Apple's search advertising service, which debuted in the United States five years ago, has finally arrived in mainland China this week.
The Apple Search Ads feature, which works similarly to Google search ads, allows developers to bid on an advertising slot based on users' keyword searches in the App Store. JPMorgan previously predicted that the company's annual ad revenue would exceed $11 billion by 2025, but the forecast did not include a breakdown for the search ad business.
“It’s likely that the long delay in launching Search Ads in China was due to Chinese government restrictions on the operation of the advertising business in China. It seems that Apple has found a way around this, but at the cost of having to accept payments in foreign currencies and not being able to provide Search Tab ads,” says Rich Bishop, founder, and CEO of AppInChina.
Apple has been limiting personalized advertising by allowing users to turn off data tracking by apps, a move that will undoubtedly disrupt the business models of Facebook and others that rely on third-party data to target ads.
China has traditionally been a massive market for Apple, but with the rise of local offerings such as Huawei, iPhones are losing their sparkle as a status symbol in the country. However, Apple's smartphone shipment increased in the first quarter as a result of Huawei's declining sales and the release of the iPhone 12 family. Appl's income is also supplemented by the Chinese App Store.
Apple delineates the qualifications for developers who want to target ads to mainland Chinese users in a five-page guideline. According to a blog post by AppInChina, advertisers must obtain a slew of industry-specific licenses, effectively prohibiting most foreign entities from directly advertising in mainland China.
To bid on search ads in China, apps would need to find local partners who had all of the necessary government approvals. Apps importing goods into China, for example, must obtain not only a general license to operate value-added internet businesses but also register with the relevant trade and customs authorities.
Apple might also start requiring these permissions from apps that essentially want to publish in China, according to AppInChina, as Apple continues to enforce Chinese government rules, as evidenced by its crackdown on gaming apps.
