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The Advertising / Revenue Link

Published by on Apr 4th, 2013, No Comments

Samsung-Super-Bowl-Ad

If you’re not reading Asymco for insight into the business behind mobile technology you’re missing out. Writer and analyst Horace Dediu put a great tweet out earlier today about the marketing spend of some of the worlds biggest retail companies:

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Interesting to see that Samsung spends the most although this does make sense in that they’re advertising everything from the latest Galaxy phone to a TV or laptop (for full info on what falls under Samsung Electronics click here). These are interesting numbers but nothing without context. Twitter user @Chiphanna went and ran these numbers in order to compare marketing spend vs revenue and came up with some interesting figures:

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Essentially for every dollar Apple spends on marketing, they make $156 in revenue. Compare that to Samsung that have to spend a dollar to only make a  relatively low $46 in revenue and you wonder if someone like Samsung is doing something wrong?

The fascinating insight is that of Coca-Cola, they spend over three billion dollars a year to and only make $14 for every dollar they spend. This brings us to wonder whether the advertising that Coca-Cola puts out is actually irrelevant or are they over advertising?

Another interesting question is what would happen if Dell spent $200 million more a year (bringing them into parity with HP spend) would their sales increase to the level of HP? I would assume this is unlikely as proportionally they need to spend more than the $200 million in order to get to a level of parity.

Coca-Cola continually have to spend billions for the reason that they need to be top of mind before anyone heads to the soda fridge to buy a drink. More expensive products from brands such as HP and Apple require more research, more information and aren’t impulse purchases. As such, they can advertise less.

The number one take out for me: You don’t to have great adverts or spend billions, you need to have a product people love. Apple makes so much revenue per ad dollar for the simple reason that their products are great. As a whole this can be seen for HP and even to some extent Microsoft.

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