Apple "McCains" Microsoft in New Ad

Ad spending has become the Bill Ayers of the Mac verses PC rivalry.

The latest commercial in Apple's "Get a Mac" campaign attacks Microsoft for spending too much money on advertising Windows and not enough on fixing what Apple says are Vista's problems.

But just like the overblown presidential campaign accusations about former Weatherman leader Ayers, it's important to read the fine print. So here are a few facts.

The "Bean Counter" ad -- made by TBWA\Media Arts Lab, Los Angeles, and debuted on Sunday night -- opens with the stodgy PC character dividing up a stack of cash. One pile is huge and devoted to advertising. The other, very small stack is meant to "fix Vista," a Microsoft operating system.

"Do you really think that amount of money is going to help fix Vista?" says the younger and cooler Mac character.

"I guess you're right," PC says. "I'll just put it all in advertising."

Great gag. It is meant to undercut the major campaign that Microsoft launched just last month with its agency, Crispin Porter + Bogusky, to counter Apple's campaign, which sought to cast PC users as dullards willing to settle for second best.

The Microsoft ads attracted a ton of attention by pairing comedian Jerry Seinfeld with Microsoft Chairman Bill Gates in a few teaser ads.

Startlingly, two weeks into the campaign, the Microsoft ads drastically changed; Seinfeld disappeared. This drew yet more media attention.

Were those Microsoft ads effective enough to parry some of Apple's attack? Or is Apply using a little advertising jiu-jitsu to use Microsoft's advantage -- the size of its ad budget -- as a weapon against it? One clue is whether Microsoft really does spend too much on advertising. Another is how its budget compares to Apple's.

Let's see. According to Microsoft's most recent annual Securities and Exchange Commission filing, Microsoft spent $1.2 billion on advertising in fiscal year 2008. That's 1.986 percent of its annual revenue of $60.4 billion.

Now let's check in on Apple. In its most recent annual filing, the company spent $467 million on advertising during fiscal 2007. And that's ... wait for it ... 1.945 percent of it's annual sales of $24 billion. Pretty close!

Okay, so what about research and development costs? In fiscal 2008, Microsoft spent $8.2 billion, or 14 percent of its revenue. Apple, meanwhile, spent $782 million, or just 3 percent of its net sales.

It looks like Apple is pulling a fast one. Apple spends just as much of its revenue on advertising as Microsoft does, but it spends a significantly smaller portion of its sales on R&D. Gotcha!

by Willow Duttge

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