A question. Has anybody on here ever actually clicked on one of those ads other than by finger-check? Or actually ordered or researched something from an intrusive ad?
Exactly. I have
never clicked an ad in Apple News and can count on one hand the number of times I’ve responded to an ad in any media in the last decade; however I may be the exception as
2023 global digital revenue was $602B — which is about 1.6X
Apple 2023 revenue ($383B) so it represents a sizable growth opportunity.
Based on this, I can see why Apple is embracing ads in Apple News. However, given Apple’s stance on privacy and UX I don‘t understand why Apple‘s Ad playbook looks almost indistinguishable from Google’s, Facebook’s, or any amateur website for that matter. The only difference I’ve seen is user choice for receiving ”personalized” ads vs non-personalized ads.
While I see the revenue potential, I don’t see how Apple can pull this off in a way that can add materially to revenue without disproportionately eroding customer satisfaction ratings — given my
belief that Apple customers are likely to view this ad push as antithetical to its very public privacy posture (I see this sentiment despite Apple honoring user choice of ”personalized” ads vs non-personalized ads
iff most Apple customers share this middle-age man’s views on digital ads toxicity).
The benefit (and motivation) I see is potentially outsized contribution to profitability based on the assumption that incremental ad costs are approaching zero — so every ad dollar could effectively flow to the bottom line. If this holds, a 5% global digital ad revenue capture for Apple (~$30B) is equivalent to a 7-8% revenue increase which translates to a huge 15% boost to profits (2023 Net Profit was $97B, and assuming that ad serving cost is a very conservative 50% of ad revenue). This scenario would also increase net profit margin from 25% to 31% ([$97B x 25% + $30B x 50%] / $127B).
This is compelling math, so I get why it would be management malpractice not to pursue the opportunity; but I truly hope Apple has a more inspired way of going about it other than imitating and ultimately becoming the next Google, Facebook or ad revenue-addicted website riddled with intrusive advertising — which would be a tragedy and betrayal of creative and moral principles that endeared Apple to this old guy and perhaps others. I’m optimistic that Apple will avoid this me-too approach and trap, but I’m still looking for ad delivery innovations and other tangible signs that this optimism is justified.