The past 18 months have not been kind to HTC. After years of year-over-year record profits and sales, HTC’s fortunes quickly turned in late 2011. Competition from Samsung and Apple started to eat away at HTC’s market share and the evolution of the Android segment gave other players in the mobile industry the ability to directly compete in what used to be a niche market. Analysts, bloggers and even HTC have all highlighted 101 reasons why the company has lost market share, but we believe there’s only one – marketing.
A recent report from Kantar Media compared HTC’s 2011 and 2012 US marketing budget with Samsung Apple, Nokia and BlackBerry. The report shows that HTC spent $124 million on television, print, billboard and internet marketing in 2011. While the number was significantly lower than Apple’s $253 million, HTC did come out ahead of Samsung’s $78 million marketing spend of 2011. We do not know how HTC’s US sales and revenues played out, but HTC did rake in more than $2 billion in profits for the year by selling 45 million devices.
Fast-forward to 2012 and things look dramatically different. Samsung blitzed the smartphone market by quadrupling its marketing budget to $411 million in the US, while Apple kicked in an extra 41% to get them to $333 million. Surprisingly, HTC put up very little resistance, cutting its marketing spend in the US to $46 million, nearly a two thirds drop from the previous year. We do not know if there is a directly correlation between HTC’s market budget and the company’s bottom line, but HTC profits for 2012 declined by more than two thirds as the company struggled to sell an estimated 32 million phones.
Hopefully, HTC has learned the error of its ways. Benjamin Ho, HTC’s new chief marketing officer seems to think that the company has some amazing products, but they simply need to turn the marketing volume up. HTC’s 2013 budget includes a 250% increase in digital marketing and a 100% increase to traditional marketing. We don’t know where HTC will investing that money, but it’s nice to know that the company willing to put its name on the line for the HTC One. Spending over $100 million in the US to promote the HTC One won’t guarantee its success, but it will definitely give it a much better chance than a $46 million marketing budget would.
