Samsung's US marketing team gets in a conflict of interest controversy, 'Mad Men' style
Samsung shook up its US marketing team, reports the WSJ today, partly because it was allegedly playing too close with big media conglomerates and ad agencies. The problem with taking someone to the Super Bowl or the Oscars, and letting them lavish you with lunches or other perks, is that this could cause a conflict of interest when you decide where your marketing budget will be spent.
Samsung goes "Mad Men"
Said media budget for Samsung has been the whopping $583 million last year, not even counting all of the digital channels, according to the market research shop Kantar. That's not small change to be bandied about and you can you wined and dined by quite a lot of ad agencies and media reps vying for your budget in the process.
Needless to say, whoever has had even a passing glimpse of "Mad Men" would say that this is normal, but, after an internal audit, Samsung's HQ seems to be on the negative opinion. It has reportedly terminated the contracts of marketing division employees, including Marc Mathieu, the U.S. marketing chief, and Jay Altschuler, vice president of media and partnerships.
It's not clear how many of the 18,000 people that work for Samsung in the US have been affected in total. The firings have occurred without severance packages, meaning that the marketing sector employees may have been found in violation of company principles, but insiders tip that some of the staff that was let go is adamant they didn't do anything wrong, and Samsung is disciplining them for "trivial" actions.
Asked to comment on the matter, Samsung US issued the following boilerplate statement that acknowledged some changes indeed:
Last year, the Galaxy S9 and S9+ didn't sell as well as expected, and not only in the US, prompting Samsung to undertake drastic changes in management and strategy, and the founder's heir to take part in rewriting the mobile strategy. In the most recent quarter, the mobile division's profit was down 30% year-on-year, which hadn't happened to Samsung in a while.
Samsung crisis management
At the time, the head of mobile Koh Dong-jin (known as DJ Koh during grand Galaxy unveilings) issued a self-flagellating memo that Samsung’s then-current smartphone trajectory is in "crisis", after being blamed for a "top-down and rigid decision-making system." His future was briefly in the cards, but he stayed and pushed on with the Galaxy S10 trio, promising to "listen to voices from consumers and reflect them in product development more actively in order to meet their needs better."
A lot of good things happened since then in Samsung's mobile strategy, chief among which is the thorough overhaul of the company's much-maligned Android overlay, resulting in the polished and functional One UI interface. On the hardware side of things, Samsung was the first to offer a hole-in-display OLED solution for the growing "all-screen" phone trend with the Galaxy S10e, S10 and S10+.
It also managed to bring its long-in-the-making foldable phone concept to the retail stage and will be one of the first to have a mighty 5G phone in the US market very soon. Reports are pouring in that the shift in tactics has begun to pay off, as the S10 is selling better than the S9, and in places like China this has resulted in Samsung tripling its (admittedly small to begin with) market share. DJ Koh seems safe for now, but the marketing team in the US may have felt an unusual pressure to change its tacks in the meantime, resulting in the reported division shake-up.