A quick review of the 10-K reveals that AMR spent a total of $144 million last year on advertising, less than in 2004.
Despite complaints from some posters, the ad budget continues its downward trend.
Compare that to Southwest, where the ad budget appears to assume that money grows on trees:
The disparity between the ad spending of AMR and WN is even greater when you consider that AMR's total 2005 revenue was $20.712 billion and that WN's total 2005 revenue was a mere $7.584 billion. WN's ad spending continues to be about triple AA's ad spending, when measured as a percentage of revenue.
Advertising professionals obviously believe that ad spending works. And lots of highly profitable companies spend huge money on ads, like Coca-Cola, Budweiser, and Pepsi. Of course, lots of examples of huge money-losing companies that spend lots on ads, like General Motors.
Would increased ad spending by AMR on effective, sensible ads (NOT the crappy "we know why you fly" ad campaign) be worthwhile? Or is it wasted money? Would AMR's revenue continue to grow if it canceled all ad spending?
Advertising Costs The Company expenses the costs of advertising as incurred. Advertising expense was $144 million, $146 million and $150 million for the years ended December 31, 2005, 2004 and 2003, respectively.
Despite complaints from some posters, the ad budget continues its downward trend.
Compare that to Southwest, where the ad budget appears to assume that money grows on trees:
Advertising. The Company expenses the costs of advertising as incurred. Advertising expense for the years ended December 31, 2005, 2004, and 2003 was $173 million, $158 million, and $155 million, respectively.
The disparity between the ad spending of AMR and WN is even greater when you consider that AMR's total 2005 revenue was $20.712 billion and that WN's total 2005 revenue was a mere $7.584 billion. WN's ad spending continues to be about triple AA's ad spending, when measured as a percentage of revenue.
Advertising professionals obviously believe that ad spending works. And lots of highly profitable companies spend huge money on ads, like Coca-Cola, Budweiser, and Pepsi. Of course, lots of examples of huge money-losing companies that spend lots on ads, like General Motors.
Would increased ad spending by AMR on effective, sensible ads (NOT the crappy "we know why you fly" ad campaign) be worthwhile? Or is it wasted money? Would AMR's revenue continue to grow if it canceled all ad spending?