Apple's Search Ad business could generate over $500 million in revenue this year and quadruple that to $2 billion by 2020, Bernstein analyst Toni Sacconaghi claims.
If correct, the prediction would mark a significant milestone for Apple, which has been working to develop its services businesses, like iCloud and Apple Music, to offset slowing iPhone sales. Apple's Search Ads appear at the top of App Store pages, marked by a blue tint and "Ad" marker. App makers can buy specific keywords they want their app ads to appear next to, similar to the way Google search ads work on the web.
Sacconaghi said his estimate that Apple could approach $2 billion in Search Ad revenue by 2020 was "conservative" in note published Monday. The development means that Apple is likely to meet or exceed its goal of doubling its Services revenue by the end of 2020 to $49 billion.
If Apple achieves these revenue predictions, by 2020 its Search Ad business would be about the same size as Apple Music was last year, but with much higher gross margins, Sacconaghi wrote.
Apple is set to report its fourth-quarter earnings on Nov. 1.
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