Analysis: Apple Ads More Effective Than Microsoft's

(MoneyWatch)  Todd Bishop has crunched the numbers and found that Apple's advertising success over the last year has paid off. It is Microsoft -- square, stuffy, clunky Microsoft -- that actually has the least efficient advertising of the pair. Apple spends much less in advertising (and therefore starts with an advantage in terms of effectiveness), and its TV campaign, which shows PC users as overweight squares and Mac users as Williamsburg-type hipsters has been much praised. If you look at adspend compared to sales generated, then according to Bishop this strategy has paid off for Apple, which spends slightly less on ads (per dollar) to get its revenues than Microsoft does.

This puts in perspective the fact that Apple spent $486 million on its campaign while Microsoft spent only $300 million on Vista. It looks like Apple spent more, but in fact Apple spent less per dollar of revenue than Microsoft did (at least, according to Bishop). This fact becomes clear once you factor in the entire $1.2 billion Microsoft spent marketing its products. The resulting chart, which shows adspend as a percentage of revenues, indicates that Apple is the more productive advertiser -- it gets more sales per dollar than Bill Gates does. (In the chart, above, the lower the percentage the better.)

Apple's budget had been something of a mystery until BNET revealed discussion of it in the company's 10-K disclosure a couple of days ago. The news will be a comfort to TBWA/Chiat/Day, which handles Apple ads; and a challenge to Crispin Porter + Bogusky, which has some catching up to do for client Microsoft, apparently.

• For a sales-per-unit analysis, see the story in BNET Technology.