Spending Billions on Advertising, Samsung “Sacrifices the Small to Catch the Big”

From spending US$4.3 billion in 2012, Samsung dramatically increased its advertising and marketing budget to US$14 billion in 2013—more than the GDP of Iceland. By more than tripling its spending, Samsung achieved notable success, entering the Top 20 companies with the world’s highest revenues and ranking 8th in Interbrand’s global brand rankings.

According to figures released by Thomson Reuters, Samsung allocated 5.4% of its revenue to advertising and sales activities. By comparison, its rival Apple spent only 0.6%, while the renowned automobile manufacturer General Motors allocated just 3.5% of its revenue to advertising. This deliberate generosity brought Samsung considerable success, including securing a place among the world’s top 20 highest-revenue companies.

Large investments in advertising, film, sports, and the arts have helped Samsung become not only a manufacturer of consumer electronics but also a brand recognized for innovation, ambition, and consumer appeal. Samsung currently works with several major advertising agencies, including Publicis Groupe, Interpublic Group, and MDC Partners, to strengthen its brand promotion efforts.

However, not every dollar Samsung spends on advertising and marketing generates positive returns. Some advertising campaigns have faced criticism from audiences. A notable example was the X Factor television series, which was extremely popular in the United Kingdom. A scene in which contestant Jahmene Douglas called his mentor Nicole in Los Angeles using a Samsung smartphone was considered overly obvious product placement. Viewers found it distracting because the camera focused too heavily on the phone rather than on the two main characters.

A similar issue appeared in The Shoot, a short film sponsored by the Sydney Opera House. Behind-the-scenes videos were filled with disguised product placements promoting Samsung devices, leaving many viewers dissatisfied. Even direct advertising campaigns, such as the Galaxy S4 commercial in New York, faced criticism for containing images perceived as gender stereotyping.

These incidents resulted in considerable criticism from consumers.

Professor Oh Jung-suk of Seoul National University commented:

“Samsung’s marketing campaigns place too much emphasis on the image the company wants to build—innovation and convenience. However, they have not effectively connected that image with customers’ emotional responses when watching the advertisements. Samsung needs to strengthen this interaction.”

The responsibility may lie with the filmmakers or with Samsung itself. Nevertheless, if Samsung had paid closer attention to these shortcomings, such advertising campaigns might not have produced negative reactions, and its marketing budget would not have been, as the saying goes, “thrown out the window.” As the old saying goes, too much of anything is never good.

Samsung’s advertising campaign for the Galaxy Gear smartwatch also failed to meet expectations. Many technology experts described it as “a wrong move.” Despite extensive promotional efforts through advertising campaigns and fashion events, only 800,000 Galaxy Gear devices were shipped during the first two months after launch.

Compared with the 5 million Galaxy Note 3 units sold within a single month, this figure was relatively modest. Nevertheless, Samsung announced that it would continue investing in additional promotional programs for Galaxy Gear during the year-end holiday season to stimulate demand.

During the same period, Samsung—an official sponsor of eight Winter and Summer Olympic Games—also launched its promotional campaign ahead of the 2014 FIFA World Cup, selecting 11 of the world’s top football players, including Argentine superstar Lionel Messi, to promote its Galaxy product lineup.

According to the Interbrand brand valuation published by Ad Age magazine in September 2013, despite spending ten times more on advertising than Apple, Samsung’s brand value reached only US$39.6 billion, considerably lower than Apple’s US$98.3 billion, Google’s US$93.3 billion, and Coca-Cola’s US$79.2 billion.

However, for a company that had only recently emerged as a major force in the mobile device industry, Samsung’s 8th place in Interbrand’s global brand ranking was by no means an insignificant achievement.

If Samsung continues to maintain its current momentum and remains committed to investing heavily in brand awareness advertising, there is every reason to believe that it can continue climbing the rankings and gradually narrow the gap with the world’s other technology giants.