Apple's search ad business to value $2bn by 2020

The potential worth of its search ad business shows the potential value for the iPhone maker in diversifying its portfolio and expanding its services revenue stream


Apple's search ad business is set to generate more than $2bn revenue for the tech giant in 2020, four times the $500m revenue predicted for the end of this year, according to a note written by Bernstein analyst Toni Sacconaghi.

Apple's search ads, which appear on app store pages, can be purchased by app makers so that their apps appear when specific keywords are searched, similar to the way Google search ads work.

Sacconaghi told CNBC in an interview that he predicted Apple would likely grow its search ad business by expanding where it is offered and making more ad spots available in general. Search ads are not currently available in China, which represents a large growth opportunity, he noted. Another potential move to encourage growth would be to stop exclusively displaying the ads on the first results page.

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According to Sacconaghi, if Apple made these moves, it could lead to even more significant financial gains for the tech giant.

"Sacconaghi said his estimate that Apple could approach $2bn in search ad revenue by 2020 was "conservative" in note published Monday," CNBC reported. "The development means that Apple is likely to meet or exceed its goal of doubling its services revenue by the end of 2020 to $49bn."

In the face of declining iPhone sales which saw Apple replaced by Huawei as the world's second-largest smartphone provider, Apple has been working on diversifying its portfolio by developing its services business such as iCloud and Apple Music. 

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