Apple was reportedly preparing to expand ads in even more apps on the iPhone

August 17, 2022: -Apple may expand its advertising to more of its first-party apps on the iPhone to improve revenue, according to Bloomberg.

The company is generating about $4 billion in annual revenue from its ad business but wants to develop the piece into the “double digits,” according to the report.

Bloomberg said the society is thinking of ways to add advertising to Apple Maps, for instance, which has stood out from its competitor, Google Maps, by not displaying ads. Apple already offers ads in some apps, such as Apple News and Stocks. It also just disclosed plans to expand ads in the App Store. The report added it’s “likely” that Apple will also insert ads into the Podcasts and Books stores. Meanwhile, Apple has targeted other parties that make ads to iPhone users.

Last year, Apple released an update for iPhones with a new popup that asked users if they wanted to allow apps on their phones to target the user for ads. The privacy feature, App Tracking Transparency, has upended the behind-the-scenes mechanics of numerous mobile ads, especially those that confirm whether an investment or download was made.

It’s clear most iPhone users did opt for escape, and the feature has raised significant challenges for companies going from Snap to Facebook to Peloton.

The new ads could help Apple squeeze more additional value out of iPhone users.

In an August 3 note, analysts from Needham wrote that they believe Apple’s next significant revenue creek is advertising.

“AAPL has best-in-class user data,” they said. “If it builds a DSP (demand side platform), AAPL can control how and where its data gets used and prevent data leakage outside their Walled Garden.”

The analysts also said they believe Apple is in the early stages of building a new mobile advertisement platform. They said they had observed a “notable uptick” in the company’s recruiting efforts for its Ad Platform and that it was evident at the Cannes Lions advertising festival in June.

In Apple’s most recent earnings call, CEO Tim Cook and CFO Luca Maestri said the company’s ads business experienced some Covid-related difficulties. Still, cook expressed it is a “great” discovery tool for app developers who want to promote their apps.

Analysts from Bernstein said Apple’s Services business, which is principally driven by advertising and the App Store, has seen a decelerated growth rate for four straight quarters as the App Store has endured a shift in consumer spending.

However, they said they expect Apple’s ad business to grow because of higher ad loads in the App Store.

“Overall, we believe that almost 20% increase for Apple’s overall Advertising segment is attainable over the next few years,” they said.