finance management site Mint is promoting its app to people who search for "Chase." Walmart's Jet.com is zeroing in on folks looking for online grocery service Peapod, and food-delivery service Eat24 is serving its ads alongside queries for "Pizza Hut." Amazon is homing in on searches for CVS' pharmacy-refill app, and ads for Boxed, an app that lets consumers buy packaged goods at wholesale prices, appear when people type in "Sam's Club." Apple did not immediately respond to an inquiry about its conquesting guidelines for marketers.

Part of the reason brands can seemingly fine-tune their ads so granularly and specifically is because Apple factors an ad's relevance into app-install ads in addition to a more traditional bidding-based model.

"Relevance is actually huge on the Apple App Store platform," said Bill Riddell, senior media specialist for performance agency Chacka Marketing. "It will show on whatever keywords are relevant to your product I believe within your category, and if you're not relevant at all, it actually won't show you."

In other words, a sponsored listing for Chase Bank isn't likely to appear at the top of a search for "Coca-Cola" because the two brands are in different categories, but it may show up for a search for bank-related words.

That's partly because people use Apple search differently than they do Google search, Riddell said. "Someone on Google search might be more inquisitive in the way that they pose their search query," he said. "Apple ones tend to be a little bit shorter—they want to look for something that's very succinct, very specific, and most likely, they will be searching for a brand name."

And compared to iAd's hefty buy-in for brands, Apple is now going head-to-head with Facebook, Google and others over pricing. For the time being, Apple is winning that battle, at least until marketers catch on to it.

According to data from mobile analytics company Singular that analyzed 402 apps on its platform that purchased Search Ads—equivalent to $25 million in spend—between Oct. 5 and Oct. 30 only 3 percent of app budgets went to Apple Search Ads compared with roughly 42 percent for social platform app-install campaigns. Another 48 percent of spend went to display app installs, and 7 percent went to display ads that promoted app installs.

In terms of cost per install, or CPI, Apple Search Ads average $1.31 versus $8.63 for search engines like Google and Bing. Social platform app-install ads cost an average of $5.84, and display ads cost $2.99 per CPI, according to Singular.

"Clearly, there's a lot of inventory that you can pull out of there," Riddell said. "As soon as people start adopting it and more people get onto it, it's going to get more competitive. For right now, it's a game of volume."

There are other differences between Apple and other app-install players, too. Instead of measuring clickthrough rates, Apple provides marketers with a metric called "tap-through rate." And while marketers are able to access download numbers, bidding information and have some data into which keywords are most effective, they cannot get more specific data—like how long someone spent in the app or when they opened it—without using a third-party company. Apple also creates the ads themselves with assets and metadata pulled from a brand's App Store page. While brands can control which pictures and data they use on the page, they cannot control the creative for the ad.

That can actually be a good thing to help brands and publishers pick what information is most crucial on the page. For instance, Apple's hands-on approach to advertising can determine which descriptors or categories will give marketers the biggest boost.

"Considering how important App Store optimization is, this seems like a natural way to monetize or highlight your apps," said Amir Ghodrati, director of market insights at App Annie. "It gives publishers another way to increase the visibility of their apps. If the ad is not performing well, then it can also get deprioritized."

Meanwhile, the New York Post reported that a handful of fake shopping apps are targeting retailers including Coach, Michael Kors and Dollar General with Apple Search Ads that stealthily steal downloads and sales from name-brand marketers. For example, Michael Kors does not have a mobile-commerce app, but a quick search pulled up a list of apps claiming to offer discounts and sales on the designer's clothing.