a growing business
Apple and digital advertising always seemed to have not gotten along. Twelve years ago, the Cupertino company presented iAd, a mobile advertising solution whose distinctive point was that it would work exclusively in its ecosystem. That didn't work. iAd was closed six years later. Today, however, Apple increasingly appears to be in the process of creating its own advertising empire.
Although Apple does not provide detailed figures of what its digital advertising business generates, estimates of Bloomberg put it at revenues of 4,000 million dollars. To get an idea, a figure that is already close to Twitter or Snapchat, companies that have advertising as their main source of income, and even, at that time – although not anymore – would be higher than TikTok.
Apple's rise in the ad market—primarily through ads on the App Store, which has more and more spaces— comes after last year's updates that allowed its users to easily block the monitoring that many applications focused on this business were carrying out. That change greatly affected Facebook (now Meta) and, to a lesser extent, Google, causing an increase in prices and a certain recession in the online advertising market.
Apple has long touted a privacy and security advantage for its products over alternatives like Google's Android and Microsoft's Windows. But its increase in the presence of ads along with the spur that this update was for its rivals have fueled some criticism and, who knows, if at some point it will launch an antitrust investigation, as Mark Zuckerberg has already requested on several occasions.
We recently learned that Apple plans to increase the workforce of its advertising division and insert ads on various of its services and platforms to grow its business by up to $30 billion in four years.
As explained by the Financial Timesis pursuing different strategies, including bringing ads to more of Apple's own apps on iPhones and iPads, including Apple Maps.
Everything is part of a long-term strategy that Apple has been carrying out in recent years and whose ultimate goal is to increase its income in its services division, which includes, in addition to advertising, what generates commissions from the App Store, Apple Music, iCloud, Apple News, Apple TV+, and Apple Pay. According to the last quarter, this division meant 19,600 million dollars in income, 25% of the total. Five years ago, it was only 13%.
But, as we say, Apple's advertising business began to grow after changes it made last year to its app tracking policieswhich made it easy for iPhone users to opt out of being tracked in other apps on their phones.
Meta has already calculated that they would lose 10,000 million in advertising revenue this year due to Apple's changes. The changes that Apple proposed were covered by the many scandals that Facebook had had and, of course, it seems like a positive step for users. Apple, in addition, used these changes to prop up its narrative as a company that defends privacy, something that some voices now criticize. Because yes, Apple along the way has also managed to put fences in a business for which it is now betting.
Your biggest ads right now seem to be search ads within the App Store. Analytics firm Branch found that in the first half of the year, Apple's internal search ads were responsible for around 50% of iPhone app downloads, compared with around 20% in April 2019. 2021, before the company implemented its privacy changes.
Ads by targeting vs. tracking ads
Nevertheless, Apple proposes a different model in terms of defining users to offer them ads that are relevant and that can also be effective for the advertiser.
Their ads do not target individuals or small groups, but only segments made up of at least 5,000 users. The company also does not create individual user profiles in its applications and services. Instead, it says to rely on random identifiers.
If Apple can face monopoly investigations in this sector in the future, it is something that only time will tell. What does seem clear is that his changes and his interest in the advertising market depend in part on theconstruction of this business in the future and, therefore, of the internet practically in general.
The visions of Meta and Apple are divergent and increasingly incompatible. Facebook wants to capture and monetize on all possible devices and platforms. Apple wants to entice users into its own hardware-focused universe, in part by marketing itself as a privacy-focused company. The outcome of the battle could affect the type of information we see when we browse the internet and, as we say, to the prevailing business model in the network.