Apple's adtech plans reveal its APAC advertising ambitions

As Apple beefs up its digital advertising business with new hires and builds a demand-side platform (DSP), its adtech stack will eventually look similar to those from Google, Facebook and Amazon. Of the three, it will likely resemble Google's adtech stack the most due to their similarities.  

For example, both Apple and Google have web browsers and app stores and operate the two largest mobile operating systems. 

Apple also has a treasure trove of valuable consumer data across the open web through its Safari browser and the in-app mobile environment through its iOS and iPadOS operating systems. Having this consumer data means that audiences using Apple's products and services are highly sought after by advertisers. 

"By building its ad platforms, Apple can allow advertisers to reach those audiences under its highly stringent privacy policies for advertising," Michael Sweeney, head of marketing at Clearcode, tells Campaign Asia-Pacific.

"Judging by the recent job positions, it appears that Apple aims to build a DSP and supply-side (SSP) platform, which could be an SSP with ad exchange functionalities. These are the key platforms for connecting supply with demand. In Apple's case, the SSP would allow app developers to offer their inventory to advertisers via the SSP, who would create campaigns in the DSP." 

However, Fionn Hyndman, partner at Asia Pacific Growth Management, believes the industry needs to take a step back on the assumption that Apple is building an ad-business that looks like the ad businesses of Facebook and Google.  

"They have different properties, and different ad opportunities and so I don’t think it will be a like-for-like comparison to what those other players have built.  I think they’ll have a full-stack but they’ll use it very differently. So Apple’s ad opportunities look different to Google, Meta and Microsoft—they could be search ads inside their properties, ads in the App Store, maps, Apple TV," he explains.

Chris Brinkworth, managing partner at Civic Data, says if Apple were to ask anyone who has built out a DSP-like product and underlying infrastructure, they would understand just how tough it is to anticipate and manage demand from advertisers. 

Building a DSP is complex because Apple will require a DSP that can juggle deals across unique annual reach through their owned properties. For example, their supply across Apple TV, App Store and apps like News, Arcade, Maps and Stocks. 

(L-R) Chris Brinkworth, Sonal Patel, Fionn Hyndman and Michael Sweeney

Apple will also need access to the daily frequency of those same users through external supply partnerships with highly utilised third-party iOS apps like Facebook, Linkedin, Spotify, and HBO Max, just to name a few. There are also Shopify's integrations to consider for those retailers who want to make some money from their traffic. 

"They will need to build out (or buy) the targeting and measurement piece of the stack. So, for example, things like the delivery and response rates, but in a privacy-compliant manner like data clean rooms," Brinkworth tells Campaign Asia-Pacific.

"I cannot see a world where Apple's generation-long focus on quality and aesthetics, compounded by their "privacy" move - is all put at risk via poor planning around the delivery aspect. So, for example, Apple is at fault for delivering a phishing campaign in Safari via their DSP or for singling out an individual from a crowd - just would not be a good look."

How will having a DSP benefit Apple?

Apple previously introduced several technological and policy changes like the App Tracking Transparency (ATT) framework to govern how companies can collect and use consumer data on its Safari web browser and mobile operating systems. 

The ATT framework means iOS developers will need to collect an explicit opt-in from users before accessing their Identifier for Advertisers (IDFA), a random device identifier assigned by Apple to a user's device. 

While Apple will still focus on third-party apps, the benefits of removing third-party cookies, IP targeting and introducing 'throw away' email addresses on all Safari activity means that they will be better at targeting and measuring Safari on desktop and mobile. The ability to do all these will be better than any existing DSPs.  

For example, there will be no shortage of SSP for all types of supply that want to integrate with them, explains Brinkworth. 

Sweeney says he cannot see Apple running its DSP across non-Apple properties as they will have to play by the rules set by the web browser or mobile operating system, which will be a Google-owned property 99% of the time, like Chrome or Android.  

"Seeing as Apple sees privacy as a fundamental human right, they will only be able to ensure that there is confidentiality if they serve ads across their properties. Building its adtech stack will also allow Apple to introduce ads to its AppleTV+ streaming service in the future," he explains. 

"I do not believe this will be their main priority initially. Still, we may see Apple introduce ads on its streaming service in the future as a way to generate additional revenue, just as we have seen with Netflix and Disney+ in recent months." 

In addition, Sweeney believes Apple will allow advertisers to show ads to users across Apple's properties and devices based on Apple's first-party data, just like how Google, Facebook and Amazon do.  

However, he predicts the targeting will likely be based on cohorts, possibly similar to Google Chrome's Topics API, rather than based on any kind of user identifier, as the use of these user IDs would go against Apple's privacy policies and mantra. 

"One job posting from Apple for a senior product manager for its DSP states that the position will require working closely with the AI/ML teams," says Sweeney. 

"Artificial intelligence and machine learning are two critical components of a cohort-based ad targeting system that allows advertisers to reach their target audience without the need to expose user-level identifiers. In addition, using AI and ML in a cohort-based ad targeting system would align with Apple's views on privacy." 

What adtech talent is Apple looking for?

Apple is looking to fill roles globally with people with a background in adtech. Most of this search is being conducted in the US, but in APAC, 12 of these roles are in China, 12 in India, four in Japan and two in Singapore. 

These job listings in these countries show that they mix engineering and business-related positions. All engineering positions are based in India, which is natural, considering India's large pool of information technology professionals. 

On the other hand, the job positions in countries like China, Japan, and Singapore are business-oriented, signalling Apple's intentions to grow its advertising business in the APAC region.  

Sweeney explains Apple growing its advertising business in North America and Europe will not be much of a challenge considering its substantial presence in these markets, which means it makes sense for Apple to look for new markets.  

"Many independent adtech companies have set up offices in the APAC region to capture a slice of the growing digital advertising market. It appears that Apple is planning on doing the same," he says. 

Sonal Patel, managing director for Asia at Quantcast, points out that with Apple TV and the company's moving into producing their content, having a large workforce in the US makes sense. In addition, she explains that media dollars are fast flowing into the connected television and over-the-top platform world.  

"I'm surprised at the small number of roles released in Japan, as it is the second largest ad market, and Apple has a large share of the Japan phone market, almost 65%, according to Statcounter," she tells Campaign Asia-Pacific.

"Understandably, Apple has diversified away from Foxconn in China to India to make its phones, so this could indicate that there are substantial growth plans for India included in this mix."  

Will advertisers take a bite of the apple?

While many in the adtech world are unhappy with how Apple has approached this, marketers still have targets to hit and cannot do so with poor targeting and imperfect measurement.      

One core question, says Brinkworth, will be how agencies and brands start to find ways to measure reach and frequency across walled gardens if there is no way to stitch it all together.  

"That answer comes from the rapid growth of machine learning attached to data clean room," he adds. 

Sweeney predicts many advertisers will use Apple's ad platforms, mainly because they will likely be able to reach Apple users in a much more effective way than they currently do without Apple's IDFA.  

Even though the targeting will likely be focused on cohorts rather than user IDs, he says it will still be more effective than blindly targeting users based on context alone, for example, without the use of Apple's IDFA. 

"Hindsight is 20/20, and when we look back at the privacy changes that Apple has made, especially to its mobile operating system, it is clear that this was their strategy all along. To restrict access to user data for third-party adtech companies and build an adtech stack that allows advertisers to run ad campaigns based on Apple's first-party data," says Sweeney. 

"Since Apple's ATT went live, its search ads revenue has increased. Seeing as Apple's new adtech stack will likely run ad campaigns across its mobile devices and possibly on its AppleTV+ streaming service in the future, we can expect that its new line of advertising platforms will be a huge revenue generator for years to come."