Apple (NASDAQ: AAPL) jumped into news distribution in 2015 with Apple News, and the company told Recode last November that the service had garnered 70 million unique users at the time. That's a lot of eyeballs for both publishers and advertisers to chase.
Well, the company may be preparing to take its News app more seriously.
Continue Reading Below
A tough balancing act
Ad Age reports that Apple is considering ceding control of ad tech to media partners, giving them more control over how to monetize content. Many publishers that distribute through Apple News aren't generating meaningful ad revenue from the platform, according to the report.
That could potentially lower the hurdles for publishers to bring their content to Apple News, which currently requires some extra effort to run an ad campaign on the platform. Many publishers have been surprised at Apple News' popularity, which reportedly has 47 million monthly users, according to comScore.
Monthly users aren't the same as the aforementioned unique user metric, so be careful not to conflate the two. Monthly users are more important, particularly to advertisers, because it shows how many users regularly use the app, instead of just unique users that may have tried it but do not use it on a regular basis. Apple may even support Alphabet subsidiary Google's ad tech, DoubleClick, in order to remove friction and bolster monetization for partners.
"There's a ton of scale there but no dollars," an unnamed publishing partner told Ad Age. "So Apple has to do something soon or publishers will pull out."
Apple's challenge is to balance those solid usage figures with publishers' financial needs, all while adhering to its fundamental goal of preserving user privacy. That's a tough balancing act, particularly since so much of modern advertising is built on user data that inherently compromises privacy. For instance, the company last month detailed tools designed to prevent cross-site tracking that it is bringing to its Safari desktop browser.
Apple has never been good at advertising
The Mac maker has a poor track record with building advertising platforms, which it has always done as an effort to provide partners additional monetization models, including app developers (remember iAd?) and now publishers.
At the same time, it has attempted to help revive the publishing industry on multiple occasions, such as through its Newsstand app, which it had hoped would help publishers sell subscriptions but has since been discontinued. Apple News is the spiritual successor to Newsstand.
Even Facebook is struggling with the same strategy
Apple's challenges are similar to what Facebook (NASDAQ: FB) is experiencing with Instant Articles (also introduced in 2015), the social network's offering that optimizes loading times for mobile sites by hosting the content directly on Facebook. Instant Articles have also been struggling for years, for largely the same reason: Publishers aren't happy with monetization.
Even a company like Facebook, whose core business is built on advertising, is finding the "walled garden" approach difficult to execute. That doesn't inspire a lot of confidence in Apple's ability to revolutionize mobile news. If Apple can't appease publishers, Apple News' days may be numbered -- just like its predecessor.
10 stocks we like better than AppleWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Apple wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 5, 2017
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple and Facebook. Evan Niu, CFA has the following options: long January 2018 $120 calls on Facebook. The Motley Fool owns shares of and recommends GOOG, GOOGL, Apple, and Facebook. The Motley Fool has a disclosure policy.