The Apple ad network is making waves.
Generally known for its consumer products, Apple places more emphasis on prioritizing its category of services, which includes search ads in the App Store.
Services are now Apple’s second-highest source of revenue, and this article looks at how it got there and what it means for marketers.
How does the Apple ad network fit into the current search market?
While Apple has announced its expansion of available ad formats and inventory in the App Store, this is not the only way to increase its revenue.
In terms of the search market, Google and Amazon are usually top of mind. However, both conglomerates have faced public scrutiny from government and consumers.
Google made headlines this year dealing with antitrust battles in both the United States and the European Union.
Not only that, but intense Fines The accompanying antitrust rulings resulted in Google losing some market share.
Amazon didn’t have the most high profile press either. Some noteworthy lawsuits that have harmed Amazon include:
- Billion dollar antitrust case in the UK
- Antitrust lawsuit in California
- False advertising about Prime Day
- Steal tips from delivery drivers
- Wage theft
With both Google and Amazon under scrutiny, this opens up an opportunity for Apple to take a seat at the research table.
Principal analyst Andrew Lipsman of Insider Intelligence advertiser:
“I can easily imagine a scenario where Apple takes 10% of the roughly $150 billion search ad business, which could translate into a $15 billion opportunity.”
Shattering Apple’s services category revenue
The Apple Services category within its thriving advertising network consists of the following:
- Ad revenue from the App Store
- products
- broadcast services
Some of the products that fall under the category of services include Apple Arcade, TV+, Music, and Fitness+.
Not surprisingly, most of Apple’s $19.6 billion in advertising revenue will come from App Store advertising in 2022.
Similar to what top online streaming services like Netflix and Hulu offer, Apple TV+ will likely start supporting TV ad purchases on its network. While this has not been confirmed, many have forecast Apple is in the initial planning stages of a TV ad product.
Challenges still loom for Apple’s advertising network
Legal battles over consumer privacy and competition are not immune to Apple.
In efforts to protect consumer privacy, Apple introduced the Application Tracking Transparency (ATT) program in 2021, which has severely hampered marketing attribution efforts on other platforms.
However, in November 2022, Apple filed a New class action lawsuit against themselves, claiming that they continue to track consumers even after disabling tracking in their device settings. Because of this, the lawsuit states that Apple’s promises about user privacy are “completely false.”
On the flip side, competitors like meta have seen a significant impact on advertisers’ earnings as a direct result of ATT.
With the combination of the death of Apple’s IDFA, its own ATT rollout, and its growing ad inventory, others are now coming at Apple, claiming it has become an online monopoly.
This means that Apple has initiated measures that effectively prevent third parties (such as other ad platforms) from accurately tracking and measuring ad performance. This has led to advertisers fleeing those networks and investing more marketing dollars in Apple due to their ability to track this performance.
summary
Apple announced its goal of tripling its ad revenue and has made strides already.
While some of the benefits come directly from challenges from competitors like Google and Amazon, Apple has paved its way with diversified revenue streams.
Yet even the most “user privacy-centric” of Apple’s products continues to be scrutinized on its way to the top of the search. Apple’s privacy and measurement efforts will continue to impact consumers and marketers alike.
Featured image: Primakov/Shutterstock
