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Apple's Latest iOS Update Takes Out Advertisers, Draws In Revenue In One Fell Swoop

Apple's Latest iOS Update Takes Out Advertisers, Draws In Revenue In One Fell Swoop

Apple Inc. (NASDAQ: AAPL)'s highly anticipated iOS update was released this week, much to the dismay of online publishers. The new system allows the use of ad-blocking apps that prevent mobile advertisements from appearing in the Safari browser.

For users, this has been great news as it will likely speed up page-load times and make web browsing more enjoyable. However for content creators, the news is dismal is it is likely to take a major chunk out of their revenue.

Why It Matters

iPhone users tend to be bigger spenders than their Android counterparts, so losing the iPhone audience is detrimental to advertisers. The new operating system will make it difficult for publishers to draw in revenue by selling ad space as it will be much less valuable without a huge subsection of the population ever seeing it. Not only will the new feature take Apple users out of the mix, but it could prompt other operating systems to follow suit.

Related Link: Apple's iPhone Upgrade Program: What Will It Do With Used Phones? -- And Other Questions Investors Are Asking

Consumers are likely to praise the new system's ability to block ads, which could put pressure on companies like Google Inc (NASDAQ: GOOG) to make that feature available for their mobile browsers as well.

Advertising Isn't Dead Yet

While Apple's latest update presents a major challenge to the mobile advertising and publishing industries, the company is offering an alternative— Apple News.

This week Apple unveiled the Apple News app, a place users can subscribe to news articles and web content. The News app does allow advertising, and publishers who sell their own ad space are able to keep 100 percent of their revenue. Apple takes a 30 percent cut of the ad space it sells on its own. Apple News has already made an impression on several big publishers like New York Magazine and The Washington Post, which are both expected to announce their distribution plans on the app on Thursday.


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