Can HTC Make Its Smartphone as Familiar as Apple or BlackBerry?

Marketing Push Aimed at 'Significantly' Raising Awareness by Christmas

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SAN FRANCISCO (AdAge.com) -- For more than a decade, the cellphone maker behind T-Mobile's G1 Google smartphone has been making handsets on which wireless carriers can slap their own logos. But now Taiwanese smartphone maker HTC wants to make a name for itself, and has hired Deutsch, Los Angeles.

AMBITIOUS: HTC is up against RIM, which holds 55% of the market, and Apple, with a 20% slice of the market.
AMBITIOUS: HTC is up against RIM, which holds 55% of the market, and Apple, with a 20% slice of the market.
The company is working on its first national consumer campaign, set to debut in the fourth quarter. At the core of the exercise is the belief that a recognizable brand will spawn greater sales for HTC, which more than two years ago began putting its own logo on its phones. "We're talking about dramatically increasing awareness to dramatically drive volume," said Steve Seto, executive director-marketing, HTC North America.

For a company that spent $2 million last year in measured media testing regional campaigns, the fourth-quarter undertaking will come with "significant" brand-awareness goals that will have to be achieved by Christmas, the industry's biggest selling season, Mr. Seto said. Executives familiar with the pitch told Ad Age last month that the company was planning to boost ad spending to $50 million in the fourth quarter alone. Mr. Seto said the figure was inaccurate but declined to discuss it further.

Regardless of spending, it will be a tall order for HTC to move the needle meaningfully in three months, analysts said, particularly in a market that's 55% and 20% owned by respective brand heavyweights Research in Motion and Apple. HTC's share weighs in at 4%, according to IDC, tied with Samsung and Palm.

"Can they do it by year's end? No way," said Karl Barnhart, managing director at CoreBrand. "They are really starting from zero at this point."

Time to shine
But if HTC wants a bigger share of the smartphone pie, it must forge an identity -- and cultivate it continuously, analysts say, especially as consumers are increasingly choosing their phones first and their carriers second. And with cellphone sales on the decline overall, the growing smartphone category is becoming more critical for the industry.

Any phonemaker that can pull in new customers for a carrier stands to reap handsome rewards. Apple delivered its best non-holiday quarter ever in July on the back of the subsidies it got from its exclusive carrier, AT&T, at a rate north of $350 for every iPhone sold. Last quarter, the popular touch-screen phone drew in more than a third of AT&T's new wireless subscribers.

As HTC trades in anonymity for visibility, it is looking to fatten its margins with bigger subsidies. Phones that are made exclusively for carriers to rebrand typically yield lower margins for the manufacturer, and don't sell as many as those that carry the logo of a well-known manufacturer, said Matt Thornton, an analyst with Avian Securities.

"Brand power moves more devices," Mr. Thornton said. "It gets you better subsidies and better volume. For the carriers, the question is: What are you doing for me? Do you have the brand momentum to drive people to the store? If not, go to the back of the subsidy line."

T-Mobile has the deepest assortment of HTC phones, but it, and other carriers contacted for this story, declined to comment on HTC's branding initiatives.

Near-anonymity
In its marketing of the carrier's flagship G1 Google phone, and now its follow-up, the recently launched MyTouch, T-Mobile has chosen to keep the HTC name at the periphery. Instead, it has leaned on its own brand and Google's to drive interest in those phones. T-Mobile has sold more than a million G1 phones worldwide, while Apple sold more than 5 million iPhones last quarter.

T-Mobile "certainly could have sold more if the manufacturer was well-known," said Current Analysis analyst Brad Akyuz.

HTC certainly isn't the only Asian import that has entered the U.S. market as an unknown and later wanted to show the world who it was. Manufacturers such as South Korea's Samsung and LG have become well-known consumer brands by investing in high-profile campaigns, and today are the No. 1 and No. 2 in the overall U.S. cellphone marketshare, according to Avian Securities.

"LG redefined its meaningless letters to 'Life's Good.' They were able to take an obvious negative and transform it into a positive," Mr. Barnhart said. "I haven't seen that level of thinking from HTC yet. The brand right now is a jumble of meaningless letters. They need to find a compelling brand proposition beyond product, product, product."

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