Tech Companies Blitz Consumers with Holiday Advertising

When TV, radio, print and billboard advertisements pivoted from election campaigns to the holiday shopping season, American consumers found themselves in the crosshairs of a media barrage triggered by technology companies eager to distinguish their products from a rush of new computing devices types, many of which didn’t exist even a year ago.

Windows 8 Dell XPS Convertible Ad

Microsoft is reportedly spending between $1.5 and $1.8 billion promoting its Windows 8 operating system.

The perception that companies are carpet-bombing advertising channels to grab attention isn’t unfounded. Analysts expect Microsoft, Apple and Samsung to spend $5 billion to advertise smartphone and tablets during the holidays.

“There’s a bit of an advertising war going on right now that I haven’t seen before, certainly not of this scale,” said Kevin Sellers, vice president and director of Creative Services and Digital Marketing at Intel.

The explosion of choices in the consumer electronics space now forces consumers to wade through more noise and options to select the right tech gift. Choosing among tablets, convertibles, Ultrabooks, laptops, smartphones and all-in-one PCs is challenging enough, but shoppers also face unprecedented alternatives within each form factor and a variety of operating systems.

“Advertising spending for technology overall is increasing simply because of the increased number of companies and devices in market this year,” said Paul Jennings, associate director of strategy at media agency OMD.

American holiday shoppers are expected to spend an average of $1,634 on gifts this year, up 11 percent from last year, and they will put nearly a third of their gift spending, an average of $252, toward consumer electronics. That’s only slightly more than last year’s number of $246, according to the Consumer Electronics Association.

Google Nexus Ad

Google has been advertising three sizes of its Nexus device. Courtesy of Google.

Jennings sees tough competition between smartphone and tablet makers for those consumer dollars. “Key players in this category remain Apple and Samsung, supported with a range of messaging from the major carriers such as AT&T, Verizon, Sprint and T-Mobile, and all are looking to increase market share, especially with Android-based devices,” he said.

There are many new tablets on the market from Apple’s iPad and iPad Mini to Samsung’s hybridized Galaxy Note. Amazon is pushing Kindle devices, the Nook is getting an increasing amount of advertising and Google is promoting Nexus 7. “All are vying for consumer attention and spending considerable ad money to do so,” said Jennings.

Apple vs. Samsung

Competition among tech companies has intensified since Apple shifted from niche advertiser to making huge media buys about 6 years ago, according to Sellers. During the recent Apple-Samsung trial, an Apple executive testified that his company spent $97.5 million in 2008 advertising the iPhone in the United States. The company reportedly spent nearly $150 million pitching the iPhone in 2009, almost 30 percent of Apple’s $510 million total ad budget that year. Since 2009, advertising spend has doubled, hitting $1 billion in 2012, the company said in its annual report.

“Apple’s rise has created a dynamic where competitors like Samsung, Microsoft, Google and others are taking a very aggressive posture to break through and not get drowned out by Apple,” said Sellers. What’s different this year is that there are more smartphones, tablets and computing devices vying for attention than ever before. “Companies aren’t competing on product alone … they’re also battling it out through marketing.”

Samsung is spending nearly $12 billion a year to market the Galaxy line of smartphones, according to Asymco’s Harace Dediu. Samsung has used that budget to become one of the fiercest, most daring consumer tech advertisers, according to Sellers. “They are buying big chunks of media time and doing some of the most innovative marketing right now with their long-form story ads and the Samsung Galaxy ad featuring LeBron James. There’s lots of LeBron love in the world; he’s the star of opening night for the NBA and then what happens? Samsung breaks a 90-second commercial in that game with a big media buy featuring LeBron James. It’s that kind of tying in of events with unique media formats that grabs a lot of momentum.”

Microsoft’s Multi-Product Push

Microsoft is reportedly spending between $1.5 and $1.8 billion promoting its Windows 8 operating system. That makes it one of the biggest product launches in the history of the technology industry and dwarfs the $200 million the company spent to market Windows 95.

But Sellers points out that there’s much more coming from Microsoft. “They are spending a huge amount of money promoting totally different campaigns for their new Windows 8 operating system, Surface tablet product, Windows Phone plus on-going promotion for Bing search and Xbox,” he said. “That’s five Microsoft campaigns happening right now. It’s almost unbelievable.”

Sellers is leading Intel’s own “New Era of Computing” advertising campaign for Ultrabooks, showing new mobile computers that convert from a thin laptop into a touchscreen tablet and running the new Windows 8 operating system. Valued in the hundreds of millions of dollars, the campaign is the company’s largest since the reported $300 million marketing spend for the release of Intel Centrino technology that made Wi-Fi standard for laptops in 2003. “Our partners are also ramping up their advertising for the holiday, because we’re seeing it in the Intel Inside Program,” said Sellers.

Themes Rise to the Top of Tech Ads

Competition is so fierce that it has seeped into storylines. “One advertiser will say more overtly that their product is better than the other and use that as leverage against the consumer,” said Jennings.

Sellers sees Samsung being aggressive. “They are taking Apple’s playbook and throwing it at Apple,” he said. “The way Apple used to ask, ‘Are you a Mac or PC?,’ comparing hip Apple users to nerdy Microsoft users, Samsung is now comparing their products to Apple as if Apple products are old and out of style.”

Consumer feedback is also playing a role in the fate of tech ads. “The best example of this is the universal panning of Apple’s most recent Mac Genius campaign, which was quickly pulled despite being designed to replace Apple’s Mac versus PC campaign of a few years ago,” said Jennings. “Advertisers have to be quick to react in knowing what is working and what isn’t, so getting that messaging right is essential.”

Apple iPad and iPad Mini Ad

Apple has advertising its variety of touchscreen options since the release of the new iPad and iPad Mini. Courtesy of Apple.

Sellers said there is a lot of Apple envy, but the company faces different challenges as the leader in a market segment. “An underdog, ‘we’re the minority’ message lends itself more easily to aggressive tactics and breakthrough ideas. When you’re the big fish in the pond, it’s much more difficult to really do something unique and stand out. In phones, specifically, they are the big fish now and that changes things for them.”

Outlook for 2013

Since the post-holiday season generally brings lower advertising rates, Jennings believes some companies will take advantage of this time and continue flooding the market with more ads.

“Some product categories like smartphones will remain consistent post-holiday while computers may increase depending on the success or failure of the Windows 8 launch,” said Jennings.

After the holidays, Sellers doesn’t expect Microsoft will lighten up its advertising push, especially for its Surface tablets, which are a completely new device from the company. “What’s driving companies to spend money to advertise is a combination of new product cycles and buying cycles,” he said. “Even in a weak economy, if you give the consumer something that’s truly innovative and unique, they will buy it.”

SOURCE: Intel Free Press