Apple is about to embark on a bold new strategy that will see it show ads in preloaded iPhone apps, according to a new report. As it looks to make more money from services, the iPhone maker is looking to triple revenue from its ad business, according to Apple commentator Mark Gurman’s Power On newsletter.
According to German, Apple’s vice president of ad platforms Todd Terezi has been asked to increase annual revenue to “double digits” of about $4 billion today. The iPhone maker is already testing map search ads that can be displayed with places to eat, for example, when you search in the app.
Apple could also schedule ads in other apps, including Podcasts and Books, and even on Apple TV through a subscription model that would include an ad-supported tier in exchange for a cheaper monthly fee, Gurman predicted.
Apple can also schedule ads in other apps, including Podcasts and Books, and even on Apple TV… [+] through a subscription model that will include an ad-supported tier in exchange for a cheaper monthly fee, Gurman predicted.
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Expanding Apple’s advertising business
That would be an expansion of Apple’s current advertising business, which is limited to the App Store — where developers pay to have their apps boosted when certain search queries are entered — and its stock and news apps. Apple started asking people last year if they wanted to enable personalized ads in these apps, and you can turn this off in the iPhone’s privacy settings.
Gurman also echoed predictions that Apple plans to include ads in its Today section — as I wrote earlier.
This marks a major shift in Apple’s strategy, which previously focused on hardware to drive revenue. Over the past few years, the iPhone maker’s focus has shifted to the services business, and this latest move is a continuation of that.
Apple’s new strategy comes after its App Tracking Transparency (ATT) features introduced in iOS 14.5 crippled Facebook’s advertising business by limiting its ability to track people on iPhones.
Gurman calls this the “elephant in the room,” saying:
“Before I even talk about how Apple Inc. can expand its ad business, I need to address the elephant in the room: how the company’s privacy efforts have hindered third-party ads 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 disputing that ATT created some collateral damage: a big hit to earnings for companies big and small.
“You might not feel too bad for social media giants like Meta Platforms Inc. and Snap Inc., which say they’ve lost billions of dollars as a result of Apple’s changes, but smaller developers also say the feature has upended their businesses,” Gurman adds.
With that in mind, Gurman calls Apple’s decision to expand its advertising business “ironic.”
This is especially true because Apple’s own way of personalizing ads is based on the data you produce using the other services. “It doesn’t look like a privacy policy in the first place,” Gurman says.
Gurman makes a very good point – and while you can turn off customization, the iPhone maker can still collect data, including your carrier, device type and what you’re reading.
Apple has been heavily promoting its privacy credentials for some time, so hopefully it will still be easy for people to opt out of customization in their settings. However, in the interest of transparency, the iPhone manufacturer will need to ensure that it has clear information about the data it collects about you and maintains it in accordance with its own ATT rules.
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