Apple may expand its ads to more of its first-party apps on the iPhone in a bid to boost sales, according to Bloomberg
The company currently generates about $4 billion in annual revenue from its advertising business, but aims to grow the segment into “double digits,” according to the report.
Apple already shows ads in some apps, such as Apple News and Stocks. It also recently announced plans to expand ads in the App Store. Bloomberg said the company is considering ways to add ads to, say, Apple Maps, which has so far differentiated itself from its competitor, Google Maps, by not showing ads. The report said it is “likely” that Apple will also place ads for podcasts and books in stores.
An Apple spokesperson was not immediately available for comment on the report.
Meanwhile, Apple has been targeting other companies pushing ads to iPhone users.
Last year, Apple released an update to iPhones with a new popup that asked users if they wanted to allow apps on their phones to target the user for ads. The privacy feature, called App Tracking Transparency, has turned the behind-the-scenes mechanics of many mobile ads upside down, especially those that confirm whether a purchase or download has been made.
Obviously most iPhone users have opted out, and the feature has presented major challenges for businesses ranging from Snap to Facebook to Peloton.
The new ads could help Apple extract more value from iPhone users.
Needham analysts wrote in a note dated Aug. 3 that they believe Apple’s next big revenue stream is in advertising.
“AAPL has best-in-class user data,” they said. “If it builds a DSP (demand side platform), AAPL can control how and where its data is used, and it can prevent data leaks outside their Walled Garden.”
The analysts also said they believe Apple is in the early stages of building a new mobile advertising platform. They said they have seen a “significant increase” in the company’s recruiting efforts for its advertising platform, and it was highly visible at the Cannes Lions advertising festival in June.
In Apple’s most recent earnings call, CEO Tim Cook and CFO Luca Maestri said the company’s advertising business was experiencing some Covid-related issues, but Cook said it’s a “great” discovery tool for app developers looking to promote their apps.
Bernstein analysts said Apple’s Services business, which is primarily driven by advertising and the App Store, experienced slowed growth for four consecutive quarters as the App Store experienced a shift in consumer spending.
However, they said they expect Apple’s advertising business to grow due to the higher ad load in the App Store.
“Overall, we believe that at least 20% growth for Apple’s overall advertising segment is achievable in the coming years,” they said.
Read more on Bloomberg.