Who Spends More on Ads -- Apple or Microsoft? Another Lesson in Quality vs Quantity
Apple (AAPL) has run some new commercials –- featuring a blue-shirted genius -- during the Olympics. The genius in the ad seems marginally less annoying than the real Apple geniuses giving you attitude behind the bar at retail stores, but critics have been harsh. A former creative director of ad firm TBWA/Chiat/Day blogged that the new ads are “causing a widespread gagging response” and he “honestly can’t remember a single Apple campaign that’s been received so poorly.” It's not quite on the level of Groupon's (GRPN) offensive Superbowl ads, but it's a definite advertising miss.
Here's a reassuring thought: This is getting people riled up precisely because it's such a rare misstep for Apple's image-makers. Also, Apple has one of the strongest brands around, and its advertising spend is not even $1 billion.
According to its annual filing, Apple spent $933 million on advertising last year, $691 million in 2010, and $501 million in 2009. Its total sales those years were $108.249 billion, $65.225 billion and $42.905 billion.
Translation: Apple spent less than 1% of sales last year on advertising. And its sales growth has been far outpacing its advertising budget. That has helped it achieve this:
How does that compare to, say, Microsoft (MSFT)? Advertising in Redmond was $1.6 billion in fiscal 2012 (its year ends in June), $1.9 billion in 2011, and $1.6 billion in 2010. As a percentage of sales, advertising was 2.2%, 2.7%, 2.6%. And last year, ad expenses grew 19% while sales grew only 12%.
Over at Dell (DELL), meanwhile, that company spent $860 million last fiscal year, $730 million in 2011, and $619 million in 2010. That’s 1.3%, 1.2% and 1.2% of total sales. And last year, sales growth didn't keep up with the advertising budget.
Apple's past campaigns have been, basically, art. The silhouettes of dancers rocking out to U2's "Vertigo" not only sold millions of iPods, they helped make the aging band cool again. Apple’s hipster cred was cemented by the amusing, passive aggressive commercials where the handsome young Mac ribbed a portly PC. But even if it screwed up on one campaign, its advertising strategy is still genius.
Filed under: Company News