Mobile Ads Reportedly Interest Apple

Can Apple do mobile ads? The world might soon find out, according to a report Friday (June 1) in The Wall Street Journal (WSJ).

The paper, relying on unnamed sources, said that “over the past year, Apple has met with Snap Inc., Pinterest and other companies about participating in an Apple network that would distribute ads across their collective apps. Apple would share revenue with the apps displaying the ads, with the split varying from app to app.”

Last year, Apple earned $1 billion from the sale of “promotional ads on search terms in its App Store,” the paper reported. “Under the concept discussed internally, and raised with potential partners, users searching in Pinterest’s app for ‘drapes’ might turn up an ad distributed by Apple for an interior-design app, or Snap users searching for ‘NFL’ might see an ad for a ticket-reseller app.”

The company, of course, is best known for sales of devices, but that part of Apple’s business could face challenges soon enough, according to analyst Jeffrey Kvaal. In a recent note to clients, he said that the company’s shares will slump 6 percent from its mid-May close to $175 over the next 12 months. The reason? The recent average selling prices for iPhones, as well as soft demand for iPhone X.

“iPhone volumes are not deteriorating, though iPhone X remains uninspiring,” Kvaal wrote. “Apple guidance implied third fiscal-quarter iPhone unit volumes that were better than feared. We do not believe, however, sell through has meaningfully improved.”

Were Apple to get further into mobile ads, it would come as spending on that form of marketing is set to surpass TV advertising, according to a recent eMarketer report.

“This year, driven by display ads, mobile will account for 69.9 percent of all digital advertising,” the report said. “With a 33.9 percent share of total U.S. ad spend, mobile will pass TV as the leading advertising medium in the world’s largest ad market — and we expect that share will grow to a whopping 47.9 percent by 2022.”

Apple’s reported move into mobile advertising takes it into territory dominated by Google, which has a 35 percent share, and Facebook, with 25 percent, according to the research firm. Of course, Google and Facebook have their own hardware efforts — Google has smartphones, for instance, while Facebook is into smart speakers.

Meanwhile, Apple’s shipments of Apple Watches reached 3.8 million in the first quarter of 2018, making it leader of the smartwatch pack, according to Canalys. The company accounts for 59 percent of the smartwatch market.

“Key to Apple’s success with its latest Apple Watch Series 3 is the number of LTE-enabled watches it has been able to push into the hands of consumers,” said Canalys senior analyst Jason Low in a press release. “Operators welcome the additional revenue from device sales and the added subscription revenue for data on the Apple Watch, and the list of operators that sell the LTE Apple Watch worldwide is increasing each month.