The news: Apple is testing an AI-powered ad buying tool for the App Store that would automatically determine where to place ads, according to Business Insider reporting.

• The tool, which is being tested with a small group of advertisers, would allow them to input a budget and desired cost-per-acquisition target to inform the AI’s decision.

App Store ads: Apple has spent the last few years focusing heavily on its advertising business by launching new ad formats across its suite of apps, as well as developing a video ad business for Apple TV+.

• That push has seen Apple invest in podcast ads, bring ads to its maps service, and more, but one of its largest initiatives is bringing ad formats to the App Store—an effort that was kicked into gear after it introduced AppTrackingTransparency changes in 2021, altering the mobile advertising landscape.
• There are currently four ad formats available: placements in the search tab and in search results; “You might also like” ads on apps’ download pages; and featured apps on the store’s homepage. The AI tool would not introduce new ad formats but rather help advertisers maximize efficiency and ROI.

Apple and AI: The news comes as Apple is facing investor pressure to invest in generative AI and announce its strategy for the technology as other Big Tech competitors like Google and Microsoft race ahead—even if that race means products hit the market before they’re fully baked.

• While the company is still relatively silent about consumer-facing AI products, the Business Insider report reveals that Apple is trying to use its ad business as a testing ground for the technology.
• Given the issues with consumer-facing generative AI, using the tech for behind-the-scenes operations is a way to satisfy investor demand while also minimizing risk. While there’s hesitancy around the use of AI in brand marketing, a large number of advertisers already use the tech for data analysis and buying recommendations.