Apple’s growing design in the ad business is already well-documented, with the iPhone maker’s media unit already generating $4 billion a year from search. But now it seems it’s upping its efforts even further by serving ads on even more screens.
Apple, Digiday has learned, is preparing a more serious push to monetize its original video content with an ad-playback, according to multiple media agency sources who held separate exploratory discussions with the digital giant.
More will follow later this year, according to media agency executives Digiday spoke to, all of whom asked to speak on the background of the sensitive nature of the discussions and Apple’s insistence on privacy.
While Apple did not respond to Digiday’s request for comment on the nature of its meetings with holding company executives, separate sources noted that Apple, led by VP of ad platforms Todd Teresi, has been making rounds with network executives. During those meetings, Teresi described what agency sources characterized as an unusual way to sell ad time on Apple TV.
A source said Apple was talking a few months ago about an ad sales approach that was more like prospecting than a traditional audience-based pitch that most TV sellers take to market. Apple TV executives are said to have talked about building an API-based platform in a similar way to how Google or Microsoft search is bought.
“Their view, which they clearly expressed, is that they don’t believe in clean rooms, they don’t believe in any use of data,” the source said. “At the time they were very against working with one [demand side platform]. And they also said they don’t have the ability to build one.”
That approach has since changed – Digiday reported in August that Apple is building a DSP. And another holding company executive who recently spoke with Apple confirmed that the company plans to use a DSP for its TV inventory. “They actually have so much built-in inventory, through maps, email and all their apps at this point, that the DSP would actually only be up to their own-and-operated decisions [TV content]”, said the manager.
Apple TV has already had ads for its coverage of Major League Baseball games, but those ads have been sold by the league itself, not Apple. But there’s no shortage of original programming, including multiple Emmy winner Ted Lasso, to run ads.
The question is when does it start? An agency source said Apple did not ask the media agency network to set aside client dollars in the fourth quarter, so it seems more likely to be in early 2023.
“Anything that would open up premium stock [in connected TV or streaming] would be positive, says the manager. “The last bastion is Apple TV. Apple is going to be a very good ad experience with probably a low ad load. They’re already actually very diversified in terms of revenue streams so there’s less pressure to fit a lot of ads.”
A third holding company executive also met this summer with Apple’s Teresi, who talked about advertising opportunities around sports programming (which includes a 10-year deal with Major League Soccer), but this executive said the discussion did not address an ad-supported level on Apple TV.
The manager said that Teresi was looking to meet with this holding company again in November – and that the manager speculated that an ad-supported level could come up then. Teresi “expressed interest in expanding their [ad] business, but he also made it very clear that Apple will not do anything unless one, there is a significant possibility, and two, they would never do anything to jeopardize the relationship they have with their consumers, the executive said.
Rising mobile number
Apple doesn’t break out the advertising revenue generated by its existing ad business, which consists mainly of selling search ads on the App Store as well as a tie-up with NBCUniversal that allows its sales team to sell inventory on apps like Apple News.
Although it is believed to be in the range of $4 billion a year and is expected to rise to $6 billion, according to analysts at JP Morgan, where Counterpoint Research estimates that iPhone’s market share overtook Android in the US, where it now has a 50% share, in June.
In the month before Digiday revealed Apple’s ambitions to launch a DSP — a development that would require a tactful introduction to the market given its past proclamations around privacy — it also revealed new search ad placements in the App Store.
Industry veterans will recall how the latest Madison Avenue charm offensive is a sign that iAd launched more than a decade ago, a launch that largely coincided with the early launch of the iPad. According to sources, this was a premium offering that was impressive but overpriced, and was launched in a way that was largely out of sync with market sentiment.
For some, iAd was ahead of its time, but in particular, many ad buyers believed that Apple did not allow its seller the humility and flexibility necessary to make it as a Madison Avenue vendor, and so it was effectively phased out in 2016.
Speaking about the rise of Apple’s programmatic ambitions in August, Rob Norman, an adviser to several ad tech startups and longtime GroupM veteran, noted how iAd was a “first-rate” mobile experience but that there was little evidence of its effectiveness.
“For the customers who did [iAd]it was very high-touch in terms of support with creative and everything else that happens with a campaign,” he added, “and Apple was never staffed to be a very tough support business for advertisers.”
Rachel Pasqua, now CMO of Prohaska Consulting, led the mobile specialist team at iCrossing during the early launch of iAd and noted how Apple’s behavior during this time – one in which Google also promoted its “mobile first” mantra – showed that they were unaware of how “media is a completely different beast” than the tech industry.
“Obviously it was a premium product, but I think Apple was used to being able to mention their price without any questions, but the media is not that way,” she said. “Questions are always going to be asked in the media… their perception was very much, ‘This is a premium product from Apple, and you’re going to pay our price.’
“Obviously, it didn’t go well for the media community,” added Pasqua, who (like several other sources) went on to note his opinion that iAd sales executives were allowed to deviate a bit from their prescribed sales packages.
But as they continue to woo the C-suites on Madison Avenue, the exploratory nature and collaborative tone of the discussions suggest that Apple has learned lessons from its foray into adland in the early 2010s as it seeks to advance its mobile dominance and tap into Primetime TV advertising sales.
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