In the Smartphone Race, Money Talks for Samsung - Wall Street Journal

By SPENCER E. ANTE and WILL CONNORS In the smartphone business, following the money leads right to Samsung Electronics Co. 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. "They understand how to build a strong product...and have been willing to invest to drive their success," said Michael Sievert, chief marketing officer of T-Mobile USA Inc., a unit of Deutsche Telekom . To be sure, Apple remains a powerful brand that benefits from its own advertising and ubiquitous references in popular culture. Apple's iPhone is America's most effective mobile phone brand, advertising analytics firm Ace Metrix said in January. But Samsung finished second in phones and was the top technology brand of 2012, said Ace. 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. Riding strong demand for its flagship Galaxy S3 and other less pricey devices, Samsung ended the year with a leading 30.3% share of the world-wide smartphone market, up from 19.0% at the end of 2011, according to research firm IDC. Meanwhile, despite strong sales, Apple's share of the smartphone market was essentially flat, as the company held on to the No. 2 spot with 19.1% share, up from 18.8% in 2011. 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. Patrick Remy, vice president of the devices team at France Telecom's Orange, said Samsung delivers good products that customers rarely return. The marketing budget, he said, is a big advantage, too. "It can be a challenge for the competition to match that level of investment," Mr. Remy said. While boosting its marketing outlays last year, Samsung also became more assertive with carriers. When it launched the Galaxy S 3 last year, Samsung insisted that all four national U.S. carriers use the same name. The single-name strategy wasn't an easy sell, as it broke with the long practice of using different names on each network. But carriers agreed, seeing the logic in promoting a consistent brand. The strategy helped Samsung to set itself apart from a slew of other phones using Google Inc.'s Android wireless operating software, including some that carried similar features. Fared Adib, senior vice president of product development at Sprint Nextel Corp., said Samsung's marketing muscle is more important now because carriers focus their marketing on service plans, prices or network quality, instead of products, as they did in the past. That leaves device makers to handle the job of promoting their own hardware. And nothing succeeds like success. Sprint recently carved out a section in its retail stores devoted to Galaxy-branded devices, Mr. Adib said, adding: "They made their brand stand out." Write to Spencer E. Ante at spencer.ante@wsj.com and Will Connors at william.connors@wsj.com via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFNnVkHLD8pe5z2CLRpYONiwJG-gQ&url=http://online.wsj.com/article/SB10001424127887324096404578356651577771618.html

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