Apple floats new App Store ad network concept to Snapchat, Pinterest & others

Apple is pushing to expand its digital advertising business by increasing the size of its advertising network, a report claims, with the iPhone producer said to have been in discussions with a few major app companies about a possible deal to provide advertising to their apps.

Representatives from Apple have met with firms including Snap and Pinterest about joining an Apple-run advertising network, sources told the Wall Street Journal. The advertising would be distributed across the apps of all participating firms, and while Apple would share advertising revenue with the other companies, it won't be the same deal for all apps, as the rate would be set on a per-app basis.

It is suggested internal discussions about the concept centered around search-based advertising, where search terms would influence the ad shown. Examples given include advertising for an interior design app appearing in searches for "drapes" in Pinterest's app, while a ticket-reseller app ad may be shown if Snap users searched for "NFL" or another sport-related term.

Representatives for Apple, Pinterest, and Snap declined to comment to the report.

Apple has endured mixed results in the advertising industry, as the earlier iAd mobile advertising network closed in 2016 after six years of operation. It is thought Apple's restrictions on the types of advertising that was allowed on the network, combined with supposedly higher costs compared to rivals, contributed to its failure.

Currently, Apple offers advertising on searches within the App Store, a small but still growing business that is said to have earned nearly $1 billion in revenue last year. A source close to Todd Teresi, the chief of Apple's ad business, claims its strong performance and wide profit margins caught the attention of Apple CEO Tim Cook and SVP Eddy Cue, prompting further investigation into the industry.

The move into creating an advertising network could help the advertising business grow, but it also puts Apple in competition against the other major players in the mobile advertising industry. Research firm eMarketer estimates Google controls approximately 35 percent of the mobile ad market, while FaceBook has a 25-percent share.

If successful, the advertising effort will help Apple's Services business keep growing. In the most recent financial results, the arm posted $9.19 billion in revenue for the second quarter of 2018, representing a year-on-year growth of 31 percent.