HTC Corp (TPE:2498) has signed a $12 million contract with Iron Man - Robert Downey Jr. to promote its smartphones over the next two years, people familiar with the matter told Tim Culpan of Bloomberg. Leading the ad campaign, Robert Downey Jr. will be featured as himself, not Iron Man or any other character he plays in movies. Sources said that Downey Jr. will have the final word over creative elements of the campaign. He will appear in print, television and billboard ads.
HTC Losing Market Share
HTC Corp (TPE:2498) recently launched a slim, all-metal smartphone named HTC One. The Taiwanese company was once the best-selling smartphone company in the United States. But its market share has declined heavily amid fierce competition from Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and Apple Inc. (NASDAQ:AAPL). The Korean electronics heavyweight has 10 times higher marketing budget compared to HTC Corp (TPE:2498).
In the first quarter of 2013, HTC Corp (TPE:2498) posted a 68 percent decline in smartphone sales and net profits were less than $3 million. As sales of ZTE Corporation (SHE:000063) and Huawei Technology Co Ltd (SHE:002502) rose, HTC Corp (TPE:2498)'s ranking fell to 9th spot in global smartphone shipments.
The Taiwanese vendor needs to make some bold moves to revive its business as consumers become more brand-conscious. Hiring a top Hollywood celebrity to promote smartphones can be that bold step. HTC Corp (TPE:2498) marketing chief Ben Ho recently said that the company would no longer maintain its underdog status. It won't hide its brand name any longer. However, his boldness may not match the competition. HTC Corp (TPE:2498)'s market budget of about $1 billion is dwarfed by a whopping $10 billion marketing expenditure by Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930).
HTC Takes Celebrity Endorsement to a New level
Celebrity endorsement seems to be in full swing. In 2010, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) signed a deal with Pamela Anderson to promote its N8 smartphone. Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) recently hired Alicia Keys as its creative director. Now HTC Corp (TPE:2498) is taking celebrity endorsement to a new level.
HTC Corp (TPE:2498)'s move comes at a time when the sales of Samsung's highly endorsed Galaxy S4 seem to be slowing soon after its launch. Apple Inc. (NASDAQ:AAPL)'s iPhone sales growth is slowing drastically. Now there are two questions. Is it the right moment for HTC Corp (TPE:2498) to strengthen its brand image? And, can Iron Man save the Taiwanese company just like he saves the world?