Apple's App Tracking Transparency Inadvertently Boosts Apple's Ad Revenue

Apple Search Ads, money

Apple's business model involves selling a series of expensive gadgets. But its money sources are more than just that.

The company also provides a number of services, designed and made only for users of Apple devices. And from there, Apple is also earning a lot of money. And this time, it is revealed that Apple is also earning huge sum of money from its advertising division, unintentionally.

Earlier in 2021, Apple introduced App Tracking Transparency, a feature that gives users a choice if they want to stop third-party trackers from tracking their internet habit across apps. When turned on, App Tracking Transparency requires apps not to collect and share information about users across platforms without their permission.

This impacted the advertising business, because ad companies are having great difficulty targeting Apple users with relevant ads.

In turn, this created an immediate drop in revenue in the industry that relied on tracking ad viewers between apps and websites.

Months later, it turns out Apple’s own ad business was not similarly encumbered.

Apple seems to be benefiting handsomely.

According to mobile marketing analysts speaking to the Financial Times, Apple's in-house advertising arm, Search Ads, appears to be benefiting from Apple's privacy push.

In the time when rival advertising companies, like Google and Facebook, are having trouble targeting advertisements at potential customers, due to them operating blind as they have to operate with delayed ad data, Apple's own advertising service is said to offer a greater level of detail.

Advertisers that started noticed this, started using Apple's Search Ads.

As a result, Search Ads started experiencing a dramatic rise in usage, giving Apple some extra cash.

According to the report, Apple's Search Ads is responsible for 58% of all iPhone app downloads, versus 17% before the introduction of App Tracking Transparency.

Because of this, Apple is earning an estimated $5 billion extra from advertising in 2021, with a potential of rising to $20 billion a year within three years.

In other words, Apple Search Ads has gone from a minor player in industry, into a powerful competitor to some others in the industry, in the span of just half a year.

It's like Apple has given itself a free pace, because it is not subjected to the same policy as every other ad network is.

Apple has significantly altered the landscape, as the company controls everything from the software to the hardware of its devices.

And this time, it is making things difficult for its competition, while creating some new sources of income for itself.

Apple's Search Ads
Credit: Apple

Search Ads is how Apple sells advertising space in the App Store.

According to Apple, Search Ads "helps people discover your app when they search on the App Store, matching customers with your app right when they’re looking."

So for example, if users search for a specific iPhone game, they will see sponsored results for other games, or other related apps, at the top of the results.

This is a form of targeted advertising.

While Apple has the advantages, and isn't breaking any laws, considering that it's operating within its own walls, the company continues to be investigated for its monopolistic business practices.

So far, Apple only said that its privacy features are intended to protect users, and that the technologies "are part of one comprehensive system designed to help developers implement safe advertising practices and protect users — not to advantage Apple."

Despite this may not be Apple's original public intention, a lot of rivals should frown because of this.