There is no doubt about what drives Apple’s (NASDAQ:AAPL) astronomically high revenue figures. It stands to reason that the iPhone, which brought in $40.7 billion of Apple’s (AAPL) roughly $83 billion in revenue during the most recent quarter, would be the answer. The iPhone continues to be so successful even 15 years after its first release that it usually accounts for more than 50% of Apple’s (AAPL) holiday quarter sales.
Then there is Apple’s services division, which offers everything from monthly subscriptions to Apple Music to Apple TV+ and iCloud storage options. Services have developed into Apple’s (AAPL) cash cow to the point where they accounted for more than $19B of the company’s recently ended fiscal third quarter.
The corporation continues to generate billions of dollars in income from selling items like Apple (NASDAQ: AAPL) Watches, Mac laptops, and iPads. However, during Apple’s (AAPL) third quarter, every single one of those sales fell year over year. Additionally, Apple (NASDAQ: AAPL) needs to find a new sector of revenue growth since inflation shows no signs of slowing down and worries about an economic recession are rising daily. And perhaps mobile advertising is where that is.
According to Needham analyst Laura Martin, there have been increasing indications that Apple (AAPL) is developing its mobile advertising platform, which may ultimately become a “significant” source of earnings and revenue for its services division. Martin based some of her opinions on the magnitude of Apple (NASDAQ:AAPL) and how Amazon (AMZN), another internet behemoth, increased its ad revenue from $4 billion in 2018 to $37 billion this year.
Analyst’s Report About Apple
Martin said that Apple (NASDAQ:AAPL) is the largest company on Earth, and to grow, it must target large global TAMs [total addressable markets], like global digital advertising. Martin highlighted eMarketer estimates that indicated the TAM for digital advertising would hit $600 billion this year, with mobile advertising accounting for roughly $450 billion of that total every year.
The development of a “demand side platform” (DSP), a piece of software that enables users to purchase advertisements with the use of automation technology, would be one of the keys to Apple’s (AAPL) success in advertising sector. DSPs search a network of publishers for websites and mobile apps that fit an advertiser’s requirements before placing bids for the placement of adverts on those sites and apps. Such a set-up, according to Martin, would be in line with Apple’s (AAPL) history of forging a world in which all of its goods and services are compatible with one another across various platforms backed by the business.
Martin continued by saying that growing an advertising company would also benefit Apple’s (AAPL) existing enormous customer base of 1 billion unique users and 1.8 billion active devices globally. And that vast array of consumers and goods offers a marketing opportunity that Apple (NASDAQ:AAPL) would find difficult to pass up. According to Martin, mobile is where people spend most of their time using Apple (NASDAQ:AAPL) devices. Therefore, we anticipate Apple (NASDAQ:AAPL) focusing on the global mobile advertising market.
Meanwhile, according to a recent analysis from Morgan Stanley, the revenue growth of Apple’s (AAPL) App Store may be slowing.
Featured Image: Megapixl @Lester69
