Apple’s latest secret: Its advertising budget

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people are switching from Android to iPhone than before.
Yet another secret cost.
Photo: Ste Smith/Cult of Mac

Whether it’s its new heartwarming Christmas ad or its giant iPhone 7 billboards, Apple frequently leads the way on both quality and quantity for its advertising.

But according to Apple’s most recent 10-K annual report, recently filed with the SEC, it’s no longer revealing what it spends to get to this point.

Instead, under the section of the report titled “advertising costs,” Apple notes that such costs, “are expensed as incurred and included in selling, general and administrative (SG&A) expenses.”

Last year, Apple’s ad spend increased by 50 percent to a $1.8 billion. According to an analyst at Wells Fargo, the reason Apple may now be clamming up about advertising spend could be because Apple is spending more advertising dollars per sale, which could be a boon to critics if news got out.

Interestingly, while it would make sense for Apple advertising costs to be even higher this year (or at least the same), SG&A — Selling, General and Administrative Expenses — were actually down by 1 percent in 2016. Apple notes that:

“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.”

While that may be true, however, Wells Fargo also points out that S&GA expenses as an overall percentage of Apple sales is actually up this year to 7 percent.

With Apple ending 2016 with its lowest margins since 2009, it’s quite possibly that Apple is spending more cash to persuade customers to part with their hard-earned money.

Source: Business Insider