The move that Apple hopes to offset declining phone sales by increasing ad revenue will take effect next week. So starting October 25, iPhone, iPad and Mac users will see more ads displayed and more visible on Apple-managed platforms like Search and Maps.
Revenue has so far been generated from a few sources: ads displayed for searches in the App Store, ads on Apple News Maps, the Apple Stocks news section, and occasionally high viewability/high price ads that are displayed during US sports competitions.
Thus, Apple will also display ads in pre-installed apps on devices (e.g. iPhone and iPad). At the same time, the company has announced its advertising customers will start seeing more ads in the App Store. The new ad sections in iOS 16 will allow advertisers to place promotional messages at the Today Tab section of the App Store, as well as at the bottom of product pages for other apps.
As Apple’s hardware sales growth has slowed over the past 5-6 years, Apple has continued to diversify the revenue opportunities of its services divisions, including its ad business. Apple first entered the ad market under CEO Steve Jobs with the iAd platform launched in 2010. The plan was for developers to place banner ads in iOS apps directly through Apple, rather than using third-party services like Google AdMob. iAd was largely a failure and was discontinued a few years later.
While so far the US company has been criticised for the way it plans to expand its own advertising business, we’re now starting to see the first concrete “results”, with the newly displayed ads in the Today tab marked with an icon on a blue background. For some reason not very clear, Apple wants the newly delivered ads to be demarcated from other recommendations displayed so far.
Given Apple’s positioning as a premium device manufacturer, the plan to increase revenue by displaying more ads in the App Store is risky at best for the American company, as annoying users with ads that are too pushy or displayed in inappropriate places could erode brand image and motivate an eventual exodus of users to other rival ecosystems.