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Tech’s Advertising Efficiency Gap

If there’s one industry outside of tech that should be happy about Apple’s release of its smartwatch, it’s Madison Avenue. That’s because the new product launch will force Apple to spend a little more money on marketing.

As the accompanying chart shows, Apple spent just 0.67 percent of its revenues on advertising in its fiscal 2014 year, the lowest proportion of any major consumer-focused tech company. At the other end of the spectrum, advertising expense accounted for 31 percent of revenue at  IAC, owner of Match.com, Tinder and search engines like Ask.com.

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Read comments from top tech and industry leaders
Joe Lonsdale
Joe Lonsdale
Founding Partner, Eight
Chamath Palihapitiya
Chamath Palihapitiya
Founder & Managing Partner, SocialCapital
Tina Sharkey
Tina Sharkey
CEO, Brandless
Jonah Peretti
Jonah Peretti
CEO, Buzzfeed
Adam D'Angelo
Adam D'Angelo
CEO, Quora
Brit Morin
Brit Morin
Founder & CEO, Brit + CO
Dustin Moskovitz
Dustin Moskovitz
Co-Founder, Asana
Christina Miller
Christina Miller
President & General Manager, Turner
Max Levchin
Max Levchin
CEO, Affirm
Adam Mosseri
Adam Mosseri
Director of Product, Facebook
Alex Mather
Alex Mather
The Athletic
Martha Josephson
Martha Josephson
Partner, Egon Zehnder
James Murdoch
James Murdoch
Co-Chief Operating Officer, 21st Century Fox
Andrew Kortina
Andrew Kortina
Founder, Venmo
Ben Chestnut
Ben Chestnut
Co-Founder & CEO, Mailchimp
Ruchi Sanghvi
Ruchi Sanghvi
VP Operations, Dropbox
The enormous disparity between how much each spends on advertising, most notably between Apple and IAC, highlights the scale efficiencies available to bigger companies–particularly those with a single brand and a relatively narrow range of products.