Making Sense of the Recent Apple and FaceBook Results

February 11, 2016

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Allocating budgets and prioritizing projects are primary concerns for marketers and executives. We rely on industry conferences and chatter, what competitors are doing and what is working internally to help guide these decisions. Two of the biggest and most influential companies in technology - one being the biggest company globally, ever - released their quarterly reports providing a look into what is driving their results (good or bad). To follow along at home - Apple released their 2015 Q4 results here, and Facebook here.

Apple Results

Starting with Apple, to summarize in a sentence: Apple reported the largest quarterly profits ever reported by a public company. The biggest company in the world (by market cap) just delivered history’s most profitable quarter ever. Roughly 60% of Apple’s revenues come from outside of the US. Due to the relative strength of the dollar, revenues in non-US dollar denominated currencies are worth 15% less than they were 2 years ago - making the quarter even more impressive. What does all of this tell us about marketing, apps and where to allocate marketing (project and advertising) budgets? Because the majority of Apple’s revenues and profits are driven by iPhone device sales, their earnings report help us understand where growth is likely to come from, and where they see challenges. Apple-results-currencyIndex The story of 2015 and Q1 2016 was Apple's tremendous success in China. In fact, remove China from iPhone shipments and Apple was actually down year over year in device sales. For those following wearables and the new Apple TV, it is hard to determine sales given the way Apple reports, but the “Other Products” category grew 62% year over year. And….the market responded by selling Apple stock to the tune of a 6% drop by days end.. Tim Cook and Apple gave extremely cautious guidance in the earnings call, citing potential turbulent economics in China, and a slower adoption of the latest round of iPhones (the 6s). While this may be a case of nowhere to go but down after setting quarterly profit records, the larger challenges Apple faces to maintain growth are related to investments in the iPad as a business PC replacement. All said, there are now 1 billion consumers in the Apple ecosystem, where Apple continues to adopt the app model vs the open web. install-base-apple-results Consumers prefer mobile and apps to PCs, and now Apple’s focus will be on replicating the massive success in the business environment.

Facebook Results

If Apple provides insight to market saturation at the high end for mobile devices, the company with the 4 of the top 10-15 apps across both Android and iOS provides a broader view of the mobile space. Facebook - with its primary Facebook app, Messenger, Instagram and Whatsapp - are consistently among the top apps globally across platforms by installs and usage. Reporting a record quarter of $5.84 billion, 80% came from mobile ad revenue. Facebook showed more mobile ads, made more per ad and is forecasted to generate almost $10b in display ad revenues for 2016 in the US alone, or around 30% of total US display ad spend. facebook-results-mobile Facebook is now essentially a mobile-first company and provides clear guidance as to where marketers and executives should be focusing their efforts. A key takeaway should be a mobile app is not a side project like sponsoring an event or building a dedicated website for a campaign. To effectively reach consumers, a mobile app should be the hub of your digital presence and all marketing should be mobile-first marketing. The smartphone is the most personal computer yet (the name PC was already taken)... Setting all-time global corporate profits records like Apple, and essentially monetizing a social network and leading the way in reaching mobile users like Facebook are just some data points to make the case that 2016 is the year mobile should be the core of your marketing department’s focus.

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