Apple Watch $38M ad spend a drop in the bucket
Apple (AAPL) has had an early field day with the Apple Watch. The product went on pre-order sale Friday morning and the initial batch sold out within two hours.
Given the amount of buzz from Apple fans and journalists, this might not be surprising. But the word hasn't gotten out solely through a network of loyalists. According to one industry analyst firm, Apple has spent $38 million on U.S. television advertising since March 9 to push the device. That compared to an estimated $42 million for five months of iPhone 6 and 6 Plus TV ads.
But those amounts are drops in the bucket. In the fiscal year that ended in September 2014, Apple's advertising costs were $1.2 billion, according to the company's public filings. That was up from 2012, when the company's ad budget hit $1 billion for the first time, and a comparatively paltry $206 million in 2004.
Although Apple depends on core customers to help generate interest in its products, advertising has always played a role. The original launch of the Macintosh was tied to the famous "1984" Super Bowl commercial that announced the upcoming product without ever showing one or mentioning what it was.
Commercials were important for the launch of the iPod, which became synonymous with digital music players starting in 2001. The first iPhone advertisement aired during the 2007 Academy Awards show. The original iPad commercial also premiered during the Oscars, three years later.
And yet, there's been a massive growth in the company's advertising budget. Apple can likely thank two factors: its transformation into a mass-market consumer electronics brand and global markets. Becoming a powerhouse in personal mobile devices and other forms of consumer electronics means reaching broadly, and that costs money. Moving more firmly into international markets and opening retail stores around the globe requires the support of big advertising budgets.
However, everything comes in context. That $1.2 billion in advertising last fiscal year was not even 0.7 percent of the company's $182.8 billion in revenue. At that scale, who could begrudge some advertising?