Samsung is reported this week to be on course to spend around $14 billion on advertising during 2013. That’s led to questions about how effective the spend is compared with that of rival firms.
The figure comes from the Reuters news agency, though it doesn’t make clear if that is an actual number from Samsung itself, or an estimate based on the going rates for the various advertising slots Samsung has bought.
The $14 billion figure has naturally prompted a string of comparisons to try to put it into context. The Register notes it’s roughly the entire cost of hosting the last summer Olympic Games. Other have noted it’s larger than the $12.5 billion that Google spent to buy out Motorola’s cellphone business.
It’s the comparison to arch-rivals Apple that’s most likely to raise questions among shareholders however. Apple is estimated to spend around a billion dollars a year on advertising. Samsung’s annual revenue is nearly 60 percent higher than Apple’s, though that ratio is almost exactly reversed when you look at profits.
Reuters also notes that Samsung spends the biggest proportion of its revenues on advertising — 5.4 percent — among the 20 biggest companies in the world. That compares with a mere 0.6 percent for Apple.
Ad industry experts responding to the figures suggest there may be a case for Samsung spending so much, particularly as it doesn’t have such a strong and distinctive brand identity as Apple.
However, they question the effectiveness of the ads Samsung uses to fill the slots it buys. The most common criticism seems to be that the ads are good at creating an aspirational image for some of Samsung’s more high-end products, but poor at persuading people that they need to buy the product.
It’s also suggested that some of the products Samsung has concentrated on pushing, such as humongous televisions or the Google Gear “watch”, however well promoted, have too much of an inherently limited audience to make high-profile, mainstream advertising worthwhile.