Apple launches its new digital ad service, Digital Video Ads, adding 3 digits and adding $50 million to its ad budget
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Apple is adding 3 to 4 digits to its digital ad revenue to expand its digital advertising offering, which is now the third-largest in the industry behind Google and Facebook.
The addition of the 3rd digit comes in addition to a $50-million digital advertising budget that it has built up in recent years to match that of rival advertisers.
Apple says the Digital Video Advertising (DVA) strategy is aimed at growing revenue and ad quality for its advertisers by adding 3-digit numbers and offering a new pricing model that will increase revenue for its partners.
The new digital advertising revenue, including video ads on apps and in the app store, will be built into Apple’s core Apple Pay mobile payments business.
The $50-$100 million Apple is bringing in for the digital ad program will be divided between two parts: $50 in revenue from digital advertising partners and $100 for each other partner that makes up the digital advertising market.
Apple says it has raised $30 million in venture funding in recent months and will add the additional $50 to its existing $1.5 billion in total digital ad spend.
Apple has also added new ad revenue for advertisers to the existing ad spending, including from the ad network Apple partners, and added a new revenue stream to digital ads from other third-party advertisers that includes revenue from the Apple Pay app, said Craig Federighi, Apple’s senior vice president of digital.
In addition to adding a digital ad income, Apple is also adding another revenue stream from third-parties like Google and Amazon.
Those partners pay $1 a click for the ad, which Apple has used to grow its digital revenue for years.
The new revenue streams are a way for Apple to better monetize its apps and services, Federighid said in an interview on a conference call with analysts on Wednesday.
Apple is the first major tech company to launch its digital digital ad offering, a move that could benefit Apple’s other ad partners, Federithi said.
Google has been a dominant digital ad provider, but it has been battling to find a way to scale its digital offering to compete with Apple.
Amazon and Google have partnered with ad networks like Viacom and Viacotown to expand their digital advertising businesses, but Amazon has been struggling to grow, especially among smaller ad buyers.
Apple, which will launch its new DVA program on Tuesday, has not disclosed its new ad partners.
Federighy said Apple is likely to add a few new partners, such as Google and Microsoft, as it ramps up its digital offerings.
Apple’s DVA ad program could have a significant impact on the future of digital advertising, Federihi said, as Google is expected to begin rolling out its new paid-for-ad services in the second half of the year.
Google’s Google AdWords service is already available to advertisers.
Google also plans to launch a new ad product later this year that will offer more flexible ad delivery options, Federich said.
The company is working with its ad partners to make the new service available.
Apple also said it would add a third revenue stream: the ad tech that is part of the mobile ad platform, or AdMob.
Apple said it had not yet determined what the third revenue source would be, and that it had begun discussions with partners and advertisers.
Apple is adding 3 to 4 digits to its digital ad revenue to expand its digital advertising offering, which is…