The 1998 iMac and Why Advertising Needs More Attention

December 9th 2016

Advertising is a fascinating business. More so now than in any other period in history. Thanks to cookie and click tracking, advertising has become more science than art. Big Data has unearthed deep insights into the human psyche. I’d argue that the Head of Marketing at Nestle knows far more about irrational quirks in human behaviour than Daniel Kahneman.

Advertising though, doesn’t get the attention it deserves (oh the irony in that statement). It’s a second rate job, not something you’d note down as your first choice after college. Advertising agencies, as David Ogilvy often said, don’t attract talented people. Even the ones that are attracted get jaded, cynical and frustrated with the shit clients throw their way. (though it makes for good entertainment)

Senior management at large corporations are to blame. Advertising is always an afterthought, pegged as a percentage of top line revenue. CEOs care so little about advertising that they outsource it to agencies. I struggle to understand why you’d let someone else control the image of your own company.

Take a straw poll amongst senior corporate managers. Ask how many of them have read any books on advertising or consumer psychology. And yet these are the same people who hire advertising agencies, and have final say over multi-million dollar campaigns.

One of the greatest CEOs of the past century, Steve Jobs, was an advertising man at heart. Some of his closest friends were creative directors, journalists, artists and musicians. Hardly the geeky list you’d expect from the head of the world’s largest technology company.

I don’t think we’ll ever see a turnaround as remarkable as what Steve Jobs accomplished at Apple. What started it though was great advertising for a fresh consumer product – the iMac. It’s colourful translucent shell, coupled with a fun and original advertising campaign, kick-started the ultimate corporate comeback. [1]

I had a front row seat to this revival. Back in 1998, my father owned an IT retail store along Singapore’s main shopping district, Orchard Road. I’d spend every weekend at his store, getting a chance to play with very expensive computers. While most kids headed to Toys R’ Us to play with the latest RC cars, I had a chance to play with big boy toys worth thousands of dollars. I loved every minute of it.

As an authorised apple retailer, my dad had a chance to be one of the first stores in Singapore to sell the new iMac. In order to get our hands on it, Apple required us to purchase 50 units upfront. That was a massive number. Back in 1998, Apple wasn’t a popular choice. We’d never sold more than 50 apple desktops in calendar year. And now apple wanted us to order 50 iMacs upfront? It was a big risk. Dad however saw the potential. He took a gamble and made the order.

Desperate to clear stock, we placed one of those bondi blue iMacs really prominently in the display cabinet facing the main street. Then, the magic began. Every couple of minutes, someone would stop to gawk at this new machine. It was unlike anything they’d seen before. My dad and I would often let them oogle at it a for a few minutes before approaching them: “That’s the new iMac. We’ve got a couple wired up inside. Would you like to try it out?”

They tried it. They loved it. They bought it. Loads of it.

We sold all 50 iMacs in 30 days. It was our best-selling computer – and the most profitable product we ever had in the history of the store. I asked my dad what he remembered from the launch. Here’s what he said:

The marketing was fantastic by Apple, it made our selling easier. No other computer had a colour chassis. That attracted many buyers.

The ease of use of the Mac OS was what got customers to switch. Fast boot up, no virus problems. But I think it was the cool factor more than the functionality that mattered to them.

What’s funny is that at no point did my dad talk about the what the iMac was designed to do – get you on the internet. The consumer didn’t care. The computer was blue-tiful! [2]

As dad rightfully pointed out, the advertising behind the new iMac was unparalleled. It was fresh. Exciting. “Think different” they said.

 

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Apple’s 1998 iMac was a “ok” product but not great. Many geeks baulked at the iMac’s poor specs compared to it’s price. Over the years though, as Apple’s health improved, they launched better and better versions which genuinely rose to become best in class. What’s interesting was how the iMac was able to overcome these initial deficiencies with a stellar marketing campaign (and landmark industrial design). It woke the tech industry up to the power of great advertising.

Many tried unsuccessfully to mirror Apple’s iMac advertising success. The campaign was a high water mark until 2001, when Apple trumped itself and launched the iPod.

What was great about the iPod was that from the get go, it was a best in class product. When paired with the viral advertising campaign, the 1 – 2 punch was unbeatable.

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What I love about this ad was that it didn’t even have the apple logo in it. The product was so iconic, you knew it was an iPod. What’s genius was that the ad men recognised this unique “iPod white” and drove it hard in their ads. White earphones become synonymous with the iPod. If you saw someone in the train wearing a pair of white earphones, you knew knew it was connected to an iPod – even if the device might have been hidden in a bag or pocket. You knew it was there. Every owner became a walking billboard for the iPod.

I’ve seen many mediocre products succeed with great advertising. I’ve seen many great products fail because they had poor advertising. But I’ve not seen a single product that sold itself – no matter how great that product was.

Many incubators tell founders to focus on the product. Find the product market fit. Funnily enough, we’ve found you can actually use advertising to drive that product market fit. 

With AWS and open source frameworks, it’s easier than ever to start an internet business. More and more competitors are fighting for the same customer segment.In fact, when pitching to VCs these days, they’re more interested to know how you’re going to acquire users as opposed to how you’re going to build the product. Technological moats are getting thinner by the day. It’s a war of customer acquisition, which makes VC funding even more necessary. Just look at the Uber vs Everyone Else war.

Great business leaders come with many character traits. There are many skills necessary for success. But it’s telling that the greatest CEO of the past 30 years, was great at advertising and possessed a deft understanding of consumer psychology.

 

Further Reading

Peter Thiel: If You Build It, Will They Come?

Paul Graham: The Refragmentation

Sam Altman: The Startup Playbook

 

Notes:

[1] The iMac was the turning point for Apple. 800’000 units sold worldwide in the first 140 days of launch (aided in no small part by Dad’s great salesmanship in Singapore). It got Apple profitable for the first time in 3 years. It’s first successful milestone under Steve 2.0

[2] Many technology historians might argue about how the iMac was a best seller because of it’s brave technological bets – USB ports, no floppy drive, built in modem. My dad, who sold hundreds of iMacs, disagrees. It was never a key selling point. The MacOS and great looks were what made the difference.

[2] It features 233 MHz PowerPC G3 processor, 512 kB backside cache, 32 MB RAM, 4 GB EIDE hard disk, ATI Rage IIc with 2 MB SGRAM video, 15-inch built-in monitor, 66 MHz PCI system bus, 10/100 BaseT Ethernet, IrDA infrared port, 33.6 kbps modem, two USB ports, 24X CD-ROM drive, and Bondi Blue case. Price was US$1299.