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

Wed Nov 27, 2013 3:58pm EST
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By Miyoung Kim

SEOUL Nov 28 (Reuters) - Samsung Electronics Co is expected to spend around $14 billion - more than Iceland's GDP - on advertising and marketing this year, but it doesn't 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.

And Samsung, which has a market value of $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's spending doesn't always bring the desired result.

Last month, a Samsung-sponsored short-film contest finale at the Sydney Opera House 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 popular 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 jewelery 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, and General Motors 3.5 percent.

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