Apple's Lower Commission Won't Offset the Larger Damage It's Doing to Publishers via IDFA Changes

adexchanger March 17, 2021 Offset 107
Apple's Lower Commission Won't Offset the Larger Damage It's Doing to Publishers via IDFA Changes

With the loss of IDFA and the resulting limitations on audience targeting, all signs point to a significant hit for app ad revenues. Although Apple likes to point out that ad revenues continued to grow even after it introduced its Intelligent Tracking Prevention (ITP), thats really only half the story.

With the loss of IDFA and the resulting limitations on audience targeting, all signs point to a significant hit for app ad revenues. Developers can expect to see a drop of an estimated 50% in ad revenues, if not more , due to the transition, according to Facebook testing. Although Apple likes to point out that ad revenues continued to grow even after it introduced its Intelligent Tracking Prevention (ITP), thats really only half the story. Most of that growth occurred within walled gardens, and at a time when the digital advertising market was substantially smaller. A publisher reprieve via reduced Apple commissions? Last November, Apple introduced a program that reduces App Store commissions from 30% to 15% for small businesses, which is being touted as a win for independent app creators. For a small business, thats a $150,000 bonus. But dont break out the champagne just yet. In the context of Apples other policy shift the removal of the IDFA the picture is more grim. That change will more than offset any commission reduction benefits in the coming year. For the industry as a whole, cutting commissions is just a distraction from the larger harm Apple is levying on developers and publishers. However, smaller developers can benefit from the lower commission by strategically diversifying their business models for monetization. Apples ulterior motive While a possible addition of up to $150,000 to the bottom line can be a big deal for an independent app publisher, for Apple that revenue is insignificant. Its estimated that about 98% of iOS apps generate less than $1 million in annual revenue, but these apps represent only about 5% to 8% of Apples app store revenues. In other words, the 2% of companies that will continue to pay the original 30% commission account for about 95% of the app stores revenues. Regardless, even if you concede Apples new program as a backing down due to industry complaints, theres another initiative that the company is decidedly not

Related Post