Apple's Advertising Budget: Revealed!

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Just how much Apple spends on advertising has been a fun guessing game among bloggers and analysts recently, particularly given Apple’s successful “I’m a Mac, I’m a PC” campaign. Not only have the spots starring John Hodgman as the hapless “PC” helped eviscerate the image of Microsoft’s Vista operating system, they forced Microsoft to order a defensive buy — estimated at $300 million by, of course, Apple — aimed at rehabilitating its roundly criticized OS.

But how much has all that cost Apple? The company hasn’t said publicly, to the best of my knowledge, leaving outsiders to guess. TechCrunch’s Erick Schonfeld had previously estimated that Apple’s massive ad budget amounted to about 10 percent of the company’s $3.8 billion SG&A (selling, general, and administrative) expenses.

Well, here’s the answer: Apple’s total advertising budget for 2008 came to $486 million. You can find the figure hidden in plain sight in Apple’s Nov. 5 10-K filing on page 62. Small wonder many people overlooked it: It’s buried in a footnote headlined “Significant Accounting Policies.”

For what it’s worth, Apple’s 2007 ad budget was $467 million; ad spending in 2006 was $338 million. As it turns out, TechCrunch wasn’t too far off — advertising came to about 13 percent of Apple’s $3.8 billion SG&A budget.

So whose ad spend had the most bang for the buck? It’s hard to know for sure, but it’s worth noting that Apple had a very good year in its longstanding war to steal market share from PC makers. According to IDC’s most recent figures, Apple grabbed 8.2 percent of the U.S. desktop/laptop combined market. That puts Apple in the #3 slot behind Dell (29.4 percent) and HP (25.3 percent).

Update: The link to Apple’s 10-K previously pointed to 10kWizard, which most people can’t see without an account. I’ve changed the link to point to Edgar, where the pages seem to be numbered differently (i.e., the budget appears on page 66 in 10kWizard, but on page 62 in Edgar). Go figure.

Tags: test, Advertisement, Apple Inc., Lindsay

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1

Andrew Mager

11/21/08 | Report as spam

Comment

I'm a Mac.
2

k2times

11/21/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

Nice scoop BNET!
3

tomvons

11/21/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

The $300 million, not "estimated by Apple" but widely
reported in the industry long before the Apple ad came
out (just Google "microsoft seninfeld campaign"), was for
a single Vista advertising campaign, and it
wasn't aimed at "rehabilitating Vista", it was aimed at
rehabilitating the publics perception of Vista
(which is kind of the point of the Apple ad).
4

Win3.1

11/22/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

I bet the windroids will eat this up like the tenderest beef
available How many of them will not comprehend that
these are TOTAL for all of Apple, not just Leopard or
iPod or iPhone. Ahh well, there is a reason they are
droids after-all.
5

TheBeam

11/23/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

Sorry about the double post. The link I posted seems to have a space in it...so it doesn't work unless you remove the space. It's a good article on Ubuntu and how you can download software for free, built into the program.
6

Hodini

11/24/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

I think for that much, survey is required to measure target recalliabilty of this...I'm a Mac campaign. To determine value efficiency and effectiveness of the Ad. The critical issue is that, marketing budget is sometimes assumed as a measure of a brand's profit against competitions.
Otherwise, maybe ... they are on spending spree.
MUDI, Lagos
7

Paul1985

11/27/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

I think what amazes me mostly here is that, 'Total amortization related to capitalized software development costs was $27 million' and Advertising expense was $486 million'.

I wonder what would happen if the figures were swapped!
8

nimitkumar

12/01/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

This is not too much of a surprise. Apple reported this in its Nov, 2007 10-K (and in 2006)as well - "Advertising costs are expensed as incurred. Advertising expense was $467 million, $338 million, and $287 million for 2007, 2006, and 2005, respectively."
Here is the link from 2007 10-K: http://www.sec.gov/Archives/edgar/data/320193/000104746907009340/a2181030z10-k.htm#page_fk19701_1_64
(Page 64)
and 2006 10-K:
http://www.sec.gov/Archives/edgar/data/320193/000110465906084288/a06-25759_210k.htm
(Page 82)
9

kiaghi7

12/28/08 | Report as spam

RE: Apple's Advertising Budget: Revealed!

This is more a matter of hypocrisy than anything, I swear by apple for the devices it does the best (iPod) and I swear by PC compatibles for the devices its many 3rd party manufacturers do the best (desktops), not because of any sort of OS favoritism but purely from a "function before form" understanding of the practicalities.

There is a reason that an Apple OS hasn't been run on Apple hardware in years, it's because the PC hardware manufacturers simply left the best Apple could manufacture in the dust. Apple computers in ads routinely advertise how great their hardware is, which PC's have enjoyed often for a year if not more native to their platform...

The ad money spent on the particular commercial of the "PC" character pouring all of his money into Vista advertising and leaving the expense to fix problems with the OS is poetically ironic when it was apparently Apple pouring hundreds of millions into saying that M$ was squandering money on face time while ignoring problems, meanwhile Apple was practically saturation bombing the world with spot ads accusing M$ of doing what Apple was clearly guilty of.

This isn't to say M$ isn't guilty as homemade sin too, their Mojave and "I'm a PC" ads are tiresome, clumsy, and obvious responses no more effective than saying "nuh uh!", but neither side of this asinine debate is clean enough to point at the other and call them out as guilty of any particular fault when they are both doing it.

Both sides/companies need to listen to the old phrase "put up or shut up".