The Big Apple (ad business)

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This week brought news that Taboola had partnered with Apple to help monetize their News and Stocks apps. The reaction from the Twitter-verse was a mixture of confusion and dismay, mostly regarding the perceived gap between the brand image that Apple likes to portray versus the business model of direct response advertising inherent to Taboola.

First, let's review everything we know and don't know about the Taboola deal and how Apple has been monetizing these consumer-facing apps.

Monetization options

Two years ago, Apple announced an exclusive partnership with NBC to monetize the same apps in English-speaking markets. The Taboola relationship is additive to NBC and does not replace it as you can see on this Apple page :

Apple also allows other ad servers to work in News, as shown in the chart below. In speaking to some publishers, the name RevContent came up several times as an option for monetizing Apple News, and is shown in its own category here in the chart as a “publisher selling agent”. I have to admit I don't really know what this means or how they monetize on publishers’ behalf.

It seems that ad monetization within Apple News has not been very successful and CPMs remain low. Some publishers I spoke with weren't even sure whether they were getting a rev share from these efforts! Speculation is that the NBC monetization was blocked by Apple’s restrictive policies around identity and reporting.

This brings up the other point of misunderstanding from many observers, that Taboola represents a reversal from a privacy perspective. That's not the case as far as I can tell. My understanding is that both Taboola and rival Outbrain have minimal exposure to user identity (cookie or otherwise) in their operations and instead focus on contextual targeting and click-based optimization. So while some may have a distaste for the ad formats, there shouldn't be a concern over privacy.

Quality control and ad placement

As an ad ops geek, I have a bunch of questions about how the ads appear within content in the Apple News app. Publishers seem to be able to control where the ads slots appear, and there is extensive documentation from Google Ad Manager on the details. These docs indicate that private deals and programmatic guarantee deals are supported, so it appears that programmatic demand can reach Apple News.

How exactly the publishers interact with these resellers (NBC and now Taboola) remains opaque to me. Does each publisher set up relationships with these resellers, or does Apple have an umbrella relationship that carries down to the publishers? And, does each publisher control which ads slots are resell and which are not?

The answers to the above questions will have a big impact on the question of who is responsible for ad quality on the platform. As a consumer spending time on Apple News, I saw very few ads. So I went to a HuffPo article, figuring that was as good a spot as any to find some ads, and the quality was … not what I was hoping. See the screenshot below for a typical high-quality ad.

In addition, each Apple News article contains a large number of suggested follow-up articles, which are likely monetized already and may be a key part of how the Taboola relationship will unfold.

The real action: App installs and TV

The News and Stock apps are essentially a sideshow to the real action (or speculative action) with Apple’s advertising business. Apple is expected to make over $10 billion on ads this year (eMarketer ) with virtually all of it coming the App Store search experience. Like Google, Apple realized that putting the ads in the context of a user who is also expressing their intent is a golden formula for ringing the cash register.

The first area where we can speculate about Apple’s future plans is straightforward. Like Google, we should expect Apple to take the demand they've already captured in their App Store and move it off their App Store into the apps themselves. This would be similar to what Google did with AdSense.

Their first effort at an ad network, iAds, was discontinued in 2016*. But there's a big difference — Apple didn't have significant demand to support the network then, but now they do. While there have been many rumors or hints that Apple was heading in this direction, we have not seen any concrete proof. As a benchmark for the size of this opportunity, we can look at the app install market at over $200 billion dollars in the US (global estimates vary a lot). So this is a big opportunity.

* Editors note: It appears that Apple has removed all trace of Steve Jobs introducing iAds. Old YouTube videos now show up with a takedown notice.

The second spot where I'm looking for Apple to make a mark is within its growing Apple TV+ footprint. While Apple continues to invest heavily in content acquisition, including sports like Major League Soccer.

In true Apple fashion, there's very little information or news coverage of how they are monetizing their investment in MLS. Literally, the only things I could find were two articles from 2022 saying the sales were sponsorship only with no individual ad slots (SportsPro Media , Insider ).

Marketecture contributor Eric Seufert included this incredibly useful chart in his latest newsletter , showing how each of the leading streaming providers is balancing advertising-supported tiers with paid tiers. Apple remains an outlier within the streaming world in its exclusive monetization through subscriptions.

No measurement, no problem

The biggest question with all of these Apple advertising initiatives is whether they plan on leaving their business on an even playing field with everyone else. And specifically whether their own systems will have the same user data availability as third parties. So far, it doesn’t look great.

App store search ads are evaluated deterministically based on actual installs, in contrast to the probabilistic methods for all other installs using Apple’s SKAd. This Kochhava article covers how that is warping the attribution landscape.

We also know that Apple does not subject its own data intelligence about users to the same standards as other apps. While ATT prompts have mandated, scary language, Apple’s built-in targeting is couched as “Personalized Ads” (see screenshot below).

The overall impression I have regarding Apple’s advertising initiatives is “hurry up and wait”. While tens of billions of dollars go into the App Store, remaining opportunities remain small, but with hints they could become quite meaningful and change the overall landscape one day.

This post originally appeared in the Marketecture newsletter. Subscribe for free .