Samsung Outspends Apple In Smartphone Advertising Dollars
With the marked shift in "coolness" surrounding smartphones away from Apple and toward Samsung (one of the primary reasons why AAPL is trading at or near its 52 week low and at the price target set for it by Jeffrey Gundlach back when the Smart Money crowd was advising their soon to be broke viewers to sell AAPL puts day after day), many wonder if this is merely a drop in innovation by Apple under it new, less visionary and far more Wall Street-friendly CEO, or is it something else? A possible answer is that is may be something as trivial as marketing. As the WSJ reports, in 2012 Samsung for the first time outspent AAPL in advertising dollars, handing out $401 million to raise brand awareness compared to Apple's $333 million.
From the WSJ:
Outspent by rival Apple Inc. more than three to one in advertising for mobile phones in the U.S. in 2011, Samsung responded with a marketing blitz on TV, billboards, the Internet and print media that moved the Korean company into the pole position last year.
In 2012, Samsung spent $401 million advertising its phones in the U.S. to Apple's $333 million, according to ad research and consulting firm Kantar Media. The onslaught—including ads that poked fun at Apple while dubbing Samsung devices "The Next Big Thing"—has helped Samsung open a huge lead in the global smartphone race.
The willingness to spend heavily could prove even more important as the technology gap between rivals narrows.
Samsung's aggressive approach has carried over into this year, with Super Bowl ads and a big presence at the Mobile World Congress wireless industry conference in Barcelona., where Samsung built a large booth with a coffee bar and private office suites for meetings.
The company will roll out its new Galaxy phone Thursday night, with a big splash at Radio City Music Hall in Manhattan.
The heavy ad spending is only the most visible of Samsung's investments. Some wireless carrier executives said the South Korean company also spends more on "below the line" marketing than any device maker. Those funds help pay for in-store advertising, promotions and training for carrier sales representatives that help close the sale.
And while Apple's cash hoard would certainly allow it to far outspend Samsung if it so desired, one wonders what the incremental returns on such outflows would be: it is not as if anyone in the entire world, or at least in those parts of the world that can afford the student loans to load up on the latest generation of self-cannibalizing AAPL products, is not familiar with the famous fruit symbol and the Cupertino company's product line up. Alas, for AAPL's shareholders, especially those who bought near the top, this question may not be relevant - for them the company must do something to shake things up or continue being relegated to the "has been" coolness sector, which will impact future growth and revenues, absent of course some revolutionary product, which is what made AAPL the consumer juggernaut in the first place.
So while we wait to see how Apple responds, we look forward to another pseudo-activist investor owning 0.1% of the stock to come up with a 300 page slideshow demanding, now that the special dividend idea has been repeatedly struck down by management, that the company spend billions on a new, aggressive marketing campaign. Because when all else fails, one must clutch at 30 second primetime TV slot straws.