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Apple buying Google ads for high-value subscription apps

forbes.com

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Re: Apple buying Google ads for high-value subscription apps

#61

Post by Joeri »

renewiltord wrote: post #50
offtotheraces wrote: post #45

Earlier quoted context omitted.

I run a big portfolio of mobile apps, and the discussion around this is misguided. It's not about Apple taking 30% of the revenue generated from these ads. It's about Apple driving up the user acquisition costs for these companies so much so that it become entirely uneconomical for them to buy ads that direct users to their own websites, and instead the campaigns that target users to download the app - which results…

Unlike predatory pricing, you can’t really price people out of this permanently. Tinder in this example is still getting the customer. Google is still getting paid. So the moment Apple stops buying the ads, they’re both ready to participate again. So how is it a long term play?

You do it while a service is growing, to capture most of the subscribers. Once growth dies down you stop buying and while the subscriber base will slowly bleed from app to web, you can ride the revenue stream from the growth fase’s subscribers for a long time.

Re: Apple buying Google ads for high-value subscription apps

#62

Post by FridayoLeary »

Hamuko wrote: post #25

It never ceases to amaze me how much Apple is willing to trash its reputation just for some pocket money. I can't imagine this or the App Store ads to actually make that much money, and both make Apple look terrible.

Most of Apples' worst excesses seem to be around the management of the app store. Even Tim Cook expressed frustration at the lack of leadership in that department. I don't think this is representative of Apple as a whole. Although the company must accept full responsibility for even their lowest common denominator.

Re: Apple buying Google ads for high-value subscription apps

#63

Post by offtotheraces »

jefftk wrote: post #51
offtotheraces wrote: post #45

Earlier quoted context omitted.

I run a big portfolio of mobile apps, and the discussion around this is misguided. It's not about Apple taking 30% of the revenue generated from these ads. It's about Apple driving up the user acquisition costs for these companies so much so that it become entirely uneconomical for them to buy ads that direct users to their own websites, and instead the campaigns that target users to download the app - which results…

Sorry, where in the article do you see that Apple is running these ads in a way that loses them money?

The article doesn't have to say it because it's just the way that google ads work. It's a bidding-based system, so at the most basic level the person who bids the most wins the auction and their ad is shown. If the LTV of a customer is $100, and there's a 3% processing fee for web transactions, then Tinder will bid up to $97 to acquire a customer. So Apple has to pay at least that much to acquire that same customer in order to win the ad auction. Once Applr has paid that $97, the user now downloads the app and subscribes via Apple’s IAP system. Apple takes 30% of those revenue while Tinder gets 70%; so Apple gets 30%*$97 = $29. So they've spent $97 and received $29 ----> they have a negative $68 margin on that spend.

Re: Apple buying Google ads for high-value subscription apps

#64

Post by offtotheraces »

renewiltord wrote: post #50
offtotheraces wrote: post #45

Earlier quoted context omitted.

I run a big portfolio of mobile apps, and the discussion around this is misguided. It's not about Apple taking 30% of the revenue generated from these ads. It's about Apple driving up the user acquisition costs for these companies so much so that it become entirely uneconomical for them to buy ads that direct users to their own websites, and instead the campaigns that target users to download the app - which results…

Unlike predatory pricing, you can’t really price people out of this permanently. Tinder in this example is still getting the customer. Google is still getting paid. So the moment Apple stops buying the ads, they’re both ready to participate again. So how is it a long term play?

You're right on two accounts: - Google gets paid no matter who pays, so they don't care - Tinder still gets the revenue (and at better margins bc they're not actually have to pay for that user anymore - Apple is paying)

And even your last point is not wrong: at some point Apple may stop doing this. But that could be year's away, and in the meantime, they're throwing their big stack around to make it too costly for developers - who Apple supposedly partners with - to build businesses that are less dependent on Apple’s whims. Plus, Apple uses the fact that most subscribers to app store products subscribe on the app store itself to bolster their case with regulators that no reform is needed bc consumers are overwhelmingly happy to use Apple’s IAP systems. But if Apple is putting it's finger on the scales in order to actively drive users away from web subscriptions, then they heavily misleading these regulators about the true “choices” consumers are making.

Re: Apple buying Google ads for high-value subscription apps

#65

Post by RNCTX »

echelon wrote: post #40
Brian_K_White wrote: post #24

It's actually an interesting question how nefarious or harmful this actually is. We obviously know why Apple is doing it and why the apps in question don't like it. But a couple things occurred to me: You could view this like Amazon giving away your book or android app in a promotion. As I understand it, they still pay the author as if it were a sale, so the author seemingly has nothong to complain about. Even that s…

This shows just how much a monopoly Apple has over brand customer interaction. They say that their app store not allowing side loading is for user safety. In actuality, it forces the brand/company/startup into a place where they're completely shackled. They pay 30% taxes, have no customer relationship, and have to step through every hoop to satisfy apple. The handicap their browser so you can't get new runtimes or de…

"nothing will fundamentally change"

-- the person currently in charge of the DOJ, when running for office, speaking to donors.

Re: Apple buying Google ads for high-value subscription apps

#66

Post by nemothekid »

tauwauwau wrote: post #17
FridayoLeary wrote: post #5

Earlier quoted context omitted.

can you explain to me this attitude, which i see a lot? Obviously the entire reason for a companys' existence is to make money why should we expect anything else? Also this is true for every company in history. Of course we must demand companies meet minimum moral standards such as not using slaves (which would be unthinkable today in 2021 cough ) but those must be imposed on them by law. This is a genuine question p…

Money corrupts everything, it replaces the original motivation. If companies didn't have to maximize x% of the profit made on the investor's money per quarter/year, they will be able to focus on product/service, customer and employees more. It may result in less profit but it will be better for the society as a whole. We can see this happening when some company is acquired solely for sucking money out of it. Sometime…

>We don't have product making companies anymore,

The problem with this sentiment is it's always presented as some new found discovery, and not as an inherent outcome of a capitalist economy. It was in 1973, 48 years ago now, that Ford did the infamous calculation on not to recall the Ford Pinto because the cost of recall was less than their calculated law suit risk - a move that would have killed their customers; and then further still Milton Friedman defended this decision.

We haven't had "product making companies" as the norm for at least 50 years now. What era are you talking about?

Re: Apple buying Google ads for high-value subscription apps

#67

Post by thrwn_frthr_awy »

jpalomaki wrote: post #9

They key piece is that article claims Apple is doing this so that they can get their 30% transaction fees. If customer pays on the app developers website, Apple is not getting cut. If customer downloads the app and makes payment there, Apple gets their money.

I see. So to a end-user it may not make much difference whether they sign up via the web site or app, but if Apple can get in-between, they can cleave 30% of the user’s lifetime revenue. Hiding email, credit card info already entered, subscription management,… there are reasons to want to run everything through Apple, but it’s interesting to see this behind the scenes as it can really change Apple’s incentives.

Re: Apple buying Google ads for high-value subscription apps

#68

Post by jefftk »

offtotheraces wrote: post #63
jefftk wrote: post #51

Earlier quoted context omitted.

Sorry, where in the article do you see that Apple is running these ads in a way that loses them money?

The article doesn't have to say it because it's just the way that google ads work. It's a bidding-based system, so at the most basic level the person who bids the most wins the auction and their ad is shown. If the LTV of a customer is $100, and there's a 3% processing fee for web transactions, then Tinder will bid up to $97 to acquire a customer. So Apple has to pay at least that much to acquire that same customer i…

I agree that that's one way it could work, but it seems really unlikely to me that Apple would be willing to lose so much money on a project like this. Some other possibilities that I think are more likely:

* Apple has a higher LTV estimate than Tinder for this traffic.

* Tinder has less available capital, so they are not able to outbid Apple even though they think that they would still earn lots of money at that price.

* Perhaps someone who is looking to subscribe to Tinder is likely to succeed even without advertising, but without Apple's ads it won't be via Apple's IAP. The amount it's worth to Tinder for a subscriber to come to them directly instead of via Apple and the amount it's worth to Apple for a subscriber to come in via IAP are about the same.

(Disclosure: I work on ads at Google, but not search ads. Speaking only for myself)

Re: Apple buying Google ads for high-value subscription apps

#69

Post by noirbot »

ClumsyPilot wrote: post #39
betterunix2 wrote: post #29

Earlier quoted context omitted.

"Money corrupts everything" BS. One of the only things Ayn Rand got right was her view of money: it is one of the greatest forces for good humans have ever invented. Money allows us to settle our disputes without violence; money is what enables peaceful trade; money is how we moved beyond palace economies. Sure, money can corrupt some things, but on the whole money has likely saved many lives and in all likelihood th…

"Money allows us to settle our disputes without violence" What? Money is the cause of like70% of all violence

Sure, but if it's 70% of the remaining smaller pie of violence, that's still an improvement. If money wasn't a thing, you wouldn't be like "Relationships cause 70% of violence. Relationships are the root of all evil"

Re: Apple buying Google ads for high-value subscription apps

#70

Post by tauwauwau »

nemothekid wrote: post #66
tauwauwau wrote: post #17

Earlier quoted context omitted.

Money corrupts everything, it replaces the original motivation. If companies didn't have to maximize x% of the profit made on the investor's money per quarter/year, they will be able to focus on product/service, customer and employees more. It may result in less profit but it will be better for the society as a whole. We can see this happening when some company is acquired solely for sucking money out of it. Sometime…

> We don't have product making companies anymore, The problem with this sentiment is it's always presented as some new found discovery, and not as an inherent outcome of a capitalist economy. It was in 1973, 48 years ago now, that Ford did the infamous calculation on not to recall the Ford Pinto because the cost of recall was less than their calculated law suit risk - a move that would have killed their customers; an…

I was talking about the current era. But you're right, it has been like that for a long time, modern technology just has made it more efficient.

My comment was hyperbolic, it should have been more moderate.

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