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Brands hit new heights in high-tech ad spending

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Brand advertising has been in vogue among tech marketers since the early '90s, but this year it's reaching new heights as major marketers launch some $500 million in incremental advertising to lock down brand positions.

Product differences have virtually disappeared in the PC industry, so "the brand is what people are buying," says Scott Helbing, VP-corporate brand strategy at Round Rock, Texas-based Dell Computer Corp., and architect of Dell's new brand advertising.

IBM Corp., Armonk, N.Y., paved the way when Chairman-CEO Louis Gerstner Jr. made advertising and marketing a priority, consolidated at Ogilvy & Mather Worldwide and, in 1995, launched a seminal tech brand campaign, "Solutions for a Small Planet." Many tech ad insiders still say IBM does the best tech advertising in the business, but suddenly IBM is facing competition on the brand front as it has never seen.

"The bar has been raised," says Steve Hayden, president of worldwide brand services on IBM at Ogilvy & Mather, New York.

Fueling factors

The unprecedented brand promotion is driven by a series of factors. Maturing of the PC industry has resulted in PC companies selling remarkably similar boxes, giving marketers more incentive to differ- entiate themselves on brand attributes, such as service and support.

More broadly, the growth of services revenue has given impetus for companies such as IBM, Compaq Computer Corp., Houston, and Hewlett-Packard Co., Palo Alto, Calif., to broaden their brand image beyond hardware.

Emergence of new non-PC technologies and the convergence of computers and telecommunications are giving new and old players reasons to define brands in a broader market. A strong economy, a desire to sell a brand story to Wall Street and a need to keep up with rivals are also strong motivators.

Ogilvy's Mr. Hayden says the mandate from the top of tech companies for better advertising has led to "a professionalizing" of marketing communications departments that in an earlier era, he jokes, were populated with "bad engineers" relegated to a function where bosses figured they couldn't do serious damage.

Tech assignments have become marquee accounts at the world's largest ad agencies, attracting the best and brightest who a generation ago would have gravitated to packaged goods or cars, says Marty Susz, group account director on Santa Clara, Calif.-based Intel Corp., at Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, and former director of advertising in IBM's corporate marketing group.

Broader base

The big winners in media are television, consumer and business print publications, outdoor and the Web. The 10 biggest tech spenders in business and in-flight publications last year increased their page count in those publications by 20.8%, according to Adscope, a Eugene, Ore., ad tracking service.

The new brand boom is no boon to computer publications, as tech marketers reach out to a broad base of business customers and consumers. Tech ad pages declined 5% last year in computer, telecom, business and news publications tracked by Adscope.

The 10 biggest spenders in computer and telecom titles last year increased ad pages in those publications a scant 3%, reported Adscope, as many of them allocated more money to other media.

Compaq, for example, last year cut ad pages in computer and telecom titles by 9.7% and boosted business and in-flight pages by 19%, according to Adscope.

In large measure, spending increases reflect that some major technology companies are finally getting their acts together in brand marketing after aborting earlier efforts.

The biggest new spending blitz is coming from Hewlett-Packard, which this year has launched two global brand-building campaigns totaling $250 million, mostly incremental -- a big play for a tech giant that in the past has seen ambitious ad plans fizzle when budgets dried up.

Compaq, meanwhile, this year boosted its global budget by 50% to an estimated $300 million as it launched a brand campaign on television in the first quarter --nearly three years after it announced plans to do a major global campaign.

Dell and Gateway, North Sioux City, S.D., also are rolling campaigns that continue efforts begun last year to define their brands.

Elsewhere in the PC marketplace, Intel nearly doubled its estimated global budget this year to $325 million to launch the Pentium III chip with the most integrated -- and lauded -- campaign in its history, created by its new agency, Messner Vetere.

Services spending up

Spending on hardware and services is booming beyond the PC. New work is rolling out in the networking space, including the first major campaign for Nortel Networks since Nortel bought Bay Networks last fall and consolidated advertising at Temerlin McClain, Irving, Texas. Nortel is boosting spending from $40 million to between $60 million and $90 million with an integrated campaign launched in March with a TV spot featuring lyrics of the Beatles' "Come Together."

3Com Corp., meanwhile, last month began a multimillion-dollar global campaign for Palm, the biggest campaign ever for the hot-selling electronic organizer. Print and outdoor ads, featuring bold images of fictitious Palm users such as a naked dancer and a hotshot attorney on a motorcycle, sell a lifestyle as much as a product.

The "Simply Palm" ads, from Foote, Cone & Belding, San Francisco, are reminiscent of Samsung's "Simply Samsung" ads and Apple Computer's "What's on Your Powerbook?" campaign.

Liz Brooking, director of marketing communications at 3Com's Palm Computing division, says the ads purposefully blur the lines between product and brand advertising. "We want to emphasize the brand but talk about the features," she says.

The ads reflect how even the nascent market for electronic organizers is maturing: Early ads had to explain the product, but the new campaign can more simply promote the benefits, Ms. Brooking says.

3Com's campaign reflects a trend of bringing a definite brand component to product ads that in the past generally were focused on "speeds and feeds" and other techy fodder.

As tech companies get better at branding, they are working harder to integrate branding and product messages. Nortel's new TV spots, for example, show specific products -- such as a technology that combines e-mail, fax and voice mail on a PC -- as a means to a bigger brand statement about the networking company's broad capabilities, says Jeffrey Brooks, senior VP-brand management.

Change in approach

PC companies are making changes in their approach. Since hiring McCann-Erickson, New York, as global agency a year ago, Gateway has made great progress in unifying print advertising so that product ads and more brand-oriented TV commercials seem in sync.

Dell, meanwhile, is reviewing advertising for its $30 million Home & Small Business Group assignment, now at Goldberg Moser O'Neill, San Francisco.

The fact that Dell is reviewing some product advertising for the first time in more than a decade shows that even the world's most successful PC marketer is considering changes in its advertising.

"One of the internal goals right now is to align all of our communications" by agreeing on a brand positioning and visual cues for all global print, television and direct work, Mr. Helbing says.

IBM, the champion of tech branding, is getting better at meshing brand and product in print advertising, following a mandate from the top. Last year, Chairman Gerstner and Abby Kohnstamm, senior VP-marketing, challenged the company and agency to bring print advertising up to the quality of IBM's oft-lauded TV work.

"Both we and the agency were collectively disappointed [with print] and felt we could do so much better," recalls Messner Vetere's Mr. Susz, the former IBM ad director.

IBM cleared the way by consolidating PC marketing under one executive, David Bradley. Ogilvy & Mather went to work.

The call to action paid off in a sleek, new PC print campaign that simply meshes style -- fashion photos of IBM products -- with substance -- features and price. IBM hasn't figured out how to make money in PCs, but it has learned how to do provocative product ads.

With all the money, talent and client focus on tech branding, it should be a given that the level of tech branding has never been higher.

"The overall industry has had a quantum improvement in the quality of advertising," especially on television, Mr. Susz says.

Yet the industry has a long way to go.

"We've got our [Intel] war room here filled with the walls of competitors' print advertising," says Mr. Susz, "and by and large, it's pretty bad. Not much of it stands out."

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