Apple Podcast Ads could be a multi-billion business by 2030
One way: Apple Podcast Ads. Which, of course, does not yet exist. Nor do I have any insider information that it will soon exist. But if Apple creates it — and there are some signs that it potentially could — Apple Podcast Ads would easily gross nearly $4 billion in 2030 on its own, and return well over a billion dollars in pure profit.
I’ve done the math.
Important note: I have no insider information here. This is pure speculation, but it is based on a variety of known facts.
Apple and ads: growing fast
Apple just increased the number of ad slots available on the App Store, which is going to boost the percentage of the global $150 billion mobile ad spend it captures. But that’s probably not the only thing Apple has on its mind, as there are rumors that the company is building a DSP, a demand-side platform. And not just any DSP, but “the most privacy-forward, sophisticated demand side platform possible.”
At the same time, there are persistent rumors that Apple is pursuing ad deals with agencies for Apple TV, potentially leading up to an ad-supported tier for Apple TV+ not unlike the recently unveiled Netflix offering: Basic With Ads. In addition, Bloomberg’s Mark Gurman has suggested that Apple is set to expand ads to its Maps app as well — think restaurant or hotel ads — and perhaps farther into other apps.
All of that makes sense, and yet, if you think about it, why would Apple stop there?
As I speculated here, there is plenty of opportunity:
Podcasts comes to mind. So does Music, along with maybe Weather and Stocks. But there are multiple options here, including Shazam, which — let’s be honest — is one big ad for Apple Music.
However, there are continual rumors about additional Apple investment in its advertising platform … so potentially the ads the company offers will eventually make their way into additional Apple apps.
In fact, if you think about it, Apple’s goal is providing digital tools and experiences that enrich people’s lives while leaving the world, as Apple puts it, “better than we found it.” Arguably, one of the ways Apple is working to deliver on that vision is via App Tracking Transparency in its mobile operating system iOS, which enables some degree of marketing measurement via Apple’s attribution framework, SKAdNetwork, while increasing personal privacy by limiting what data marketers can access.
Could that be just step one?
Could it be that Apple sees providing a broader-focused privacy-safe ad network that only uses first-party data as an ethical duty, not just an opportunity?
Certainly it’s one place to grow revenue fast. Apple Search Ads has seen revenue growth rates in the 20-40% ranges in recent years, according to one source. And any massive $2.3 trillion tech company definitely needs to justify its stock price to investors by looking wherever it can for new sources of high-margin revenue. Ads — specifically ads beyond the App Store — could fit that bill, especially since advertising can be very high-margin, low-risk revenue.
Plus, this all fits the bill of Apple’s stated goal of reducing its reliance on releasing new iPhones for revenue growth. In 2021, advertising accounted for less than 1% of the company’s total revenue:
That is something that could soon change, however.
And the interesting part is that advertising revenue, while it certainly benefits incrementally from every additional Apple device sold, crucially also enables monetization of the existing and ongoing Apple ecosystem and therefore does not require any new device sales in order to grow. In other words, it fits right into the Services category of revenue that Apple has been working hard to grow.
So … Apple Podcast Ads, huh?
If Apple is interested in a new advertising adventure in podcasting, what kind of returns could it generate? There are several different ways to estimate that.
Here’s one …
Podcast ad revenue for this year will total out at about $1.7 billion, according to Insider Intelligence. While Insider only forecasts out to 2024, if we assume similar future growth and run a simple linear regression out to 2030, that total grows to just north of $5 billion. According to Podcast Statistics, Apple’s share of the podcast market is just over 37%.
Assuming Apple can capture as much value from podcast advertising as it has captured share in the space — yes, that’s a big assumption, but we’ll unpack it more later — that means Apple could capture as much as $1.9 billion in Apple Podcast Ads revenue in the same year.
There’s of course much more complexity to unpack here: some podcasts prefer to monetize via direct sponsorships, not all podcasts monetize, and podcast monetization is notoriously poor.
The first of these is likely to remain for many top podcasts and podcast networks, but the second and third are largely a function of an immature space that doesn’t have great measurement capability on two critical components:
- ad effectiveness
If podcast ads were both easier for podcasters to implement and simpler for advertisers to measure, there’d likely be a significant boom in ad-based monetization for podcasts. (Remember when TikTok finally figured out its ad platform and revenue literally exploded 75X over a 6-month span? Yes, something like that.)
So there’s much more to add to the potential $5 billion in total podcasting revenue and the Apple Podcast Ads potential $1.9 billion profit.
Apple can potentially do podcast ads better than almost any other company
Apple Search Ads is built on first-party data, which is not subject to the rules Apple has sent up in ATT and SKAN around data-sharing between companies. In other words, Apple is only using data that you’re agreeing to provide to Apple, and no data goes to advertisers, other ad networks, or any other companies.
That’s now the default standard on iOS, and is trending towards the default standard on Android (as the GAID disappears) and the web (as the third-party cookie goes away).
This is good for consumers, and it offers more privacy, but let’s be honest: it privileges those with lots of first-party data, and punishes those who do not.
Essentially, it privileges platforms that can run both supply and demand at the same time, and have insight (via the supply-side) into what people like/want/buy/do which they can apply to the demand side and make ads more behaviorally targeted, which can provide anywhere from 10X to 100X or beyond bump in the value from an advertisers’ perspective. This is what Eric Seufert calls a content fortress.
More targeted ads with behavioral targeting and search targeting
Apple has insight into many things happening on your phone, including App Store activity, music you like (Music app), places you go (Maps app), stocks you monitor (Stocks app) … Shazam, Pages, Numbers, Keynote … and Podcasts, among other apps. While Apple maintains privacy by packaging segments of at least 5,000 people based on common characteristics, this data is helpful in finding and assembling the right targeted audience for each ad.
And note: it’s not just behavioral data.
It’s also search data, including “insights derived from non-personal historical search terms,” and in-app purchases.
When it comes to Podcasts, think of Apple’s potential advantage versus Spotify, currently the most popular podcast platform on the planet, or Soundcloud, or Pocket Casts, or any other independent podcast app besides those from Google (YouTube and Google Podcasts) and Amazon (Audible). Most podcast apps have really no knowledge of their users beyond what podcasts they subscribe to, and any other demographics people have provided. How much more targeted will Apple’s podcast ads be, if Apple decides to launch this?
That’s hard to quantify, but it’s huge.
It’s what helps Apple command a premium, simply based on natural auction mechanics of the open market for app install ads on Apple Search Ads:
Apple Search Ads prices app installs at a premium of 2X to 8X over some of the largest global players in the mobile marketing ecosystem. This advantage is at minimum a 2X boost, and often significantly more.
But wait, there’s more: full-stack control
In addition, Apple controls the full stack here: operating system, podcast app, device, podcast platform, ad platform. So Apple has exquisitely good data on listenership, drop-off, and attention that podcasting charts and rankings platforms like Chartable can only dream of.
That’s great, but it’s not just numbers.
This would allow Apple to reinvent the call-to-action or conversion paradigm for podcasts, which is largely now based on visit ADVERTISER-BRAND-WEBSITE.COM/CUSTOM-LANDING-PAGE so that brands can track visits and sales and therefore how many listeners from a particular podcast they are reaching and converting. That’s a tough conversion to create when your potential customer is driving, or running, or busy in other ways, as podcast listeners often are.
Apple could do much better:
- Shake your phone to click
- Shake your phone to download the app
- Tap the screen twice to get the discount code via email
- Hit volume up to get a push notification in an hour
- Say “Siri, add to cart” now to put this product in your shopping cart
- Say “Siri, add this meeting” to put a software demo session on your calendar
- Or whatever …
No further steps, no URL to visit, no distraction. Just pure and instant conversion.
Plus, perfect first-party measurement with super-granular data for billing. Of course, Apple won’t provide all of that super-granular data to advertisers and thereby violate individual privacy, but Apple has it for internal use.
So what’s the true financial opportunity for Apple Podcast Ads?
First of all, let’s assume the podcast space continues growing at its current rate. Nothing substantial changes, except Apple starts taking a piece of the pie.
Given the above, it wouldn’t be crazy to assume Apple could boost podcast monetization by at least a factor of 3, but I’ll go with a conservative 2X multiple here. Realistically, the premium might start out a little lower than that and grow well above it as Apple builds out the platform, network, and overall service over a period of years, but I’ll just go with a flat multiple of 2 for the next 8 years.
That would mean a potential gross revenue of not too far south of $4 billion in 2030.
Of course, that’s not all for Apple. There’s obviously a split between ad networks and publishers, in this case, Apple and podcasters. If we assume that’s a 70% for podcasters and 30% for Apple split — similar to the original App Store numbers, and basically around what at least some ad networks do — the result is almost $400 million in profit year one, and well over $1 billion in profit by 2030.
The upshot is that Apple Podcast Ads is easily a multi-billion dollar business by 2030, with easily a billion dollars in pure profit.
But all of this is at a fairly conservative Apple multiple. As I mentioned above, Apple Search Ads prices for app installs range from 2X to 6X other major global tech companies’ prices. And if Apple would do something like this, it would be a massive disruption of the current podcast monetization scene.
With proper measurement, better targeting, and built-in automated conversion models via Siri or device interactions in no-eyes situations (driving in the car) and no-hands situations (biking), it’s possible for Apple to blow the podcast monetization scene wide open. In which case, it’s likely that advertisers would significantly increase spend on podcasts, potentially flooding the space with billions more in ad spend.
And just think: a huge percentage of the user acquisition market for new users in your app is done via … other apps. In other words, this is a somewhat incestuous marketplace where apps are forever stealing a finite number of users from each other, and spending millions of dollars merrily all the way. If podcast publishers see a good, measurable path to growth, podcast advertising might follow somewhat of a similar trajectory.
What does this all mean?
The numbers above might just be the low end of the opportunity.
Caveats and confessions
It’s really, really, really important to note that I have no insider information here. I don’t know if Apple is planning to start up a podcasting ad service. (If they’re not, maybe this post might persuade them to try?) I don’t know what features it might have. I don’t know if they’d integrate it with the full iOS software stack to provide innovative “click” and conversion capabilities.
It’s also important to note that big services take time to build, time to scale, and have unknown as well as unknowable consequences. Will most podcasters opt out? Will most opt-in? It’s hard to say, but the answer to those questions is critical to knowing whether the above numbers are probable or fanciful. In addition, YouTube is a huge platform for podcasts — some with video and some with a static image — and Google is a good candidate for doing more with podcast ads as well, both on YouTube and in Google Podcasts.
Plus, Apple has recently built and released monetization features for podcasts, including subscriptions. I don’t view that as a negative for ad-based monetization; some listeners will take this option, but the vast majority will not.
A penny for your thoughts?
Let me know if you think an Apple ad network for podcasts is likely, possible, or completely insane.
And one thought grenade to leave with you for another day …
This has been an interesting little thought experiment, but here’s a bigger thought grenade to leave you with that would really blow the mobile user acquisition industry’s hivemind.
What about a version of Apple Search Ads in non-Apple apps?
Something to think about for another day.