How Apple is Pushing its Ad-vantage Over Meta, Snapchat, and Others

Apple has started the process of building its own empire. The company's timing is right as the iPhone privacy crackdown weakens the top ad-supported rivals. There has been a broader downturn in the online ad market. So, Apple's brilliant move to limit how the apps track user behavior has been a big blow to competitors like Meta. Interestingly, users have open-heartedly accepted this change.

Why It Matters?

Apple has been boasting of privacy and security advantages for its products for years. It claims to be better than alternatives like Microsoft's Windows and Google's Android. The rollout of Ad expansion by Apple and privacy changes has led to criticism and might even grab the attention of antitrust regulators in the future.

Apple's Plans

Apple plans to expand the ad business by placing the ads on the user devices directly. It would mean the appearance of ads on Apple's own apps on iPads and iPhones of the users. The list includes but is not limited to Apple Maps.

Reorganization Has Begun

Apple has reportedly started to recognize the services team responsible for making money from soft products like apps, media, etc. This is a smart move, given there has been a slump in its hardware sales.

The Moneymaker

Last quarter, the tech giant made US$ 19.6 billion from services like Apple Music, iCloud, the App Store, Apple News, Apple Pay, Apple TV+, and advertising. It represented about 25% of the quarterly revenue.

Though Apple hasn't revealed how much of the services revenue comes from advertising, it is estimated that it earns about US$ 4 billion annually in ad revenue. It has also been estimated that the ad business of the brand might reach US$ 6 billion by 2025.

The Boom

Apple's ad business started to grow rapidly after the company changed its app tracking policies. It allowed iPhone users to opt-out of being tracked easily across other apps present on their phones. The changes were not great for companies that rely heavily on that user data. They had problems efficiently targeting people with online ads. The changes were particularly hard for companies like Snapchat and Meta that depend on that data to enhance their advertising offerings.

Meta even started a lobbying campaign against the changes initiated by Apple and argued that the changes make it harder for small business owners to find customers. The company's executives even shared that they would lose about US$ 10 million in ad revenue a year due to those changes.

Being Smart

The biggest source of ad revenue for Apple is search advertising. Data has shown that Apple's privacy changes have shifted ads promoting app downloads from Snapchat and Meta to Apple.

An analytics firm has also said that in the first half of 2022, Apple's in-house search ads were responsible for about 50% of iPhone app downloads that resulted from clicks on ads. It rose from about 20% in April 2021 before the company rolled out the privacy changes.

Luckily, regulators haven't paid too much attention to the issue as the biggest reluctance to these changes is from Meta, a company with several of its own competition issues.


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