Apple plans to expand the advertising business, writes in his weekly column well-known insider Mark Gurman. The iPhone producer has been vocal about user privacy for the past few years, and last year launched App Tracking Transparency, or ATT, which lets consumers decide whether apps can track them in other apps and on websites. This innovation significantly undermined the advertising business of companies such as Meta, but it does not prevent Apple itself from showing personalized ads on its devices and planning new advertising products.
Today, Apple’s advertising efforts consist of placing display ads in the News and Stocks apps, as well as in the App Store on iPhone, iPad, and Mac. The App Store also has search ads similar to Google. And recently, Apple ran an ad on Apple TV+ for its Friday Night Baseball deal with Major League Baseball.
In the News and Exchange programs, display advertising is no different from what you can get on an advertising website. In the App Store, advertising is designed to promote applications in the store itself, so it can even be called useful for users.
Some people may resent Apple placing ads in the News and Stocks apps. After all, the iPhone is supposed to be a premium device. Let’s say you spent $1,000 or more to buy it, but do you want to feel like Apple is squeezing more money out of you just for using standard features?
You can turn off the ad personalization feature (see the “Ads from Apple” section in the “Privacy” settings menu), and the company says that 78% of iOS 15 users have done that. But the system will still use data like your provider, device type, and what you’re reading.
Then you might ask, why shouldn’t Apple apps ask for permission to track users with a pop-up message? This is what happens with other programs under ATT.
Apple says that’s because the system “doesn’t track you on third-party apps and websites.” After all, ATT is designed for this. If a third-party app doesn’t track third-party apps and websites, it doesn’t need to show a warning window either.
In the App Store, display ads now appear in the search tab of the Recommendations panel. Apple will also soon expand ads to the main Today tab and third-party app download pages. Search ads in the App Store are a little different: developers can pay to have their app appear in the results when a user searches for terms like “car racing” or “basketball.”
However, the future ambitions of the tech giant are broader. A few months ago, the organization of Apple’s advertising teams changed. Group Vice President of advertising Todd Teresi began reporting directly to Chief of Services Eddy Cue again, replacing his deputy Peter Stern. (Teresi previously worked directly with Cue during Apple’s iAd in-app ad network, which the company shuttered in 2016.)
Apple’s latest earnings call also mentioned the ad business, though not in a positive way. Chief Executive Tim Cook and Chief Financial Officer Luca Maestri said the business had experienced some headwinds related to Covid.
Still, Cook sounded positive, calling the ads a “great” promotional tool for app developers. In turn, in the advertising department, Teresi brought up the significant expansion of the business. It generates about $4 billion in annual revenue, and the company wants to grow that to double digits. This means that Apple needs to step up its efforts.
As Gurman points out, he believes that Apple will eventually expand search advertising to Maps. And it’s also likely to add it to its digital storefronts, such as Apple Books and Apple Podcasts. And Apple TV+ can create more advertising through multiple layers (much like Netflix, Walt Disney and Warner Bros. Discovery Inc. do with their streaming services).
Efforts to add search ads to Apple Maps have already been explored internally. Such a feature would likely work similarly to search ads in the App Store. For example, a Japanese restaurant might pay to appear at the top of local listings when users search for “sushi.”
In book and podcast apps, publishers could pay to have their work appear higher in results or in-app ads. Publishers have long been able to sell books in the Apple Books app, and podcast subscriptions can also be associated with advertising.
Meanwhile, the ad-supported Apple TV+ can offer older shows at a lower price and help push paid offerings. Now the only question is whether customers of Apple, champion of privacy and clean interfaces, are willing to live with a lot more advertising.