Bernstein analyst Toni Sacconaghi estimates that Apple could add at least $10 billion in annual revenue by selling more ads.
Bernstein analyst Toni Sacconaghi estimates that Apple had ad revenue of about $4 billion in calendar 2021, up from an estimated $300 million in 2017, but well under 2% of the company’s overall revenue.
Most of that ad revenue, he says, comes from ads in the App Store. Apple also generated modest revenue from display ads in its Apple News and Stocks apps.
Sacconaghi also points out that the company indirectly generates an even larger stream of ad revenue from its deal that makes Google the default iOS search engine. He estimates that revenue from that relationship this year could approach $20 billion. On a combined basis, he says, revenue from the Google deal and directly sold ads account for 30% of Apple’s services revenue and more than 40% of gross profits from the services business…
Sacconaghi says there is potential for Apple to take a more aggressive approach. In particular, he thinks Apple can build an “audience network” business that would place display ads inside third-party apps. He points out that Google’s parent Alphabet already does this for Android apps, generating an estimated $14 billion to $18 billion a year in revenue. Sacconaghi theorizes that Apple could generate $10 billion in incremental revenue over time selling ads on iOS apps.
MacDailyNews Take: We expect that Apple very carefully weights user experience with advertising and, having already endured the rise and fall of iAd, would be averse to trying to build and run an “audience network” business.
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