In Apple’s most recent fiscal year, the advertising division brought in approximately $4 billion. Of course, $4 billion is a lot of money, but I worry that the corporation could be losing even more money due to poor advertising revenue. First, let’s provide some background for that figure. It’s a lot of money by almost any measure.
That’s the same amount that AstraZeneca made selling COVID-19 vaccinations for an entire year. However, with only around 1% of Apple’s annual income, this is negligible. But if it were truly “free money,” which the corporation may extend its hand for and collect without any risk, Apple would be foolish not to accept it.
Yet I contend otherwise. It’s becoming evident that the cash isn’t coming without a price, and that the damage to one’s reputation is only going to increase as a result. Apple appears to be cognizant of this fact. Apple had been said to be looking to increase its ad revenue, but a new story from yesterday suggested the corporation was pursuing a more measured approach. That’s a positive development, but I still think Apple would be better off leaving the advertising business entirely for three reasons.
1. The Ad Business Is Risky
The advertising model back in print was straightforward. Ad space is sold by a publication like a newspaper or a magazine, and then businesses submit their advertisements for publication. Since they are familiar with their clientele, publishers are able to reject ads from dubious businesses, and they also get a sneak peek at the ads’ designs before they go to print.
Marketing products or services online is a totally different animal. While there is some direct ad sales activity, the vast majority of advertising revenue is generated through the use of ad networks such as AdRoll. Advertisement space on a website is sold by an ad network to the website’s publisher. The publisher has no idea who is purchasing the advertising or what they are for.
Even the advertising network may be in the dark about who is purchasing which ad space when using programmatic advertising. There is no human interaction in this process; instead, computers from both marketers and publications place bids on the amount they are willing to take. As little as a second before an advertisement is set to play, it may be sold.
A publisher’s best bet is to team up with reputable distribution channels. However, some dubious advertisements will still get through and have to be removed by hand. This has already happened to Apple. As soon as the business opened up two new ad slots in the App Store, gambling app adverts began appearing next to those of completely unrelated apps.
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At least once in recent memory, an advertisement for a gambling app was displayed beside RecoverMe, an app that assists those with a gambling addiction in breaking free from it. This is an unfortunate reality for publishers who rely on advertising revenue. However, if you’re selling high-end technology and your ad revenue is negligible compared to the entirety of your business, taking this chance seems pointless.
2. It Opens up New Antitrust Actions
Customers were pleased with Apple’s App Tracking Transparency policy, which requires app developers to obtain permission before gathering data used to deliver tailored adverts. However, developers were upset when they witnessed a significant decline in revenue from free apps that were supported by in-app advertisements.
The reason for this is that targeted advertisements bring in significantly more money than generic ones. The owner of Facebook, Meta, was very vociferous, saying that Apple was hurting small businesses by making their ad spending much less effective. Though the claim circulated, nobody actually thought Facebook cared about anything besides making money.
There has been no trouble up to this point. However, Apple was left open to accusations that it was purposefully making in-app ads less attractive in order to offer an unfair edge to its own ad business when it announced App Tracking Transparency and then started promoting its own ad sales.
Even more so when you consider that Apple does not even request permission to track within its own apps. As a result, the corporation is once again the target of antitrust probes. This is the worst possible news for Apple.
3. Worst of All, Apple loses a USP
Apple’s original selling pitch was that it prioritized its consumers’ needs over those of its marketers. More than often, Apple CEO Tim Cook emphasized this: And that’s a huge selling point when compared to rivals like Meta and Google. However, the same can now be said about Apple. Compared to its rivals, Apple may utilize you as a product considerably less often, but it still does.
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That makes a clear-cut distinction less so. The notion that “what happens on iPhone, remains on iPhone” is significant. Not always true of “what happens on iPhone, stays on iPhone.” Now, I do trust Apple’s privacy assurances to a large extent. Nonetheless, that is beside the issue.
Apple consumers must now decide for themselves if the company is fundamentally different from competitors like Google, or whether the difference is only one of degree. The news article from yesterday’s issue of The Information did not assist.
It describes how Apple’s ad sales operation is similar to its rivals in that it sells targeted advertisements and permits businesses to sell advertisements in searches for rival items, but does so in a more diplomatic manner. That only highlights Apple’s hypocrisy.
4. Apple’s Ad Business Is Just Not Worth It
What’s this for an extra one percent in earnings? In no way is it beneficial to do so. As Apple’s ad revenue increases, the situation will only worsen. In the end, Apple risks damaging its brand image by speaking out against ad-driven revenue models like Facebook’s while also implementing one of its own, albeit on a much smaller scale.
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If I were in charge at Apple, I would pull out of the advertising business entirely. Regain your reputation as an organization that values its customers’ privacy above all else, and not just enough to compromise it for financial gain. That’s how I see it; what do you think? We’d appreciate it if you’d take our poll and give us your feedback below.
