Apple has quietly been making moves that show it’s serious about building a formidable advertising machine.
The iPhone maker is bringing ads to Maps this summer, and this week, it rolled out Apple Business, combining a suite of business-focused tools — including ads — into a single platform.
The vast majority of Apple’s ad revenue comes from app developers buying ads within the App Store. These new moves signal that it wants a bigger share of the ad market for small and midsize businesses.
Map ads make up a small but highly competitive part of media plans for marketers whose products are tied to physical locations. That’s especially true in sectors like quick-service retail, where brands jostle for top placements.
Analysts at Omdia estimate that Google’s revenue from map ads is around twice that from app install ads on the Play Store.
“There is big potential uplift in bringing ads to Apple Maps,” Omdia analyst Matthew Bailey told me. He added that ads on Google Maps are closely tied to Google’s broader base of search advertisers, which Apple doesn’t have.
Widening the advertising aperture presents a delicate marketing challenge for Apple.
Ads and a “premium” brand identity make for awkward bedfellows.
“It’s quite a tightrope that Apple is walking,” Bailey said.
Apple frames privacy as a “fundamental human right,” and famously threw the mobile ad market for a loop in 2021 with updates to its app-tracking rules. (Apple’s ad revenue skyrocketed that year.)
Apple’s approach to the ad market has been cautious and muted relative to its Big Tech peers.
Don’t expect to see the “Apple beach” at Cannes Lions anytime soon. Apple ad execs prefer to keep it low-key.
“Apple is probably the largest advertising company that doesn’t identify as an advertising company,” Itai Cohen, chief strategy officer of the mobile ad company Digital Turbine, told me.
Omdia estimates Apple’s ad revenue grew by 15% last year to nearly $7 billion, 95% of which was tied to app install ads on the App Store.
Despite continued growth, Apple’s App Store is starting to give off “shaking the cushions” energy — to borrow a phrase from former Google ads chief Jerry Dischler — as it tries to keep its ad business growing in the double digits. Ad loads are rising: What was once a single sponsored search result has expanded to multiple ad placements.
Maps offers a fresh revenue spigot.
As iPhone upgrade cycles lengthen, Apple’s $109 billion services business, which includes advertising, has become central to the company’s growth.
It also faces challenges. Global antitrust regulators are zeroing in on the App Store over its fees and the tight grip the iOS ecosystem has on developers and users. Then there’s the DOJ’s threat to Apple’s $20 billion-a-year Google search deal.
Apple’s ad business is a hedge.
What will Apple do next with ads? It already sells TV ads during its MLS broadcasts, so a full ad tier for Apple TV could be a logical next step. Maybe in time for this year’s upfront?
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