Move over, Meta and Google—Apple’s coming for ads

On the horizon. Apple is moving into the ad space. The company is planning on building “the most privacy-forward, technologically sophisticated demand side platform on the planet”—the Solar System isn’t part of the plan yet—according to a job listing for an ads demand platform engineering director at the company.

Building a demand side platform (DSP) is a major step for Apple, which has thus far resisted diving into ads as part of its business model. Putting together its own interface will allow the company to develop an ad targeting system that adheres to its branded commitment to privacy while offering advertisers a massive market.

By allowing consumers to opt out of app tracking on Apple devices, Apple has already undercut its main competitors in the ad space, who rely on heavy data tracking as a business model. It’s likely not an accident, said advertising analyst and consultant Wayne Blodwell. Its App Tracking Transparency option allows Apple to distinguish itself from competitors—and cuts into their ad targeting business model.

Blodwell told IT Brew that Apple is probably looking at the ad-heavy revenue streams of Meta and Google and seeing an opportunity to swoop in and take some market share for itself without having to fight too hard. Apple’s established hardware business allows it the financial flexibility to explore different ways of advertising—a contrast to competitors who aren’t able to take chances in the same way.

“They’ve got this huge other arm of their business that can bankroll it,” Blodwell said. “Whereas for Facebook, which is [97%] ads, and Google, which has 88% ad revenue, they have less opportunity to put that at risk.”

Open season. A privacy-first approach to digital advertising could make Apple a major player in a space long dominated by companies reliant on heavily targeted ads. The data scraping approach used in the ad space to hyper-target every piece of the user experience may well be destined for irrelevance.

Apple declined to comment on the record for this story. But the company’s policies on how it uses contextual information shows how it manages device information, location, and other entered data from consumers to segment them into groups who are fed targeted ads relevant to the 5,000-person grouping they are in. It’s a relatively unobtrusive way of advertising—less invasive than Meta and Google’s highly targeted advertising—though the parameters of the contextual information and segmentation indicate a level of sophistication, where an ever narrowing application of information puts the consumer in an increasingly targeted group.

PubMatic Chief Growth Officer Paulina Klimenko told Digiday in early August that Apple’s ad platform expansion makes sense for a company that has put time and effort into establishing a “walled garden” of products that all work together.

“What connects all these products and services creating seamless consumer experiences is user data,” Klimenko said. “Apple building their own DSP is the next logical step in this evolution. They have been building their advertising business behind the scenes, leveraging their scale and ecosystem assets.”

How to build a DSP. For a company like Apple, with effectively limitless resources to develop its own DSP, the lift won’t be a great one, said Lemonade Project analyst Tom Triscari. The company has the hardware and the staff to make a push into whatever sector of the tech industry they want to, and whatever they don’t have, they can easily get.

Additionally, Triscari told IT Brew, the tech in question isn’t as difficult to design as it was 10 years ago. Today, the market for DSPs and other related pieces of ad tech is saturated. Apple doesn’t have to reinvent the wheel to build out a DSP, they just have to hire the right people.

“There’s been so much talent that’s been cultivated through other companies out there, you can just even list them off: Trade Desk, Criteo, PubMatic, Magnite, LiveRamp, and so on and so forth,” Triscari said. “Apple can go out and pay and get the best of the best if they want to.”

How the DSP is built will likely depend on how much control Apple has over the product, and whether it will develop its own system or convert an existing one. Apple’s ubiquity in the tech sector, from phones to watches to computers and more, means that any move by the $2 trillion company into the ad space has to be taken seriously.

“It’s like Amazon Prime with their ads platform, you sort of have to use them,” said Blodwell. “You might not want to, but because they have so much reach, and so much access to users, you’re just going to end up having to use them.”—EH

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