Jay Chiat, arguably the most famous adman to hail from Los Angeles, was once quoted saying the secret to great advertising is “Big Budgets“. Although Jay’s response may have appeared to be flip or insincere, I believe he was dead serious. And apparently, so did some of his clients.
Apple Computer became a Chiat/Day client in the early 1980’s, and since the beginning, the company seemed to spend more on advertising than their larger rivals. In 1984, Apple broke the mold for Super Bowl advertising with a commercial titled “1984” that cost a small fortune to produce and place, but has been played hundreds of times and still stands as the most famous commercial of all time. The writer of the spot was none other than Steve Hayden, formerly creative director at Speer, Young & Hollander (predecessor to Young Company).
Since those early days at Apple, Steve Jobs and his company have embraced advertising with big budgets and meticulous attention to detail. Working closely with his agency, Jobs would spend a day each month with the agency reviewing all of the proposed ads serving as editor in chief on the account.
In October 2010, Apple’s 10-K form revealed that it had significantly ramped up to $691 million which represented a 190 million jump and 38% increase over 2009. Previous years have been $15 – 20 million increases. And while this is a pretty incredible increase, Apple continues to lower the percentage of revenue they spend on advertising. While the spend was $691 million this year, total revenues were over $65 billion, so Apple only spent about 1% of their revenue on this. Last year, that percentage was 1.37%. In 2001, it was about 5%. So even though Apple is ramping up ad spending, they’re bringing in money much quicker, so the overall percentage of money they’re spending keeps getting less and less.
So what has all the advertising done for Apple? Well, in early January, Apple’s market capitalization broke the $300 billion mark, ending the day at $302.32 billion. That makes Apple the second largest company in the world, when measured by market capitalization. The leader is Exxon Mobile. But this milestone puts Apple ahead of Microsoft, Wal-Mart and Google.
So how does a small company compete in a world dominated by giants with huge budgets? It ultimately comes down to priorities and focus. If you prioritize and narrow your audiences you can focus your attention on those that will produce the best ROI. This means that you need to do enough to be important to an audience
In the early days Apple targeted the education market. An Apple on every desk was a sound marketing strategy. Not only because is a well defined niche with specific needs, but it also had the most potential to grow as students grew to become adults. Young Company has run campaigns targeted to as few as several hundred decision makers. So the secret is not how much you spend, but how much effort you put towards each prospect and how that compares with your competitors.
If you’d like make your brand more important to your audiences, we should talk. You can connect with our Young Company team at 949-376-8404 or email Bart Young directly at byoung@youngcompany.com. And be sure to follow us for the latest industry news and tips.