Apple’s Growing Ad Business ⇥ barrons.com

Eric J. Savitz, Barron’s:

Most of Apple’s ad business consists of App Store search ads. Apple also gets modest revenue — likely under $500 million a year — from ads in the Apple News and Stocks apps. He estimates that Google pulls in about $4 billion in ad revenue a year from Maps, with a user base four times as large as Apple Maps’, suggesting $1 billion a year in potential revenue for Apple. Roku, he says, offers “a helpful precedent” for how Apple can get perhaps another billion from Apple TV. However, dropping ads in Apple Mail, Apple TV+, or Apple’s home screens would likely “irk consumers and undermine Apple’s strongly avowed stance on privacy.”

Ben Thompson in the August 10 episode of Dithering, which I cannot think of a great way to link to, so you will just have to take my word for it:

There’s lots of ways to define privacy, right? Apple’s definition is not the only definition. It’s one that happens to suit them, unsurprisingly. But in Apple’s view: first-party is fine — you don’t share with third parties, right? That’s why they feel justified in doing their own ad service but Facebook’s, for example, is privacy violating. But, also, Apple even there is moving more towards on-device as opposed to in the cloud.

I think these allusions to how Apple’s ad network affects user privacy are a bit of a red herring. Those run by Facebook and Google are happy to vacuum up your specific activities on the web and in apps that include their SDKs, tie it back to your identity, and then sell ads against whatever interests they infer you express. I do not think Apple’s efforts are nearly as intrusive.

Savitz’s analyst source is right about one thing, though: Apple is leaving a lot of money on the table by not placing ads everywhere it could, and I hope it stays that way. Ads in the App Store are fine, I guess, but I would loathe to see ads in Maps or, heaven forbid, the home screen. I could not think of a quicker way to cheapen the Apple brand and destroy product satisfaction. Even speculating on the possibility is the kind of analyst-grade thinking that creates short-term financial gains at the cost of long-term customer debts.