Sponsor Content Above the Clutter with Pete Krainik
Episode Seven: Man And Machine
Brought to you by: IBM
In 1947, Haloid obtained a license for an invention called "electrophotography" and two years later introduced the Model A copier. It then changed the name of the process to "xerography," believing the term "electrophotography" unwieldy.
First easy office copier
In April 1959, the marketer introduced the Xerox 914, the first simplified office copier. The machine was aimed at the 2,000-plus copies per month market, a gamble at a time when low-to-medium-volume machines were the norm.
In 1961, the company dropped Doyle Dane Bernbach, its lead creative agency, and moved its $500,000 account, nearly all in print for the Xerox 914, to Papert, Koenig, Lois.
In 1962, Xerox increased its ad budget to $1.75 million, and in 1963, its spending reached $4 million, with much of the hike going to the introduction of its first desktop unit, the Xerox 813.
By the mid-1960s, Xerox was among a select group of single-program network TV sponsors, at times even funding the cost of production. This type of sponsorship, dubbed "entertainment with a purpose," led Xerox to underwrite six public-service TV specials for $4 million. The programs ran without commercials, with only a single credit line showing Xerox as the sponsor.
In 1968, PKL lost the $4 million corporate, business products and systems and information systems division accounts to Needham, Harper & Steers; Scali, McCabe Sloves got the emerging Xerox education division account, valued at $1 million.
Diversification, a corporate trend among America's leading companies in the 1960s, left its mark on Xerox. After its purchase of publisher R.R. Bowker Co. in 1968, Xerox in 1970 bought the computer hardware producer Scientific Data Systems and changed its name to Xerox Data Systems. It introduced the portable Xerox 400 Telecopier that year, its second move in the facsimile business. By the end of the 1960s, the company's ad budget hit $10 million, split equally among TV, print and marketing services.
In the 1970s, Xerox began its long courtship of public TV, sponsoring "Civilisation" on the Public Broadcasting Service. It promoted that series via a one-hour program, "Civilisation: A Preview," that aired on NBC during prime time. The special carried six commercial minutes, all devoted to Xerox copiers.
Xerox entered the electronic typewriter market in 1974 with its 800 electronic typing system, a typewriter-word processor that was billed in ads as 100% faster than IBM's popular market leader, the Selectric.
In 1975, Xerox settled an antitrust suit with the Federal Trade Commission that barred it from promoting or taking orders for new copier models more than three months before availability. The FTC said the action stemmed from new-model announcements that indicated early availability and caused copier buyers to hold off on purchases-possibly from competitors-until Xerox came out with its product much later. In 1964, Xerox had introduced the Xerox 2400 copier in an $800,000 pre-launch campaign featuring the actor-comedian George Goebel a full year before the product was available.
Xerox got out of the computer business in July 1975. It had been a costly venture. Xerox paid almost $1 billion for Scientific Data Systems just six years earlier but never got more than 2% of the market, while IBM held 67% by the time Xerox bailed out.
Xerox, however, can lay claim to one of the most popular TV commercials aired in the 1970s. The 1975 "Miracle Monks" spot, from NH&S, introduced Brother Dominic, a cherubic monk who used a Xerox 9200 duplicating system to produce 500 copies of a hand-illuminated manuscript, thus saving decades of work in the scriptorium. Brother Dominic's abbot called this apparent laboring by the scribes a "miracle" as the roly-poly friar looked heavenward, thanking Xerox for the 9200. The spot aired on Major League Baseball's All-Star game.
By 1985, the Xerox 9200 had captured 15% of the market. But in the meantime, the company's overall market share fell from 60% at the beginning of the decade to just less than 50% by its end. Canon and Savin, a Ricoh Corp. brand, pummeled Xerox with new products at the low end of the market.
Diversification continued into the 1980s, as Xerox bought companies involved in optical character recognition, faxing, desktop publishing and scanning, as well as Crum & Forster, an insurer. It opened a chain of retail stores in 1980 to pursue low-end users of its office equipment, but sold the outlets in December 1983.
In 1981, Xerox revisited the computer business, introducing its eight-bit 820 computer for business computing. It beat IBM's Personal Computer to the market by six months and had strong distribution via its sales force and retailers. But Xerox's fortunes dimmed quickly when IBM's PC brought 16-bit technology to the desktop market.
Xerox's machine was further crippled by its lack of compatibility with IBM's PC operating system. The company also failed to react when software developers scurried to write programs for IBM. It never regained its momentum. In 1984, lack of market support caused Xerox to scrap its laptop battery-powered computer a year after it introduced the machine.
In May 1985, Xerox introduced its first IBM-compatible desktop computer, although the product was produced by Olivetti & Co. Xerox's marketing strategy to revive its fortunes in computers relied on employing photocopier salespeople to sell computers. Xerox spent an estimated $20 million to train its sales force, then scuttled its personal computer business for good in 1987. Xerox's conservative marketing approach ultimately stalled the company, killing its chances of being a player in the computer market.
Xerox repositioned its fax machine business in 1988 from upmarket to down-market. It introduced a line of thermal paper fax machines, priced at $2,000, to attack rivals on pricing. Direct mail and print ads vowed Xerox would give customers $5 for every fax transmission that failed to arrive. But the Japanese invasion in both the fax and copier market had taken a toll on the company.
In 1985, Xerox introduced a massive $70 million corporate and product ad campaign from Needham Harper Worldwide called "Directions." Past introductions had included one or at most two new products at a time, but "Directions" encompassed 14 new office systems products at once. The campaign spent $30 million on network TV, $25 million in business-to-business media and $15 million in lifestyle magazines. By this time, 80% of Xerox's U.S. sales were from copiers and electronic typewriters. In the larger copier market, Xerox's share had dropped to 36%.
In 1986, Xerox, arguing that it needed to seek new ideas and approaches to advertising, moved its account to Ted Bates & Co. and began shifting its emphasis from reprographics to computer output businesses, particularly laser printers, copier products and computer communications (it developed the Ethernet for linking computers on local networks).
In 1990, Xerox again shifted its ad account, this time to Young & Rubicam, whose task was to remake the marketer's image from that of a copier company to that of a business offering a diverse document line. As part of that shift, Xerox introduced an Olympics-themed spot focusing on the company's role as the "official document processing company" of the 1992 Summer Olympics. Xerox also served as exclusive copier sponsor in NBC-TV's coverage of the Games in Barcelona.
By 1992, Xerox held 60% of the high-end document processing market but only 15% of the low end, leading the company in 1993 to target small businesses and in-home users for its copiers, printers and facsimile products. Its U.S. media spending in 1992 and 1993 was about $30 million a year.
Alliances with computer manufacturers took the place of independent production as the company supplied Compaq Computers and Apple Computer with print engines in 1992 and 1993, respectively. Other alliances followed with Adobe Systems, Cisco Systems, Dell Computer Corp., IBM, Intel Corp., Microsoft Corp., Novell, Oracle Corp. and Sun Microsystems. In 1993, Xerox also brought out network color laser printers and software for printing Web documents.
In 1994, Xerox toyed with retail once again, opening Xerox Document Centers in supermarket chains to sell copier and fax paper, self-stick notes and computer diskettes. From 1996 to 1998, Xerox sold its struggling insurance units. Its first product for home use, a $500 PC printer, copier and scanner, was introduced in 1997 when ex-IBM Chief Financial Officer Richard Thoman was hired as president-chief operating officer to move Xerox into network and digital products.
Xerox underwent a restructuring in 1998 at a cost of $1 billion and pared 10% of its workforce. It bought XLConnect (renamed Xerox Connect) and parent Intelligence Electronics and, in 1999, purchased SET Electronique, a French manufacturer of high-speed digital printers. Xerox also moved online to sell its products.
Under its restructuring plan, the company laid off 14,000 workers in 1998, but critics claimed the restructuring had been botched. Indeed, cuts were so severe that customer bills went uncollected and many of Xerox's top account executives left.
By 2000, Xerox's worldwide ad budget had grown to $130 million.
Early that year, Xerox bought Tektronix's struggling color printing and imaging division and linked with Fuji and Sharp in a joint venture to produce low-cost inkjet printers. It eliminated another 2,000 jobs in 2000.
By the beginning of 2002, Xerox had become more focused and much more nimble. Under the leadership of Anne M. Mulcahy, the new chairman-CEO who negotiated the $925 million purchase of the very profitable Tektronix, Xerox's losses in 2001 were pared 80% from the prior year, to only $8 million on revenue of $16.6 billion, down 13%. By the first quarter of 2004, the company showed an earnings gain of 25¢ per share.
To announce its newly turned-around status, Xerox re-upped its advertising budget beginning in late 2002. An umbrella campaign "There's a New Way to Look at It" included TV spots featuring products such as printers and digital imaging software as the hero. More than 60 print ads also had been created under the campaign by mid-2004; each featured a large red Xerox logo and a sample client case study, from companies such as Microsoft Corp., Office Depot or Enterprise car rentals.
Xerox spent $53.5 million in measured media in 2003, up significantly from the $27.3 million it spent in 2001.