Apple mysteriously stopped disclosing how much it spends on ads – Business Insider


Tim Cook
Apple CEO Tim
Cook.

AP

Apple has stopped disclosing how much it spends on advertising,
and it’s not entirely clear why.

The company’s
latest annual report (10-K)
, filed with the Securities and
Exchange commission in October, made no mention of its
advertising expenses.

As analysts at Wells Fargo pointed out in a recent research note,
that’s a shame as it was useful to track Apple’s advertising
expense, and its ad spend as a percentage of revenue, over time.

The decision not to disclose ad spend for the full-year 2016
comes a year after
Apple’s advertising expenses rose 50% to a record $1.8
billion in 2015
.

This chart, courtesy of Wells Fargo, shows how much Apple’s
advertising expenditure has grown since 2008.



apple ad spend

Wells Fargo Securities LLC

So why has Apple stopped making its ad spend public? The company
doesn’t say in the annual report. 

In a section entitled “advertising costs”, Apple simply states:
“Advertising costs are expensed as incurred and included in
selling, general and administrative (SG&A) expenses.”

Logic would dictate that Apple’s ad spend hit another record high
in 2016 and, because it was spending more on ad costs per sale,
the company decided it would look better not to make
this figure public.

However, Apple’s SG&A costs were down 1% year-on-year to
$14.1 billion. In 2015, that figure — of which staff salary will
make up a large proportion — had increased 19% year-on-year.

Apple says in the annual report (emphasis ours): “The decrease in
selling, general and administrative expense in 2016 compared to
2015 was due primarily to lower discretionary
expenditures and advertising costs, partially
offset by an increase in headcount and related expenses.”


applecosts
Apple

But that doesn’t quite tell the full story. While SG&A
expenses were down year-on-year on a dollar basis, S&GA
expenses as a percentage of overall sales were up one
percentage point to 7%.

Wells Fargo’s analysts also point out that Apple ended 2016
with its lowest operating margin since 2009, which could be in
part due to Apple seeing less leverage — or in other words,
spending more ad dollars to drive total revenue.

Companies are not required to split out their advertising spend
from their general SG&A expenses figure, and most don’t want
to share that kind of data with competitors. Nevertheless, it’s
unusual that Apple has suddenly stopped doing so.

Apple did not immediately return a request for comment.

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