The Boeing Co., which last month named Foote Cone and Belding, Chicago, as its global advertising agency of record, will increasingly focus on its aerospace business in b-to-b ad campaigns beginning next year.
That strategy is part of a long-term repositioning effort that began six years ago, but it will take on even greater significance as a result of the Sept. 11 hijacking attacks, which are expected to hurt the commercial airlines business for at least two years.
On Sept. 18, Boeing’s Commercial Airplanes Unit said it would lay off between 20,000 and 30,000 employees by the end of 2002 as a result of reduced capacity projections by its airline customers in the wake of the terrorist attacks.
In a speech earlier this month, Boeing CEO Phil Condit said it will take 28 to 42 months for commercial airline traffic to recover from the attacks, during which time the company will lose production of more than 1,000 airplanes.
Given those setbacks in the commercial sector, it’s important for Boeing to focus on areas with better growth potential, experts say.
"They are still going to do everything they can to grow commercial aviation," said Joel Denney, research analyst at U.S. Bancorp Piper Jaffray Inc., Minneapolis, who covers the aviation industry. "If they are looking at where they see the largest growth, it is coming from aerospace and defense."
Anne Toulouse, Boeing’s VP-brand management and advertising, said that, in the past, commercial airline business accounted for as much as 89% of the company’s revenue, although today it is in the 60% to 70% range.
"We expect [that percentage] to decline—we hope because the rest of the business is growing," she said.
Boeing is turning to FCB to develop advertising to position the company as a leader in the aerospace industry.
An agency review was initiated in July, with results to coincide with the relocation of Boeing’s headquarters from Seattle to Chicago in October. The review included FCB, the incumbent, as well as the Chicago offices of BBDO Worldwide and J. Walter Thompson.
Toulouse said senior management reviewed the creative work that had been submitted at the end of the week following the terrorist attacks and decided to keep the agency assignment intact. "We decided to move forward, and once we had an agency partner,
together we’d have to look at the environment from a global perspective and determine the timing, messages and the audience’s receptivity to those messages," she said.
Jonathan Harries, chairman of FCB Chicago, said it was too early to discuss the advertising strategy being developed for Boeing. The agency will meet with Boeing executives during the next month to formulate a strategy going forward, he said.
In developing creative for the review, "We looked for a certain feel and look to the advertising that would be flexible enough to cover the corporate image and specific business unit advertising," Harries said. He declined to elaborate.
Boeing’s current tagline, "Forever new frontiers," which was developed by FCB, will remain the same.
Boeing will certainly have challenges to overcome in the aerospace industry.
In October, it lost a contract for the U.S. Department of Defense Joint Strike Fighter, which went to Lockheed Martin Corp. Although the loss of the coveted JSF did not affect Boeing’s 2001 revenues, the company said overall revenue in 2002 would be reduced by an estimated $1 billion, to about $55 billion, as a result.
"With some audiences, we have to answer the question, ‘What is in store for us following JSF,’ " Toulouse said.
Boeing will use media programs and advertising to address this question, but Toulouse said it is premature to give details.
Boeing is now evaluating advertising to reach its target audience of C-level executives in the financial community, government officials and influencers in the U.S. and other key markets.