If you search ‘Instagram’ in the Apple Inc. (NASDAQ:AAPL) App Store, the first result may not be Instagram’s app.
Apple’s expanding digital advertising business has made the App Store desirable advertising real estate, because similar to Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), top search results are typically paid ads.
Apple’s (NASDAQ:AAPL) advertising goals overlap with the company’s concurrent crackdown on third parties that track users in order to display them with personalized advertisements. This action has resulted in billions of dollars in lost advertising income for firms like Meta (NASDAQ:META).
The juxtaposition is odd. However, many computer companies attempt to include digital advertisements into their revenue streams. Now, ride-hailing businesses Uber and Lyft offer advertisements. Netflix is creating an advertisement-supported membership tier to its streaming service. Also Disney+.
Apple Inc. (NASDAQ:AAPL) asserts that its advertising division is breaking quarterly revenue records, though it has yet to release specific figures. Amazon’s successful adoption of advertising demonstrates that there is sufficient business for all. However, only organizations who are able to collect enormous amounts of data that can be used to target advertisements to specific audiences will emerge victorious.
Amazon’s (NASDAQ:AMZN) advertising sales increased 18% year-over-year in the second quarter. This is a much faster growth rate than advertising-driven companies like Twitter (NYSE:TWTR), Meta (NASDAQ:META), Snap (NYSE:SNAP), and Pinterest (NYSE:PINS), which all rely on third-party data.
Apple Inc. (NASDAQ:AMZN) Has Large Bank of Data to Utilize
Apple Inc. (NASDAQ:AAPL) over 745 million paid subscriptions and close to 2 billion active devices. This suggests it has a large amount of data to utilize. Advertising is now restricted to the App Store, news and stock apps, and baseball games streaming on Apple TV. However, it would make sense for advertisements to appear in other services, such as payments, in the future. The stipulation is that this would not harm the user experience, or UX in technology parlance.
Apple’s decision to present itself as an advertising platform that prioritizes privacy aids in this regard. Internet users are becoming increasingly dissatisfied with the tracking and sale of their online activities to unknown customers.
Apple (NASDAQ:AAPL) intends for its services activities and hardware sales to contribute equally to corporate profitability. These companies rely significantly on fees imposed to app developers, which regulators criticize. Priority should be placed on replacing a portion of these fees with another source of high-margin revenue. Advertising meets the criteria.
Apple Pursuing Streaming Rights
Apple Inc. (NASDAQ:AAPL) is also pursuing streaming rights after ESPN ended its 40-year partnership with the Big Ten, one of the longest-running sports rights partnerships.
According to The Athletic, Apple and Amazon.com (NASDAQ:AMZN) have been heavily involved in the Big Ten negotiations on the direct-to-consumer rights being severed from linear TV. However, it is not clear yet who will be the winner.
According to one source, Apple Inc. (NASDAQ:AAPL) returned to negotiations after hearing that the Pac-12 powerhouses UCLA and USC were joining the Big Ten. This expansion significantly increased the Big Ten’s coverage area, by bringing the West Coast into what had been an Eastern and Midwest-based conference. Previously, Amazon’s Prime Video was considered the front-runner for the Big Ten streaming rights.
Featured Image: Megapixl ©Prykhodov
