Samsung’s Advertising Hampers Profits but could be a Necessary Evil

Samsung has enjoyed wild success in 2012, with its Galaxy SIII and Galaxy Note 2 smartphones winning plaudits from critics and selling millions of units. However, the company (which is now the world’s largest smartphone builder) could be finding itself in a catch 22 situation, and all because of advertising.

The Korean electronics giant spent a massive $4 billion on advertising in 2012, which could be hitting the company’s profit margins. The figures certainly back this theory up, with a telecom products profit margin of 17%, which is much lower than what its rivals in the industry make.

However, was that $4 billion worth it? Was it that money that made Samsung the success story of this year? It is at least possible, and it is no coincidence that Apple, an already established brand in the conscience of the public spent far less. Maybe to break into the smartphone market in such a big way, Samsung had to spend big.

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