SEM

15/01/2016 | 16:29 GMT+7

How Apple Could Play Spoiler For The Search Ad Business

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With the start of a new year, it’s a fitting time to reflect on all that happened in the previous year and look ahead to what this next one might have in store for us.

Thinking about what developments could have the greatest impact on paid search in 2016, for better or worse, a few possibilities jump to mind: Google significantly expanding its foray into audience-based targeting for search; Yahoo abandoning Bing Ads entirely for Google ads or for its own Gemini program; Google finally throwing its full weight behind the buy button/Purchases with Google program.

Another possibility that has been simmering for some time is whether or not Apple will make a move that shakes up the entire search industry. With so much volume flowing through their devices, there are a number of ways they could do this.

Ad Blocking In iOS

Some feared that the introduction of ad blocking app capabilities in iOS would hurt mobile marketing efforts — but to date, any impact to paid search programs has been largely imperceptible, and iOS has maintained its share of mobile Google search ad clicks.

Ad blockers shot to the top of Apple’s App Store charts shortly after the release of iOS 9 in September 2015, but they quickly faded and have now all but disappeared.

Source: Merkle|RKG Digital Marketing Report, Q3 2015

Source: Merkle|RKG Digital Marketing Report, Q3 2015

Ad blocking will likely be more of a slow burn on mobile, as it has been on desktop. Short of Apple introducing its own ad-blocking product that is on by default, which seems unlikely, chances are the situation we find ourselves in now will not change dramatically any time soon.

Safari Default Search Provider

Speculation over whether Apple will drop Google as the default search provider for Safari has run hot and cold over the last two or three years, but ultimately, nothing has changed, and no one seems to know exactly what agreements have been signed by Apple and Google (and when).

The reality, though, is that such a change wouldn’t necessarily be that big a deal for paid search programs. Yes, mobile (phones and tablets combined) now produces over half of Google’s searches, and iOS devices account for about two-thirds of that mobile volume in the US, but most users would switch back to Google as their default engine (as they did when Yahoo became the default for Firefox), and the traffic that Google did lose would almost certainly be picked up and be monetized by Bing or Yahoo.

Those two engines may not be able to deliver quite the same ad volume or performance as Google, but the impact on the bottom line for most paid search programs would be minimal.

A Push Towards Ad-Free Search Listings

The scarier proposition for paid search practitioners is that Apple pushes mobile search toward an ad-free model, either as a marketing move to sell more products (for a "better user experience”) or simply to contain and/or spite Google.

Analysts have estimated that Google pays Apple around $1–2 billion a year to be the default search provider for Safari. That’s a pretty big chunk of change, but Apple generated $234 billion in annual revenue and $53 billion in net income as of their most recent earnings report.

They may view Google’s (or anyone else’s) search money as a drop in the bucket, or at least an amount they are willing to put at risk for the right strategic reasons.

Apple may or may not have ambitions to develop a full-fledged search engine, but they are crawling the web, and they have continued to expand the functionality of their Spotlight search product.

Google, meanwhile, continues to do very well in growing its mobile search ad revenues as it improves the monetization of its traffic, but Apple could have a larger impact down the road if the Spotlight feature gains more traction or, maybe more importantly, if Apple chooses to offer more Suggested Websites within the Safari search box.

Currently, Bing organic results supplement Apple’s within Spotlight, and users will only get to an ad if they click "Show More in Bing” or "Search Web.” It’s not clear how big Spotlight search has become, but Bing isn’t exactly killing it in mobile search.

Within the Safari search box on the iPhone, Apple typically only offers up a single suggestion of its own, and on a limited number of queries (navigational brand queries are particularly well-covered).

iphone-suggested-website-example

What happens if Apple starts showing two or three times as many of its own site or app suggestions in Safari, pushing Google’s autocomplete search suggestions farther down the page or even below the fold?

It’s easier to imagine Apple serving up two or three solid results for any given query than it is to imagine them producing a full search engine that can compete toe-to-toe with Google.

We saw with Apple Maps how hard it is to match Google in one of their specialties, even for a huge company like Apple, and search is the very core of Google.

Apple forcing the issue with its own search engine that isn’t fully baked will lead to a backlash (as might switching the Safari default to Bing or Yahoo). A more subtle approach would probably go unnoticed by the average user, but it could shift a great deal of traffic from paid and organic search to "direct” and benefit those who are able to rank well in Apple’s algorithm — likely the rich getting richer.

iOS 10 and Beyond

We may not get a better peek at Apple’s hand until they hold their WWDC event mid-year, where they will presumably speak to iOS 10 and any major changes they have in store for Safari. It will be interesting to see if they plan to continue with incremental changes to their search capabilities or opt for a bolder play.

Longer term, if Apple is able to wrest a great deal more control over the search traffic that takes place on its devices, the lure of directly monetizing it themselves may become too tempting to pass up. We may ultimately have a new search ad provider to work with in Apple devices, but the road to that point could get bumpy.

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