December 1, 2005 9:44 AM PST
Apple spends a bundle on iPod ads
Last modified: December 1, 2005 12:05 PM PST
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It's a bundle. Apple Computer spent $287 million on advertising in its last fiscal year, up nearly 40 percent from the $206 million it spent a year earlier. And the company spent $193 million in the year before that, according to its annual report, filed Thursday with the Securities and Exchange Commission.
U2 singer Bono was featured in
Apple's iPod ads last year.
The ad spending, though significant, is far less than the billions of dollars spent each year by the very largest advertisers--companies such as consumer products giant Procter & Gamble and automakers such as General Motors and Ford.
And, though its spending is a lot for a tech company, Apple has also seen a significant spike in its sales, particularly the heavily marketed iPod music player. The company sold $4.5 billion worth of the players in its fiscal year, a more than threefold increase over the prior year.
"They're getting great bang for the buck," said Piper Jaffray analyst Gene Munster. "To be who they are, it's important to have cool ads out there."
However, Munster said Apple also can depend on word of mouth to sell its products. "The reason they get such great leverage from their ad campaigns is that they have products that people want to talk about."
In addition to boosting its ad budget, Apple is investing more in research and upping its capital spending. The company said it plans to spend $390 million in capital spending this year, up 50 percent from the $260 million spent last year, much of which went to Apple's retail store effort. Research and development costs for last year were $534 million, up 9 percent from the prior year.
"Apple is clearly focused on continuing its innovation," said Sam Bhavnani, an analyst at San Diego-based market research firm Current Analysis.
Apple's regulatory filing also contains an update on various legal matters, including its ongoing dispute with Apple Corps, the Beatles' record label, as well as a host of other pending lawsuits. The Apple v. Apple case is slated for trial in a British court during the last week of March.
Meanwhile, Apple disclosed that it has settled a dispute with Tiger Direct, which sued the company in April for its use of the "Tiger" name to describe Mac OS X 10.4. "The parties have reached a settlement," Apple said in the filing. "Settlement of this matter did not have a material effect on the company's financial position or results of operation."
An Apple representative was not immediately available to comment further.
See more CNET content tagged:
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I know that it drives me nuts, and when one buys a car, the value depreciates immediately when you take it off the lot, solely because so much of the car's value is just in how much was spent on advertising.
Crazy.
WHY? They are a monopoly.
Maybe it's because the majority of Windows users are NOT upgrading to WinXP, since the majority of them are using Win98/2000 according to numerous tech news reports (C/Net, etc.)
With FogHorn-LongHorn-AstalaVista 2007/08/?? OS going "public gold", for sale in the future, they have to create the buzz somehow today inorder to keep the monopoly fresh in the minds of the MS Drones so they don't switch to Unix/Mac OSX/Linux/Open Source/OpenOffice/FreeOffice/StarOffice/Google....
crashing through someone's home. I could design a better Mac ad
than the maroons at the Apple agency.
not at all related to the depreciation of American Auto
manufacturers. They depreciate because the products' quality is
poor. I'm a life long Honda owner, and NONE of my hondas have
depreciated like the American crap that is see driving next to
me.
iPods don't depreciate in value, nor is it 10% of the cost of the
iPod. that's less than the industry average across all industries
other than pharma (15% or more). For a company of any size to
spend less than 10% of per sale is fantastic. so, $30 of your
iPod went to the cool ads, so what. Enjoy them. Know that you
are part of POP culture.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=8239236611&rd=1&sspagename=STRK%3AMESE%3AIT&rd=1
eom