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Apple’s advertising business hit by ‘weakness’ of coronavirus economy

Apple saw quarterly revenues rise 1% despite the Covid-19 impact

Apple may have seen an ‘uptick’ in product sales towards the end of Q2 2020, but its advertising business has taken a hit as companies pause search spend on platforms such as the App Store.

The company posted quarterly revenues of $58.3bn yesterday (1 May) – increasing sales 1% year-on-year despite Covid-19’s impact on consumer spending.

Chief executive Tim Cook noted that while international lockdowns had caused a “sharp decline” in business in March, the company had witnessed an “uptick across the board” in the second half of April.

“A part of it is due to the [US] stimulus programs taking effect in April,” he said. “And then a part of it is probably the consumer behavior of knowing this is going to go on for a little while longer and getting some devices and so forth lined up to work at home more.”

The company has continued to advertise throughout the coronavirus period, releasing brand films on subjects such as creativity in lockdown and music production. Product marketing comprised the integrated push of the iPhone SE and the iPad Pro.

However other companies’ retreat from advertising harmed the tech brand’s revenues. Apple’s chief financial officer, Luca Maestri, singled out its own advertising business as a core area of weakness in Q2 alongside its AppleCare service.

“Advertising, which is comprised of third-party agreements, our App Store search ads, and Apple News ads has been impacted by overall economic weakness and uncertainty on when businesses will reopen,” he said.

Maestri noted the company expects this dip in business would likely create headwind within the Apple Services divisions in the next quarter too.

By contrast, Apple Services as a whole posted its best-ever revenue at $13.bn for Q2. The division comprises B2C products such as Apple Music, Apple Arcade and Apple News+.

The company is currently laying the groundwork to expand its advertising offering beyond App Store search media despite the current decline in demand, according to Adweek.

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