Samsung’s marketing splurge doesn’t always bring bang-for-buck

Samsung Electronics Co is predicted to spend around $14 billion – more than Iceland’s GDP – on merchandising and advertising, and marketing this yr; nevertheless, it would not all the time get worth for cash.

The outlay buys the South Korean know-how massive publicity in TV and cinema commercials, on billboards, and at sports activities and arts events from the Sydney Opera home to big apple’s Radio city song corridor. Google Inc spent much less on shopping for Motorola’s handset industry. And Samsung, which has a market value of $227 billion, has made no secret of maintaining its aggressive advertising and marketing and promoting splurge because it seeks to make its brand as inspirational as Apple Inc’s. However, the cash it is spending does not all the time carry the desired consequence.

Giant bucks

final month, a Samsung-subsidized quick-film contest finale on the Sydney Opera home acquired negative reviews for blatant product placement in a series of ‘in the back of the scenes’ videos. In Britain, viewers panned a product placement take care of ITV’s in style X-issue skill conveys. “Is this a singing competition or a long Samsung advert?” asked Twitter consumer Ryan Browne.

Before this year, Samsung’s big apple launch of its latest prime-of-the-vary Galaxy smartphone got here under hearth for being sexist, portraying laughing ladies chatting about jeweler and nail polish. In contrast, the boys discussed the new telephone, and the corporate new fridge and washing machine launch in South Africa drew identical complaints as it featured swim-swimsuit dancers.

““Samsung’s advertising and marketing is an excessive amount of interested by projecting an image they aspire to be progressive and in advance of the %,” stated Oh Jung-such, associate professor on the industry faculty of Seoul national college. “They’re failing to effectively bridge the gap between the aspiration and how shoppers, in fact, respond to the campaign. It is obtained to be more aligned.” Samsung spends an even bigger chunk of its annual income on merchandising and merchandising than another of the world’s high-20 firms by way of gross sales – 5. four %, in line with Thomson Reuters ’ data. Apple spends simply zero.6 % and general Motors 3.5 percent.

“When your model doesn’t have a transparent identification, as is the case with Samsung, to maintain spending is most definitely one of the best techniques,” said Moon Job-hunt, head of the name guide Interbrain’s Korean operation. “But maintaining advertising spend at that stage, in the long run, wouldn’t deliver rather more benefit. No one can beat Samsung with regards to (ad) presence, and that I doubt whether or not protecting investing at this degree is effective.”

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In a commentary to Reuters, Samsung mentioned it would “proceed to leverage our model power to maintain growth momentum while focusing on optimizing the efficiency of our advertising actions,” reiterating up-to-date comments by using its co-CEO. “Our product innovation and advertising and marketing strategy have made Samsung the world’s most well-liked smartphone model,” Joke. Shin, who additionally heads the staff’s cell trade, informed buyers just lately. “Now we are going to transfer from probably the most preferred model to turn into one of the world’s major inspirational brands.”

Samsung’s ‘subsequent giant thing,’ and ‘it’s time to change’ marketing campaigns stress that its products are cutting-area, and even trumpet its expertise ‘world firsts’ before they’re prepared for top time, comparable to curved smartphones, available only in South Korea, and curved TVs that value nearly $10,000. For a company lengthy viewed as a follower, that is now a major promotion of being an innovator.

However, while Samsung has change into the arena’s biggest advertiser, spending $4.3 billion on advertisements in my own final 12 months, its global brand price of $39.6 billion is not up to half of that of Apple, which spent best $1 billion on promotion, in step with Interbred and advert researcher ad Age. to make certain, Samsung has a more numerous vary of cellular products, which together with its chips and household appliance businesses need extra advertising across completely different target audiences. But the heavy advertising and marketing spend suggest a need to convince customers that it belongs on the top. Apple can manage to pay to spend much less as it already has that brand reputation and cachet.

“The better, extra differentiated the product, the much less it must be propped up with the aid of advertising,” stated Horace Eddie, founder of impartial research agency Asimov and a former Nokia industry building supervisor, referring to Apple’s ad spend. Defending its advertising price range, Samsung can point to its lead within the global smartphone market – it sells one in every three smartphones and has more than double Apple’s market share. The Korean team’s savvy adverts mocking Apple devotees and heavy funding in distribution channels have reinforced its Galaxy cell model.

“The Galaxy model has centered itself, and the Samsung brand is now much enhanced than Android or any of the opposite OEM brands, excluding Apple,” said Benedict Evans, impartial know-how and media consultant in London. “The underlying problem is that Samsung has based itself as an unswerving high-quality model, no longer a differentiated or top rate high-quality product, so it does absolute best where it’s not competing immediately with Apple.” Samsung works with quite a few promotion agencies, together with Publicist Grouped, Interpublic staff, and MDC companions.

Samsung’s latest advertising splash has been on its Galaxy tools smartwatch, nearly universally panned by using reviewers. The software has been aggressively marketed through adverts and collaboration with style displays – but only 800,000 Gears had been shipped, given that its launch was only two months in the past. Evaluate that to the greater than 5 million words; three smartphones were shipped because of its late-September launch. It suggests fewer than a fifth of the be aware patrons are additionally buying the accessory tool.

A deep-pocketed Samsung – it earned operating revenue of $9.6 billion within the third quarter on my own – is still pushing the envelope to win over shoppers. Undeterred, Samsung has vowed extra equipment promotions for the compelling yr-finish holiday season because it seeks to steer the wearable laptop market and show its innovation credentials. “Most definitely Samsung knows higher than any person that tools won’t develop into a mainstream product. Nonetheless, they’re trying to bring the message that ‘we are first with such technology,’ which they hope will help construct their brand as a complicated know-how agency,” stated Interbrain’s Moon.

This month, the large-spending reputable sponsor of the earlier eight winter and summer season Olympics launched a fable-inspired soccer advertising campaign beforehand of the mid-2014 World Cup in Brazil – picking 11 of the world’s top gamers, together with Argentine striker Lionel Messy, for a digital suit to save lots of Earth from aliens – with the assist of Galaxy devices.