Bernstein's Toni Sacconaghi: Apple's ad biz will pull in $3 billion in fiscal 2021

From Erik Savitz' "Apple Has Been Quietly Building a Digital Ad Business. Here Are the Numbers." posted Saturday on Barrons.com:

For some time now, Apple has left the impression that it’s opposed to digital advertising. For instance, Apple recently made it nearly impossible to track what consumers view on their iPhones, making it harder to target ads. But that anti-ad impression is not necessarily the reality, as advertising becomes a material contributor to Apple revenue.

In a research note, Bernstein’s Toni Sacconaghi estimates that, while Apple doesn’t talk about ads much and provides little disclosure about them, the company will generate some $3 billion in ad revenue in the September 2021 fiscal year, up from about $300 million in fiscal 2017. He sees the total hitting $7 billion to $10 billion a year by fiscal 2023 or 2024.

Most of Apple’s ad business consists of App Store search ads. Apple also gets modest revenue—likely under $500 million a year—from ads in the Apple News and Stocks apps. He estimates that Google pulls in about $4 billion in ad revenue a year from Maps, with a user base four times as large as Apple Maps’, suggesting $1 billion a year in potential revenue for Apple. Roku, he says, offers “a helpful precedent” for how Apple can get perhaps another billion from Apple TV. However, dropping ads in Apple Mail, Apple TV+, or Apple’s home screens would likely “irk consumers and undermine Apple’s strongly avowed stance on privacy.”

My take: I'd rather have Apple's numbers than Toni Sacconaghi's.

8 Comments

  1. Gregg Thurman said:
    For some time now, Apple has left the impression that it’s opposed to digital advertising.

    Typical media twisting of facts. Apple has never been against “digital advertising” per se. Apple is against digital advertising that vacuums up people’s personal data and sells it to others without their consent.

    13
    August 9, 2021
    • Aaron Belich said:
      Preach Brother Gregg!!

      0
      August 9, 2021
    • David Drinkwater said:
      Apple has no opposition to advertising or making money. Apple has an aversion to making bad products or services.

      When the advertising model didn’t look good, they (mostly) walked away from it. But they did still keep doing it (on a small scale).

      And then, oops, Toni noticed. Rolls eyes.

      0
      August 9, 2021
  2. Miguel Ancira said:
    So, 10x what it was 4 years ago, and he predicts it will be 3x in 2 more years. Does this jive with his general assessment of AAPL? I’m asking for a friend.

    2
    August 9, 2021
  3. Gregg Thurman said:
    Does this jive with his general assessment of AAPL?

    Absolutely not. Saccocrap does not recognize growth at Apple as a good thing.

    0
    August 9, 2021
  4. bas flik said:
    these revenues are almost 100% margin i think. revenue = net profit. really nice voor eps.

    1
    August 9, 2021
  5. Bart Yee said:
    Here’s a few tidbits for you.

    Toni “estimates that Google pulls in about $4 billion in ad revenue a year from Maps, with a user base four times as large as Apple Maps’, suggesting $1 billion a year in potential revenue for Apple.”

    So Apple Maps was introduced in 2012 for iPhones to replace Google Maps but to rather bad fanfare. It did need a lot of work and growth. Here’s a contemporary comment of how it went in the early days: “ Apple Maps was destined to fail — it was rushed in development and replaced a loved and mature product. Following the fateful iOS 6 launch, CEO Tim Cook posted a public apology on Apple’s website. … It seemed that Apple had selfishly placed themselves above their customers.”

    Yet today, many use Apple Maps with little difference in functionality. If entrenched Google has now lost 20% of the map app market to Apple, and growing with each successive iPhone launch, Apple is again doing what it does best, grow and refine software services that becomes another integral part of the Apple ecosystem. That Apple has NOT decided to heavily monetize Apple Maps with ad barrages or search results speaks volumes about how it approaches its users.

    Also, if Google’s user base is 4x Apple’s consider that a major part of that is Android devices which classically pay or spend less while Apple users historically spend and pay more. Wonder if the ad rates show vary significantly from each platform.

    2
    August 9, 2021
    • David Emery said:
      There was a piece about a month ago about advertisers moving their ad dollars from Apple to Android. Not sure how well that worked out for them, or whether that trend continues.

      0
      August 10, 2021

Leave a Reply