Fri, Nov 29, 2013 - Page 15 News List

Samsung ads not always bang for buck

Reuter, SEOUL

A passenger using a smartphone walks past an ad promoting Samsung Electronics Co’s Galaxy Note 3 at a railway station in Seoul on Monday.

Photo: Reuters

Samsung Electronics Co is expected to spend about US$14 billion — more than Iceland’s GDP – on advertising and marketing this year, but it does not always get value for money.

The outlay buys the South Korean technology giant publicity in TV and cinema ads, on billboards and at sports and arts events from the Sydney Opera House to New York’s Radio City Music Hall. Google Inc spent less on buying Motorola’s handset business.

Samsung, which has a market value of US$227 billion, has made no secret of keeping up its aggressive marketing and promotion splurge as it seeks to make its brand as aspirational as Apple Inc’s, but the money it is spending does not always bring the desired result.

A Samsung-sponsored short-film contest finale at the Sydney Opera House last month received poor reviews for blatant product placement in a series of “behind the scenes” videos. In Britain, viewers panned a product placement deal with ITV’s X-Factor talent show.

“Is this a singing competition or an extended Samsung advert?” asked Twitter user Ryan Browne.

Earlier this year, Samsung’s New York launch of its latest top-of-the-range Galaxy smartphone came under fire for being sexist, portraying giggling women chatting about jewelry and nail polish while the men discussed the new phone, and the company’s new fridge and washing machine launch in South Africa drew similar complaints as it featured swim-suit dancers.

“Samsung’s marketing is too much focused on projecting an image they aspire to — being innovative and ahead of the pack,” said Oh Jung-suk, associate professor at the business school of Seoul National University. “They are failing to efficiently bridge the gap between the aspiration and how consumers actually respond to the campaign. It’s got to be more aligned.”

Samsung spends a bigger chunk of its annual revenue on advertising and promotion than any other of the world’s top 20 companies by sales — 5.4 percent, according to Thomson Reuters data. Apple spends just 0.6 percent.

“When your brand doesn’t have a clear identity, as is the case with Samsung, to keep spending is probably the best strategy, but maintaining marketing spend at that level in the longer term wouldn’t bring much more benefit,” said Moon Ji-hun, head of brand consultant Interbrand’s South Korean operations. “No one can beat Samsung in terms of [ad] presence and I doubt whether keeping investing at this level is effective.”

While Samsung has become the world’s biggest advertiser, spending US$4.3 billion on ads alone last year, its global brand value of US$39.6 billion is less than half that of Apple, which spent only US$1 billion on advertising, according to Interbrand and ad researcher Ad Age.

Samsung has a more diverse range of products that need more marketing across different target audiences, but the heavy marketing spend suggests a need to convince consumers that it belongs at the top. Apple can afford to spend less as it already has that brand recognition and cachet.

“The stronger, more differentiated the product, the less it needs to be propped up by advertising,” said Horace Dediu, founder of independent research firm Asymco.

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