In a note to clients — as noted by AppleInsider — Bernstein analyst Toni Sacconaghi predicts that Apple’s Search Ad business will generate $500 million this fiscal year and $2 billion by 2020.
Search Ads is an App Store ad program designed to simplify the advertising process to eliminate keywords and bids. The company’s intelligent automation creates the ad and matches it to interested users.
In June Apple announced that its Search Ads Advanced platform allows developers to create more ad variations using all of the screenshots and app previews from their App Store product page. The tech giant says Search Ads Advanced “is ideal for developers or agencies who want access to powerful marketing tools they can use to control campaigns and the audiences who see their ads.” There’s no budget maximum.
Sacconaghi says Search Ads alone will generate as much revenue as Apple Music did in fiscal year 2017, but given that it has to practically nothing for acquisition costs, the margins are considerably higher. Apple's Search Ads service is part of the "Services" revenue stream that includes earnings from Apple Music subscriptions, iTunes Music, iCloud storage plans, paid apps from Apple's App Store, and Apple Care service plans, Apple Pay, etc.