The high cost of selling a Galaxy of Apples on Facebook
The question of the cost of funding the Smartphone wars is a question worthy of consideration.
So let's scrape some data. From disparate sources. Shake n' bake it. And discover some hidden truths.
To being with a collection of sources.
Make of them what you will.
Shake n' bake 'em and you discover Apple's return on investment on its US spend looks something like this:
|Spend per unit||$ 5.62||$ 5.24||$ 7.04|
Which is to say in 2012 Apple achieved a return of $105 for every dollar spent on advertising in the USA
(if you discount the fact everything but iPhones and iPads have been taken out of the equation thereby skewing the unit numbers higher and the revenues lower).
Samsung's story takes a little bit more effort to extract. Unit sales can be scraped and estimated but revenues are difficult to establish.
|Spend per unit||$0.45||$1.49||$ 7.57|
The first thing you'll notice is Samsung spent significantly less per unit than Apple up until 2012.
In 2010 and 2011 Apple spent 5x more on advertising in US Market than Samsung. While in 2012 Samsung spent just 20% more.
More over the much publicised 2012 increase in expenditure by Samsung appears to
We do have a defacto benchmark number for Samsung. It's approximately 48x.
This is the ROI on Advertising Spend Samsung Electronics achieved in 2012 across all products.
So every $1 spent by Samsung on advertising delivered $48 in sales revenue.
The source of the data is Samsung's Annual Reports.
So, on a comparative basis, it appears that Apple's US advertising spend is twice as efficient as Samsung's global average across all divisions. Granularity after this point proves difficult to quantify.
But, having established a benchmark, let's not stop there.
You see, on my travels in hyper reality, I discovered a Samsung Facebook Social Media Campaign Case Study.
So let's find out just how well advertising on Facebook stacks up against the Samsung average.
The case study proudly reveals 13x ROI and $129 Million in product sales on a $10 Million spend.
So for every $1 spent the Facebook advertising campaign delivered just $13 in sales revenue.
So that makes this flagship Facebook campaign 3.7x less effective than the average Samsung Advertising Campaign. Which perhaps explains why a campaign that generated only 0.06% of global revenues represented only 0.24% of Samsung's global advertising spend in 2012.
Compare the ROI with the Apple benchmark for 2012 (i.e. 105x) and you'll discover it was 8x less effective than the average Apple advertising campaign.
Which is perhaps why Apple continues to be the least social of all the hyper-connected brands.
And this in the end is why I enjoy the deconstruction of the narrative by the numbers.
It provides a deeper insight in the fundamental challenge facing not just Samsung or Apple but, somewhat surprisingly, Facebook.
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