Samsung share price: $14 billion marketing budget in 2014

on Nov 29, 2013
Updated: Oct 21, 2019
Listen Friday, November 29: Samsung Electronics (KRX:005930) is planning to spend around $14 billion (₤8.6 billion) – $4 billion (₤2.4 billion) more than the GDP of Iceland – on marketing and advertising in 2014.

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The massive budget allows the South Korean tech giant to carry out an extensive advertising campaign of billboards, tv and cinema ads, as well as public events. As a comparison, Google spent less on buying Motorola’s handset business.
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Samsung, which has a market capitalisation of $227 billion (₤139 billion), has been trying to make its brand as inspirational as Apple’s. But the money it’s spending doesn’t always deliver appropriate value.

Last month, a Samsung-sponsored short-film contest at the Sydney Opera House was criticised for blatant product placements in some of the videos. A deal with ITV’s X-Factor has also been the subject of ridicule. “Is this a singing competition or an extended Samsung advert?” asked Twitter user Ryan Browne.
According to data from Reuters, Samsung will spend 5.4 percent of its annual revenue on promotions and advertising, more than any other of the world’s top 20 companies by sales. Samsung’s biggest rival Apple spends only about 0.6 percent of its revenue on advertising, as it prefers to use brand loyalty to boost its sales. Microsoft and Coca Cola spend $2.5 billion (₤1.5 billion) and $3 billion (₤1.8 billion), respectively.

Despite its massive budget, Samsung has yet to break into the top five most valuable brands according to Forbes magazine. The brand is currently ninth, behind the likes of Intel, Google and IBM.
“When your brand doesn’t have a clear identity, as is the case with Samsung, to keep spending is probably the best strategy,” Moon Ji-hun, head of Korea for brand consult Interbrand, said as quoted by Reuters. “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.”

**Samsung Galaxy Gear 2 could come out with Galaxy S5**

Although the Galaxy Gear, Samsung’s first smartwatch, just came out, there’s already plenty of talk about its successor – the Galaxy Gear 2.
A source was quoted by Korean site ET News as saying that Gear 2 might be “about 15 percent to 20 percent thinner than previous production”, which would certainly make it more comfortable for users. It’s also possible for the Galaxy Gear 2 to come out with the S5 smartphone and customers to be allowed to buy both devices at once as a package. It appears that the smartwatch will be far more integrated with Samsung’s latest version of its flagship phone, with the source saying that you’d be able to use the Gear 2 for entertainment, gaming and health care functions.
**As of 08.25 UTC buy Samsung shares at $699.50.**
**As of 08.25 UTC sell Samsung shares at $699.40.**
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