Apple Stock: Apple’s New Plan to Make More Money From Ads

Apple Stock

Apple Stock (NASDAQ:AAPL)

Apple (NASDAQ:AAPL) has been looking for new ways to increase its service revenue, and digital advertising has been a key growth area in recent years. The huge IT company is getting better at making money from the apps that come with its products. Its most recent move was to launch “Apple Business Connect,” which makes it easier for businesses to join the Apple ecosystem and brings it closer to offering advertising solutions through Apple Maps.

Evercore ISI says that Apple’s ad business will be worth $5 billion by 2022. How quickly it grows will tell us this. Apple’s main place to advertise is in the Apple App Store, but the company has also sold ad space in other parts of its built-in programs. In the past few months, Apple Maps has made the company more money. Apple has been experimenting with search ads on Apple Maps for a while now. Even though Apple Maps ads aren’t available yet, the company is moving in that direction with the launch of “Apple Business Connect,” which helps businesses get listed on Apple Maps and in other Apple products.

Apple Enterprise Connect

In January 2023, Apple Business Connect will be on the market. It lets businesses make “place cards” that Apple users can find using Apple Maps and other apps that come with their devices.

Businesses can put things like “order food, make a reservation, book an appointment, buy tickets, and more” on their place cards to make it easier for people to buy from them once they find them. Apple is doing everything it can to get more businesses to join its marketplace. This is so that more businesses will use its apps, which will make its advertising services better.

Apple has even teamed up with some of the biggest business platforms to make it easier to do business with Apple Maps. You can, for example, “buy groceries with Instacart, make a hotel reservation with, reserve a table for dinner with OpenTable, and more, all with a single tap.”

If Apple can get more people to do business-related things on Apple Maps, like make reservations, more businesses will create business listings and “place cards,” which will get more people to do business-related things. More importantly, it would make Apple’s rumored advertising options through Apple Maps more appealing, since businesses want to be more visible to Apple device users who are likely to buy things.

Through Apple Business Connect, companies can also “share limited-time deals and announcements.” Apple Maps is a great tool for finding new places and doing business. The fact that it tells users about special prices and deals makes it even better. This method could work if people get in the habit of checking Apple Maps and other Apple apps for special deals. This will make Apple’s advertising options more interesting in the future.

Google (NASDAQ:GOOGL) also lets stores show special deals and promotions to people who use Google Maps. Google also has access to other important user information, like a user’s search history, which helps its algorithms show users more relevant products and services when they use Google Maps to find businesses. This makes it more likely that people will click on advertisers’ ads.

Also, Apple Business Connect is a good start to getting more business listings in the Apple ecosystem, but Google is already way ahead of Apple in getting business listings on its own platform. Google Maps is popular, and retailers also use search engine tools like Google Search Console to find out how their businesses look online and improve them.

Google also lets merchants link their products to ads that are shown all over the platform. So, when a Google Maps user searches for or finds a business, they will see relevant product listings for items that are in stock. This would make it easier for merchants to get more people to buy their goods. Google has also changed a lot about how people look for businesses. People can take a picture of an item with Google Lens and then use Google Maps to find stores or places nearby that sell that item. People now have a different way to find businesses.

Given how great Google Maps is, Apple will have to work hard to get more businesses to use Apple Maps and then use advertising to make money off the service. Still, Apple has been making changes on its own to make the business environment in the Apple ecosystem better.

Apple’s Policies on Stores, Ads, and Privacy

This year, Apple will start its own “Buy Now, Pay Later” service called “Apple Pay Later.” “Buy Now, Pay Later” platforms are becoming more and more like e-commerce hubs, and they use information about users’ purchases to help merchants make more targeted ads.

Apple might do the same. The more people use Apple devices to shop and use Apple Pay or Apple Pay Later, the more information the company will have about how they buy things. This information could be used to make ads more relevant. Apple could also combine Apple Pay and Apple Maps’ commercial features in the future to give shops more targeted advertising options. This would make it more likely for businesses to use Apple Maps instead of Google Maps.

But if Apple used user data to help with its digital advertising goals, it would go against the company’s long-held belief that privacy is important. In fact, the “Apple Business Connect” page shows how important privacy is to Apple.

Apple’s focus on customer privacy is a big part of the company’s brand value, and it may eventually lead to more people using Apple products and apps. It could even make people like Apple Maps more than Google Maps. On the other hand, Apple’s rules about user privacy get in the way of its digital advertising goals by making it harder to show ads that are more relevant to the user.

Even though the company cares a lot about privacy, it still serves customized ads to iPhone users in apps like News and Stocks. When customers use Apple’s built-in apps, the company collects first-party data, which it then uses to target ads. Apple wants to do more digital advertising, so it wouldn’t be surprising if the company found ways to get around its own privacy rules so it could do more targeted advertising. Keep in mind that iPhone users can choose not to see targeted ads, and “78% of iOS 15” users have already done so. This is a very big problem for Apple’s advertising. Still, Apple isn’t likely to give up, and if it wants to make more money from ads, it may keep asking customers in future versions of iOS.

Apple has a big advantage over other advertising platforms like Facebook because it can count activity on built-in apps as first-party data. Facebook has to follow Apple’s rules because it uses the Apple App Store to reach iPhone users. In April 2021, Apple introduced App Tracking Transparency (ATT), a privacy feature that lets people who use Apple products choose not to have their actions tracked by third-party apps. Most people don’t want their apps to keep track of them, so it’s been hard for third-party advertising platforms to show targeted ads and give ad buyers the right attribution data.

Also, around the same time that it changed its privacy policies, Apple released its own attribution assessment tool called “SKAdNetwork.” On the other hand, advertising platforms have said that the tool is not enough. Apple has been making changes to its “SKAdNetwork” to help third-party advertisers measure the attribution of their ads better. This is done so that there won’t be antitrust lawsuits.

Still, it’s clear that Apple’s changes to its privacy rules have hurt its advertising rivals, which the tech giant is using to its advantage. As part of Apple Business Connect, stores will learn, among other things, “how customers find and use [their] place cards.”

Since the activity happens in an Apple app, the data is first-party data, and Apple can use it to figure out who did what. Keeping this in mind, people expect Apple to add more commercial features to its own apps to get more valuable first-party data for advertising.

Bottom Line

By giving ad solutions, Apple Business Connect brings the business one step closer to making money off of Apple Maps. As more companies join and offer their products and services through Apple’s apps, and as more people use those apps for business purposes, the Cupertino-based company will be in a better position to offer high-conversion ad solutions. Still, the tech giant faces tough competition in this space, especially from Google/Google Maps, which has a well-established directory of business listings and is well-positioned to help commerce and discovery through features like inventory syncs and using users’ Google search histories to show the most relevant product/service listings for businesses.

Apple’s growing interest in advertising will eventually clash with the company’s focus on privacy. Even though privacy is still important to the company, it uses information about what people do in apps to show ads across its ecosystem. Most likely, it will use a large amount of first-party data it has to improve its targeted advertising in the future.

If you want to buy Apple stock, you should think about all of the business units of the company. Apple stock will be given a neutral “hold” rating because this article only talks about the company’s work with digital advertising.

Featured Image: Pexels @ Armand Valendez

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About the author: Stephanie Bedard-Chateauneuf has over four years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on consumer stocks, cannabis stocks, tech stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.