Apple is about to embark on a bold new strategy that will see it displaying adverts on preloaded iPhone apps, according to a new report. As it looks to make more money from services, the iPhone maker is aiming to triple the revenue of its ads business, according to Apple commentator Mark Gurman’s Power On newsletter.
According to Gurman, Apple’s VP of advertising platforms Todd Teresi has been asked to bolster annual revenue into “double digits” from about $4 billion today. The iPhone maker has been testing search ads in maps already, which could show up with places to eat, for example, when you search in the app.
Apple could also be planning ads in other apps including Podcasts and Books, and even on Apple TV via a subscription model that would include an ad supported tier in exchange for a cheaper monthly fee, Gurman predicts.
Expansion of Apple’s ads business
This would be an expansion of Apple’s current ads business, which is limited to the App Store—where developers pay to have their app boosted when certain search queries are entered—and its Stocks and News apps. Apple started asking people last year if they wanted to enable personalized ads on these apps, and you can turn this off in your iPhone Privacy settings.
Gurman also reiterated predictions that Apple is planning to include ads on its Today Tab—as I wrote previously.
It marks a major change in Apple’s strategy, which had previously focused on hardware to boost revenue. Over the last couple of years, the iPhone maker’s focus has shifted towards its services business, and this latest move is an extension of that.
The new Apple strategy comes after its App Tracking Transparency (ATT) features introduced in iOS 14.5 crippled Facebook’s ad business by limiting its ability to track people on the iPhone.
Gurman calls this “the elephant in the room,” saying:
“Before even talking about how Apple Inc. could expand its advertising business, I need to address the elephant in the room: how the company’s privacy efforts have stymied third-party advertising on its platform.”
He goes on to talk about how ATT is “perfectly reasonable,” adding that people should be able to choose whether they want to be tracked. However: “There’s no denying that ATT has created some collateral damage: a major revenue hit for companies big and small.
“You may not feel too bad for social media giants like Meta Platforms Inc. and Snap Inc. that have claimed to have lost billions of dollars as a result of Apple’s changes, but smaller developers also say the feature has upended their businesses,” Gurman adds.
Taking this into account, Gurman calls Apple’s decision to expand its ads business “ironic.”
This is especially true since Apple’s own way of personalizing ads is based on the data you produce by using its other services. “That doesn’t feel like a privacy-first policy,” says Gurman.
Gurman makes a very good point—and while you can switch Personalization off, the iPhone maker can still gather data including your carrier, device type and what you read.
Apple has been heavily promoting its privacy credentials for some time, so hopefully it will still be easy for people to opt out of personalization in their settings. However, in the interest of transparency, the iPhone maker will need to ensure it’s clear about the data it collects about you and keep with its own ATT rules.
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