Ikea and the Underpinnings of Clever Advertising

Ikea is a bit of an enigma to Americans. We love the Swedish giant’s cleverly designed products, but after getting lost in the store, or struggling to put together the most basic of desks, we question that love.

(1)

What if I told you that Ikea was actually a charity, a nonprofit? Would that change your opinion of the company? Do their incredible prices now make sense?

Ikea is actually owned by Ingka Holding, which is in turn owned by Stichting Ingka Foundation, a nonprofit. The Stichting Foundation, as of 2005, had an estimated worth of about $35 billion. In comparison, the Bill and Melinda Gates Foundation, circa 2014, is estimated to be worth around $40 billion. What this means for Ikea is that they pay around 3% in corporate taxes, compared to the customary 18% (or higher) that other companies in their space pay.

Ikea doesn’t really advertise that much. The majority of their sales come from word of mouth, or the fact that you can probably see their megastores from space. They cleared 27.9 billion euros globally last year, and aim to have 50 billion in global sales in 2020. This was without a huge marketing campaign, TV ads (at least in America), or any other big “push.” Where Ikea excels in advertising is their use of quirky ideas and using social media to share unique videos.

Ikea has participated in a fair amount of unique physical ads, ranging from a billboard that is actually a climbing wall, to sending around 200 million copies of its catalogues each year to consumers. Where Ikea excels is their videos, and have even landed a coveted Buzzfeed best of. Spike Jonze directed one in 2002, and can be seen below:

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Ikea’s social media channels are the other main way the retailer reaches out to consumers. They’ve had almost five million Facebook likes, close to 300 thousand people follow them on Twitter, around 80 thousand people follow them on Instagram, and about 150 thousand people follow them on Pinterest. This is a lot of people. Their Instagram is the highlight of these mediums, with Ikea cleverly showing before and after pictures of rooms they have remodeled with Ikea products.

Efforts like these vault the vaunted “social media” barrier and nail something that most companies only dream of: they make things look real. Obviously, every person who buys something from Ikea won’t turn their space into a masterpiece of design, but Ikea is okay with that. Their fun-loving videos, clever posts, and unique use of marketing efforts set them apart (oh, and the fact that they save millions by being a charity).

References:

1. Daniel Hubbard. 2013, November 11. Alfonso Cuaron’s Ikea – Official Trailer. Retrieved from https://www.youtube.com/watch?v=aiBt44rrslw

2. Firat Yildaz. 2005, September 14. Ikea lamp. Retrieved from http://www.youtube.com/watch?v=I07xDdFMdgw

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3 thoughts on “Ikea and the Underpinnings of Clever Advertising

  1. This was a fascinating article! I never knew that a majority of IKEA’s sales rely on word of mouth! That’s amazing to learn that a highly successful company is relying on that type of advertising. I also believe that many people trust the brand because of how the style is reliable, stylish and well priced. I know personally that a majority of my friends and family have bought items for their home from IKEA and were highly satisfied and turned into returning, lifelong customers. Excellent article!

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  2. I definitely love Ikea but the one in Chicago is too far. Their products are beautiful, modern and simple not to mention the decent price. I love the Swiss meatballs too! But, me and my friends call them Ikea meatballs because in my country you can only get it from Ikea and sometimes we go to Ikea for lunch and it’s always full. I know it’s weird to go to a furniture store to have lunch but this is another reason how they bring in income. People can stay in Ikea the whole day because it feels like home, spacious and they have food. Very smart. Not sure if you know about the “book book” commercial from Ikea, but it’s brilliant!

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  3. Fascinating to read! I can remember being little and first hearing about Ikea from friends and my family…but that’s exactly it. I didn’t see advertisements for it anywhere, people just told me about it. Great how a company has managed to master the coveted art of word of mouth marketing.

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