Apple (AAPL +2.59%) just released a new tool for small businesses, and it could be a gateway to billions in ad revenue.
The new Apple Business Connect suite is a set of tools that allows small businesses to update how their location place cards look across Apple apps like Maps, Messages, and Wallet. Businesses can ensure their information is up to date and showcase certain items, including promotions or a call-to-action. The suite also provides an insight dashboard to show how customers find a business and interact with the place card.
That last detail could be the essential groundwork for building a massive advertising segment to rival Alphabet's (GOOGL +1.71%) (GOOG +1.99%) Google Maps.
Winning over small businesses
Apple is giving small businesses a lot of free tools to win them over.
Not only will the new Business Connect tools make it easier for small businesses to ensure iPhone users have accurate information about them, but they'll also make it easier for users to find and patronize those businesses.
There are a couple of tools to improve discoverability for small businesses. They will be able to add subcategories to their location listings, increasing the accuracy of searches in Maps. And they can provide information in the "Good to Know" section, which could be used to filter for businesses with free Wi-Fi or wheelchair accessibility.
More interesting is the "Action" button Apple is introducing. It gives users the ability to interact with a business directly through Maps. Apple gives examples of ordering delivery, booking a room, or reserving a table. Those are valuable actions to businesses because they can see a direct benefit from improving their presence on Maps and Apple's other apps.
And if Apple can show how valuable it is for users to see a business's place card, it may be able to provide them with more ways to stand out in Maps and other apps, perhaps at a price.
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Key Data Points
A $10 billion opportunity
Advertising in Maps could be a $10 billion opportunity.
Estimates for Google's Maps segment range around that number today. The digital advertising leader only rolled out ads in its maps app in 2019. Shortly after its introduction, Morgan Stanley analyst Brian Nowak estimated that business could generate $11 billion in revenue in 2023.
Google announced that it counted over 1 billion monthly users on Google Maps way back in 2015. That number has likely grown since then as Android adoption has increased. But Apple Maps might not be too far behind. Apple said iOS users use its Maps app 3 times more than Google's that same year. Analyst Horace Dediu estimated Apple Maps had over 1 billion users in 2021.
Apple is now rolling out new features in Maps at a rapid pace -- cycling directions, EV routing, 3D details -- as it works to catch up to Google in some areas. Mapping projects could be beneficial beyond the Maps app for Apple, as they could play into its augmented reality product or the long-rumored Apple car. Every improvement serves to increase engagement and draw in new users.
Showing businesses how those hundreds of millions of users discover and interact with their business and how those interactions convert into sales is the necessary groundwork to develop a strong advertising segment. The opportunity is big, even for Apple, as it mostly looks to the services business to fuel its profits going forward.
