Motorola Cheaps Out With Moto X’s $500 Million Ad Budget

Motorola’s (GOOG) new phone, a Moto X, has as good a possibility as any to attain (or fail) in a marketplace. Having spent some time with a phone, we can tell we that as a product, it has all that’s required and zero objectionable.

But building a ideally good device is not how we win in a smartphone wars. For that, we need selling and advertising. Which is because Motorola is reportedly prepared to spend as many as $500 million to get a word out on a newest phone. Now, $500 million is a lot of money, though let’s put that in perspective.

In 2012, Apple (AAPL) spent $1 billion on advertising.

The same year, Samsung (005930:KS) spent $4 billion on advertising.

According to Asymco’s Horace Dediu, Samsung also spent $5.3 billion on “sales promotion,” that is French for commissions and in-store displays, training, and other expenses. Roll together all of Samsung’s marketing, advertising, and promotional expenses, and you’re looking during an $11 billion budget.

Advertising gets a lot of attention, though marketing, sales, and graduation are arguably some-more important. For many people, a preference to buy a sold phone happens in a store. And that preference is guided by a peculiarity of a display, a condition of a salon phones, and a believe and unrestrained behind a sales staff’s recommendations. It’s not as splashy as a Super Bowl ad, though it’s what moves phones.

Not each dollar (or euro, or won) in Samsung’s selling bill is clinging to smartphones, though many of them are. Exhibit A: a Samsung arrangement during any wireless retailer. You’ll see that all a phones are incited on, all of them work, and all have demo modes to uncover we what they can do. That’s a distant cry from some of a other inclination you’ll find there—ones that have been switched off or don’t duty during all—and that isn’t an accident. Samsung spends buckets of money to make certain a inclination demeanour spiffy in sell locations.

Earlier this year, Samsung Mobile selling arch DJ Lee told me a company takes in-store sales really seriously. “We have teams monitoring stores in several countries,” he said. “The best approach for us to sell a inclination is in a store.”

Motorola knows it has to compensate a same courtesy to detail. Last week, Chief Executive Officer Dennis Woodside explained how a Moto X would be prominently displayed during sell locations. Echoing Samsung’s Lee, he pronounced that Motorola “has teams prepared to sight in-store staff on a facilities of a phone, quite a new Touchless Control features.” ATT (T) stores will arrangement a full array of colors and options, so people can see how many they can customize their phone online. For those who like to get their comment set adult in a store though still wish to go home and personalize their device, ATT will also have “X Cards” that enclose a formula a patron can use to supplement a comment they set adult in a store to a phone they’re building online.

If Motorola’s prepared to spend $500 million on ads, afterwards brag for them. The association had also improved be prepared to dump an equally vast (or larger) volume on a worse toil of removing that Verizon Wireless worker to advise a Moto X instead of a Galaxy S4.

Article source: http://www.businessweek.com/articles/2013-08-06/motorola-cheaps-out-with-moto-xs-500-million-ad-budget