From threatening the advertising industry, how is this tool bringing in billions of dollars in revenue for Apple?

Tram Ho

In 2021, Apple shocked the online advertising industry with the introduction of a new feature called App Tracking Transparency (ATT) on iOS 14.5, to better protect user privacy. This feature allows users to refuse to allow the application to track their activities on iPhone through the IDFA identifier. But while this feature is stifling the effectiveness of advertisers, it is bringing in huge revenue for Apple through advertising activities.

Previously, through tracking IDFA identifiers on iPhone apps, such as Google, Instagram, Facebook or websites, advertisers could learn about users’ shopping habits and preferences. from which to launch advertising campaigns that are suitable for users and measure the success of advertising campaigns.

Từ chỗ đe dọa cả ngành quảng cáo, công cụ này đang mang về hàng tỷ USD doanh thu cho Apple như thế nào? - Ảnh 1.

However, with the new ATT feature implemented by Apple from iOS 14.5 onwards, these applications need to have the user’s permission to track this identifier. Statistics for 2021 show that nearly 80% of users choose not to allow apps to track their activity data on iPhone.

In other words, this ATT feature has “blinded” advertisers about user data on iPhones, making it impossible for them to know the exact interests and habits of users to personalize ads, as well as not can accurately assess the effectiveness of each advertising campaign on iPhone.

One of the companies that suffered the most due to this feature was Facebook. The earnings report of this social networking platform shows that the ATT feature has cost the company about 10 billion USD in revenue due to the inability to conduct effective advertising campaigns as before. Similar to Facebook, Snap, the company that owns the Snapchat application, also saw a decrease in revenue due to the impact of Apple’s ATT feature.

Từ chỗ đe dọa cả ngành quảng cáo, công cụ này đang mang về hàng tỷ USD doanh thu cho Apple như thế nào? - Ảnh 2.

Billion-dollar opportunity for Apple’s advertising segment

But advertisers’ losses present a billion-dollar opportunity for Apple’s ad business. Content publishers, app makers, and even stores and retailers still need a channel to reach billions of iPhone users around the globe — and none other than Apple. can do that.

Obviously when personalized ads on third-party apps no longer work, content or app makers will have to pay Apple to have their ads appear in Apple apps. . Pre-installed on billions of iPhones, these ads can effectively reach the right users around the globe – even if the personalized advertising capabilities of Apple apps are disabled.

That’s why, a report from research firm Omdia said, Apple’s advertising revenue in 2021 has skyrocketed by 238% to $ 3.7 billion. Not only that, according to Bloomberg reporter Mark Gurman, Apple’s vice president of advertising platforms, Todd Teresi is being asked to grow the business at “double-digit” in the future.

Từ chỗ đe dọa cả ngành quảng cáo, công cụ này đang mang về hàng tỷ USD doanh thu cho Apple như thế nào? - Ảnh 3.
Apple’s in-app ads are still personalized, but users can still turn them off

That seems to be pushing Apple to prepare to cram more ads into its iPhones.

A series of recent reports from Bloomberg and many other news sites show that Apple is testing more ad placements in their iPhone apps, including the App Store, Books, Maps and Podcasts, even subscription service packages such as News+ and Apple TV+.

While Apple’s apps are still limited in terms of personalized ads like third-party apps, the iPhone maker still has another advantage in terms of being able to show ads to users. That’s based on in-app search keywords – similar to how Google displays ads next to its search engine.

As reported by Bloomberg, Apple is also testing this form of advertising in its Maps application. When users search for a certain store or address, suggestions for nearby stores will appear around the search results. Similar to Maps, the same ads will also be included in search results in the Books and Podcasts apps.

Từ chỗ đe dọa cả ngành quảng cáo, công cụ này đang mang về hàng tỷ USD doanh thu cho Apple như thế nào? - Ảnh 4.

Content publishers, stores will pay to get the preferred display position in the search results brought to users. The App Store already applies this form of advertising to Search. However, many reports suggest that in the near future the App Store may display more ads in other categories, including Today and Downloads. By expanding to these categories, Apple will have more ad space to sell to app makers who want to reach users on the iPhone.

Not only seeing the opportunity from online advertisers being left behind by the ATT feature on the iPhone, expanding the advertising business is also part of Apple’s strategy to increase service revenue. Instead of relying entirely on hardware sales, Apple is looking to extract more money from its massive global iPhone usage — and advertising is only part of that. The ultimate issue is just whether their users are still comfortable with it.

Summary of Bloomberg, Forbes, 9to5Mac

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Source : Genk