Apple’s exhaustive reach and savvy strategy have positioned it to become the third major mobile advertising network in a space that has otherwise been dominated by Facebook and Google. Already a global powerhouse for its tech products, Apple’s next trillion-dollar opportunity is in becoming the third advertising monolith, rather than selling its latest iPhone models.
This is either serendipitous or perfectly planned – being Apple, it is likely the latter: a multiyear strategy that has provided Apple with a unique, self-administered advantage in the mobile advertising space. The recent introduction of Apple’s App Tracking Transparency (ATT) in April 2021 accompanying the iOS 14.5 update offered users the option of being tracked by apps and saw Facebook lose, and fail to regain, significant advertising traffic due to the reduced consumer data being gathered. The backbone of Facebook’s business model has been its technology, designed to track users regardless of whether they are aware. Apple’s move against Facebook has escalated to become one of Silicon Valley’s biggest feuds.
Analysis of ATT suggests that 96% of US users opt-out of being tracked, significantly impacting targeted advertising and, therefore, conversions. Unbeknownst to users, ATT, launched under the banner of improved privacy for Apple users, created the ideal opportunity for Apple to introduce its own ad network, Apple Search Ads, to replace this lost traffic and gain access to exclusive customer data.
Apple’s move would not have been an opportunistic one, dating back to Apple creating and persevering with its own hardware and communities ecosystem. Now, as a mass consumer product and wielding absolute control over a very large software environment, the App Store, Apple can pick and choose who can and cannot be there and can form disputes with major advertisers, such as it has with Facebook, in the name of privacy.
Apple’s feud with Facebook has resulted in a complete reversion by marketers back to old school marketing, such as SMS, TV, social radio, digital radio, and out-of-home, and prompts the question of whether Apple will also sever its relationship with Google in the name of privacy. The multi-billion-dollar symbiotic relationship between Apple and Google indicates otherwise. Thus far, Apple has not been successful at launching its own search platform and employs Google as the default search engine in Safari. This has allowed Google to dominate the search market and has provided Apple with one-fifth of its worldwide income. Furthermore, Google opts for less overt user surveillance and its privacy actions align with that of Apple, allowing it to work well inside the new privacy rules. Where Facebook has made it clear that it simply wants to monetize its users, Google has exercised discretion and functions to provide services to its users that can ubiquitously allow data collection. Apple does not stand to gain from making Google a foe. However, probing from the Justice Department into invasive tactics used by Google could see the partnership dissolve, at the significant expense of both Apple and Google.
Building a media empire consisting of Apple Audio, Apple Music, Apple TV, Apple News, Safari browser, iMessage, and the App store, Apple will be able to inject advertising units across each channel to target its users. Apple’s shift to services has been the driving force behind the massive revenue growth experienced by the company in the previous 10 years. This is very convenient for Apple given the resurgence of old-school marketing such as TV and SMS. Apple will be able to accomplish overnight what has taken Google and Facebook years – unprecedented access. With a network of over 1 billion global devices, Apple has propelled itself to join Facebook and Google as a third advertising behemoth by leveraging the widespread use of its smartphones. Globally, including in China, Apple will have the opportunity to gather consumer data from its multimedia offerings and network of devices. Apple’s ability to establish an advertising presence in China is a major reason for its potential to surpass Facebook and Google. Apple is also expected to launch open-screen advertising, a method that it can learn from the Chinese market.
The idea of targeting existing smartphone users is not a new concept, with Samsung being credited as the forefather. Samsung launched Samsung ads in the early 2000s, serving ads on Samsung News and owning a premium ad inventory inside of the App Store. Met with immense criticism from its users, as of October 2021, Samsung has begun removing its ads from many of its proprietary apps. In practice, Samsung’s ad network did not materialize because of the openness and diversity of the Android ad system. Where Apple’s strategy overcomes this flaw is in the exclusivity of Apple’s ecosystem – to access Apple, you must use an Apple device.
Until the Apple ad network is official and made available for mainstream brands, besides trying to ask Apple for beta access, brands should continue to embrace a combination of old school marketing, utilizing both digital and traditional mass media, continuing to monitor conversions, and embracing push-based advertising strategies such as search.
[2.7 Min Read]