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Compaq stays committed to effort by DDB, ad chief says

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Despite continuing turmoil following the abrupt departure of ad chief Andrew Salzman last month, Compaq Computer Corp. is continuing with its commitment to a global branding campaign from DDB Worldwide, New York.

In an interview last week with Business Marketing, just-named acting ad chief David Middleton said DDB is proceeding on a branding campaign scheduled for later this year. Mr. Middleton, VP-corporate communications for Houston-based Compaq, said the embattled computer vendor is standing by its advertising agency and that DDB is "not in trouble."

"DDB is doing a good job," Mr. Middleton said. "We're happy with them, and we are expecting good things from them. We're see ing good things, actually."

Compaq's new president-CEO, Michael Capellas, who replaced the ousted Eckhard Pfeiffer, is overseeing the campaign, he added.

New leadership, new ads

The new global campaign will in clude television, print, outdoor, ra dio and Internet advertising. Additionally, Compaq is said to be at work revamping its Web site to hone its ability to compete with Dell Computer Corp. by selling direct over the Internet.

Mr. Capellas "is certainly in vesting a good deal of time and energy and effort in the subject area, which is, of course, expected with any CEO," Mr. Middleton said. "We're very happy he's spending as much time as he is. He is highly engaged."

Mr. Capellas, who was Com paq's acting COO and initially hired as its CIO, was named CEO of the company July 22, less than a week before Compaq announced its second-quarter loss and planned cutbacks.

On July 28, Compaq posted a second-quarter loss of $184 mil lion and said it will take a $700 million to $900 million restructur ing charge in the third quarter to cover plant closings and as many as 8,000 job cuts.

Wall Street had greeted Mr. Capellas' appointment with skepti cism, and Compaq's share price dipped slightly on the news, falling 44 cents to close at $24.50 a share.

Mr. Capellas was named CEO only after Continental Airlines President Gregory Brenneman and Oracle Corp. President Ray Lane rejected the post, according to a variety of media outlets.

Agency under pressure?

Mr. Middleton's vocal backing of DDB disputes the implication that the agency is under added pressure on this campaign, which was made by Mr. Salzman in a July interview with Business Marketing's sister publication, Advertising Age.

Mr. Middleton, a former execu tive at NEC Technologies and IBM Corp. who joined Compaq two years ago, assumed control of Compaq's advertising after Mr. Salzman resigned as VP-worldwide advertising and brand strategy on July 15.

After resigning, Mr. Salzman told Advertising Age that DDB is under the gun to deliver the cru cial global campaign for the $300 million account.

He said his marching orders to DDB were to "put the amount of effort into it that they would put into a new-business pitch."

Mr. Salzman pulled the most recent Compaq campaign, intend ed as an interim effort, within the past month, because "the overall judgment is the campaign didn't meet expectations."

Despite Mr. Salzman's remarks that the new ads are "critically im portant" to Compaq, Mr. Middle ton said, "Nothing more or less than normal rides on this work than we normally expect from a vendor."

Still, much does seem to be rid ing on the new branding effort.

Two days before Compaq an nounced its second-quarter loss and subsequent restructuring charge, International Data Corp. released figures showing that dur ing the second quarter, Compaq retained its lead in U.S. personal computer shipments over rival Dell Computer Corp.but only by a slim margin. Compaq's mar ket share is 16.6%, while Dell's is 16.3%.

Management issues

Although Compaq Chairman Benjamin Rosen restructured Compaq and sold off its AltaVista business in the period between the tenures of Mr. Pfeiffer and Mr. Capellas, many of the company's problems remain unchanged.

It is still struggling to integrate its acquisition of Digital Equip ment Corp., to cope with falling personal computer prices and to develop a direct-marketing strategy to counter Dell.

Some observers say Compaq's hybrid approach of selling through resellers and selling direct is a key problem hampering the company.

Mr. Middleton argued that Compaq's resellers are a central ad vantage. If Dell's brand is "direct," Compaq's is "choice," he said.

"Resellers for Compaq have al ways been a very important ele ment in our total offering to the customer," he said. "We firmly believe that will be the case going forward, and we want to embody that in our communications."

Mr. Middleton is currently han dling both his duties and those of Mr. Salzman. Mr. Middleton said no decision had been made about who would fill the job permanently.

Mr. Salzman told Advertising Age he resigned after becoming frustrated with overall progress at Compaq. The executive said he's evaluating two Internet-related posts in California, as well as other job options.

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