Apple’s ad network is making waves.
Generally known for consumer products, Apple is placing greater emphasis on prioritizing its services category, which includes search ads in the App Store.
Services are now Apple’s second-highest revenue generator, and this article examines how it got there and what it means for marketers.
How Apple Ad Network Fits In Today’s Search Market
While Apple announced its expansion of available ad formats and inventory in the App Store, that’s not the only way it increased its revenue.
Regarding the search market, Google and Amazon are usually top of mind. However, both conglomerates have faced public scrutiny from the government and consumers.
Google has made headlines this year dealing with antitrust battles in both the United States and the European Union.
Not only that, but the severe fines that accompanied the antitrust rulings have led Google to lose some of its market share.
Amazon hasn’t had the most remarkable press, either. Some of the newsworthy class action lawsuits that hurt Amazon included:
- $1 billion antitrust case in the UK
- California antitrust lawsuit
- False advertising around Prime Day
- Stealing 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 search table.
Principal analyst Andrew Lipsman from Insider Intelligence stated:
“I can easily imagine a scenario in which Apple grabs 10% of Google’s nearly $150 billion search ad business, which would translate to a $15 billion opportunity.”
Breaking Down Apple’s Services Category Revenue
Apple’s services category within its booming ad network consists of the following:
- Advertising revenue from the App Store
- Streaming services
Some products that fall under the services category include Apple Arcade, TV+, Music, and Fitness+.
Not surprisingly, most of Apple’s $19.6 billion ad revenue came from App Store ads in 2022.
Following suit from other top online streaming services like Netflix and Hulu, Apple TV+ will likely start supporting TV ad buys on its network. While this is not confirmed, many have speculated that Apple is in the initial planning stages of a TV ad product.
Challenges Still Loom For Apple’s Ad Network
Legal battles around consumer privacy and competition are not immune to Apple.
In efforts to protect consumer privacy, Apple introduced its App Tracking Transparency (ATT) in 2021, severely inhibiting 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 surrounding user privacy are “utterly false.”
On the other side, competitors such as Meta have seen a significant impact on advertiser revenue as a direct result of ATT.
Combining the death of Apple’s IDFA, the rollout of its ATT, and the increase in ad inventory, others are now coming at Apple, claiming it to become an online monopoly.
This means that Apple has rolled out 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 into Apple because of its ability to track that performance.
Apple has stated its goal to triple its advertising revenue and has already made strides.
While some benefits come secondhand from competitor challenges like Google and Amazon, Apple has paved its way with diversified revenue streams.
However, even the most “user privacy-centric” Apple continues to be scrutinized on its way to the top of search. Apple’s privacy and measurement efforts will continue to have a ripple effect across consumers and marketers alike.
Featured Image: Primakov/SMM Panel