Why I don’t sell ads, and why Apple shouldn’t

One and a half billion devices, what, three billion eyeballs?

From “Apple Looks to Expand Advertising Business With New Network for Apps” in Friday’s Wall Street Journal:

Apple Inc. prides itself on selling devices rather than relying on ads. Now the iPhone maker is looking to expand its digital-advertising business, people familiar with the matter said, as it shifts its growth strategy beyond selling devices toward pushing services on them.

My take: I hate ads, maybe even more than you do.. I avoid them whenever I can. I view the internet through ad blockers. I turn off NPR during fundraising. I stream everything I can to avoid broadcast television. I know the risks of depending on ad revenue; I watched the decline of Time Magazine from inside the building.

I’m trying to stay out of that business. I’m happy to settle for what little I can glean from my subscribers, for whom I have undying love and from whom I’ve learned so much.

I can see why Apple would be tempted to get into it. One and a half billion devices, what, three billion eyeballs?

Don’t go there Apple. Don’t sell those eyeballs. Keep your eye on, you know, the ball.

25 Comments

  1. David Emery said:
    But you should ALSO remove the FB, Twitter, etc “share” buttons, since those are used by their respective social media companies to track us.

    0
    June 2, 2018
      • George Row said:
        When I click the Facebook Share button on your page I am prompted to “Join or Login to Facebook” so I assume that Facebook doesn’t gain any data from the button’s presence, unless I log in. Or am I being naive?

        0
        June 2, 2018
      • Steven Noyes said:
        I think all of those services provide value for different people for different reasons. I choose to not have a Twitter, Facebook or a Google account but I do have a Linkedin.

        I would say keep the buttons.

        BTW: I fully agree with you on this piece. Apple and advertising simply does not mix. iAd anyone?

        0
        June 2, 2018
  2. Richard Wanderman said:
    I think you’re making the right choice PED and I wish Apple would get rid of ads in apps. I tend to pay to make them go away (sort of like subscribing) if the app is worth it. A few really are.

    That said, the model of a free site, supported by ads and then subscribing to make them go away has been the model of Flickr for a long time (I’ve always had a “Pro” account so never saw the ads). It seems like a reasonable compromise to me.

    1
    June 2, 2018
  3. Peter Kropf said:
    I expect Apple’s ads to be inherently different in one major and consistent way:

    Shielding privacy

    Bottom line: Apple will innovatively lead the tech ad segment towards a profitable ad model which protects consumer privacy.

    4
    June 2, 2018
    • Gregg Thurman said:
      I agree with respect to Apple’s privacy model.

      Further I interpret to ad policy being considered to be limited to an individual search and,importantly, does not follow you around the Internet. In this scenario, where i’m Looking for something, an ad may help me find it. The important difference with Google ads is that these ads won’t collect data about you or follow you from site to site. They are one time placements based on what you searched for, a one time scopes rifle shot vs a multi-shot shotgun that follows you around the Internet (learning what you do and like).

      0
      June 2, 2018
  4. Gianfranco Pedron said:
    “A billion and a half devices is, what, three billion eyeballs?”

    One could argue that’s only two billion eyeballs because the half device probably isn’t functional.

    One and a half billion devices is probably closer to three billion eyeballs..

    I always find it rather funny when people say “one million and a half dollars”, which to me translates into $1,000,000.50, when they actually mean one and a half million dollars. Yet, rarely does anyone say one dozen pies and a half when they mean one and a half dozen pies.

    Just nit picking quietly at my keyboard. 😉

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    June 2, 2018
    • Gianfranco Pedron said:
      Oh, and by the way, I totally agree with your take on ads. I love “reader view” in Safari.

      1
      June 2, 2018
  5. Turley Muller said:
    It makes sense. Apple is likely desperate for more inventory to sell their paid search (App Store) against. Certainly the number of search queries in App Store is plateauing, so expanding their paid search to queries outside the App Store opens up a whole new avenue of growth. I can’t stand ads , but is there not to like about collecting a referral fee on the front end, piece of the sale on the back, all the while enhancing the value of your platform by helping devs/publishers make more money and users more/better apps? At a high margin too.

    2
    June 2, 2018
    • Intriguing comment, Turley. Can you unpack “Apple is likely desperate for more inventory to sell their paid search (App Store) against.”

      What inventory? What paid search? Who is paying whom? And what makes Apple desperate? Is there any evidence they’re having trouble meeting Tim Cook’s Services target?

      0
      June 2, 2018
      • Turley Muller said:
        Apple sells keywords to publishers on the App Store for the search queries. You can imagine that maxes out quick. So they need more inventory. (Searches) they are limiting them selves to just one search engine but they made $1B from paid search in App Store. + Add in search queries from Pinterest, etc now Apple can “sell” or “display” more ads cause it has more search queries to trigger them.

        So I think they want to expand beyond just their 1st party search engine because they have a plenty demand for buying the search terms, which must perform well (CTR), it makes sense to expand beyond its own search engine. Although we cringe.

        0
        June 2, 2018
    • Gregg Thurman said:
      I think you may be onto something there Turley. Your comment about being “desperate” look into why that would be the case.

      Here’s what I have found.

      In FY2014 iPad unit sales peaked.
      In FY2015 Mac unit sales peaked
      In FY2015 Phone unit sales peaked.

      That’s Apple’s top three product categories peaking at least 3 years ago, with nothing of similar stature being introduced. Could this be why TC has been hyping Services since 2015?

      Apple Watch is going to be a big seller, but we’re still a couple years away from its potential being fully realized. Apple Music and HomePod are in no way near there. Video content is still just a plan without revenue generation, not to mention Apple’s Project Titan.

      Could WS’s seeming low valuation of Apple be caused by the above?

      0
      June 2, 2018
      • Turley Muller said:
        Indeed. I think there is a long runway for growth potemtial in Services. Other legs of growth will emerge as 5G & AR move to the forefront. The mature product segments will remain cyclical in the near-term.
        When I wrote “desperate” – I meant it in the sense that I suspect Apple is sitting on a mound of unspent ad budgets simply because there are so few (relatively) searches being conducted in the App Store— Aside from user typing exact name of an app they want. Apple’s search engine sucks. I was shocked, shocked to learn Apple sold $1 billion worth of search terms. Undoubtedly, the conversion is good. I know I have clicked on a few. Apple knows what apps you use a lot, and ones you have and don’t use (or deleted). And it knows what apps you were using just before searching the App Store. thus Apple is able to place context around vague / ambiguous search terms.

        WSJ mentioned Pinterest and Snap- When a user searches Pin w/ keywords Apple has sold related to home decor, an ad could appear recommending an app such as Ikea etc. Or Snap user searches for videos related to vacation destinations, a travel app ad may appear. My guess is this is just an extension of Apple’s current in-house platform, as opposed to an entirely new endeavor (for now). Apple isn’t taking a mulligan on iAds, it just sees money being left on the table.

        0
        June 2, 2018
  6. Gregg Thurman said:
    “Since the total installed base for Mac, iPads, and Windows PC’s equals about (1.5+0.242+0.96=) 1.84 billion, of that total installed base, Mac and iPads account for at least (0.338/1.84=) 18.4%, and possibly appreciably more.

    Who knew?

    Almost as importantly, since these two Apple products in particular wear like iron, that percentage, like Apple’s percentage of smartphones in use, is still growing.”

    California requires tech companies to support their products for five years. There isn’t any benefit to Apple to support hardware/software beyond that point.

    Macs sales peaked in FY2015, iPhones in FY2015, iPads in FY2014. I don’t see volumes resuming growth any time soon.

    My guess is that Apple’s installed base has peaked and moved (at best) horizontally since FY2015.

    New products such as Apple Watch, HomePod, Apple Music and Apple Content, and rising ASPs are very important to Apple’s future. I think Apple is well positioned for the future, much, much more so than Android World.

    1
    June 2, 2018
  7. John Konopka said:
    I don’t mind a few ads. A static picture on the side of the page and a link with no tracking of who sees the ad is ok. I read my newspaper as a PDF. I find some of the ads useful as they describe local merchants. I’ve learned of a few products I now use through online ads. What is horrible about some online ads is that they flicker or pop up or redirect you without you clicking or they auto play movies.

    1
    June 2, 2018
  8. Gregg Thurman said:
    Got to spend a goodly amount of time with an Apple Store rep this evening (more reps than customers). He shared that iPhone X continues as the #1 selling iPhone (more than 50% of unit sales) despite its seeming high price, and that about 70% of buyers are current, or are opting for the, annual upgrade program. The difference in monthly cost between the iPhone 8 and iPhone X is ~$10/month. As a result of the upgrade program the upgrade cycle is being drastically reduced, which in turn increases the number available on the secondary market.

    He also demoed HomePod with the new iOS. WoW. Sales of the HomePod are brisk and increasing. What can be done with/through the HomePod goes way beyond voice control of music playback.
    He likened the uptake of the HomePod as the early stage of a paradigm shift.

    0
    June 3, 2018

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