I’m listening to ”perennial seller” by Ryan Holiday and early on he takes aim at this truism that’s been going around. spend 1/5th of your time creating and 4/5ths promoting. He said it sounds good but really if your products not up to snuff then you’re trying to generate interest in something which doesn’t matter. (Being cynical it could well be that the type of business advisor who passes on this advice knows that their audiences products aren’t that good).
Anyway I was curious what the biggest companies ad spend to research budget was and if this might inform a better principle/ demonstrate that the 4/5th marketing idea was wrong. So what better place to start than Apple.
Apple ad Spend to RnD
Apple’s ad spend is now not widely revealed and bundled in with its administrative costs. That’s because it’s under 10% of its expenses and so it isn’t necessary to disclose. The last available figure is from 2015 when it was $1.8 billion. Pretty high, but how did RnD compare in 2015? In fact, in 2015 RnD budget rose by $1.5 billion to aproximaately $5.9 billion. And in 2017 there was a $10 billion RnD spend target. So it’s possible that Apple spends closer to ten times as much on developing products than marketing them. Even a conservative estimate would argue they spend a reverse 4/5ths on creating and 1/5th on marketing,
How about General Motors? Not a one of these modern tech companies but still a form of technology. Well the statistics for 2017 show they spend $3.24 billion on advertising but $7.3 billion on Research and development. That’s just over twice as much on research than marketing. Again not the four fifths dynamic that was advised.
Amazon spent $16 billion on research and development last year and $7 Billion on advertising in 2016. Seeing as amazon also sells products and has a movie streaming service, we could also include the $4.5 billion it spent on acquiring film rights as part of the cost of product vs marketing but regardless, Amazon also spends more on “creating” than marketing.
Conclusion, spend more time creating than marketing
The conclusion from these companies is clear, you should spend more time creating than marketing. It’s much easier to market good products than bad ones.