The new agency, currently code-named "Da Vinci"—representing a combination of art and science—will be officially launched March 1 and will be responsible for handling $4.5 billion in Dell agency billings over the next three years.
Previously, Dell worked with more than 800 agencies globally, including full-service marketing communications agencies, digital agencies, media agencies and agency services vendors.
Some of its previous agency partners were Euro RSCG Worldwide, New York; Carat, London; DDB Worldwide, New York; and T3, Austin, Texas.
"Our first natural response was, this has to be inefficient," said Casey Jones, VP-global marketing at Dell, pointing to the large number of agency relationships. Jones came on board last April, and one of his first initiatives was spearheading an agency consolidation process.
"It was obvious that we needed to consolidate the number of relationships," Jones said. "The challenge was, many of the agencies were doing the same exact job and presenting us with different creative ideas, different media ideas, different digital and demand generation ideas. We had to make some sense out of the chaos."
Jones noted that the agency review was not prompted by poor performance by any of the agencies. "All of our agency relationships are pretty outstanding by themselves," he said. "We were looking for a unique solution that accomplishes more than we can currently accomplish in this situation."
Dell began the review by inviting several major agency holding companies to present. Dell did not disclose the agencies participating in the review, but an executive familiar with the situation told BtoB sibling publication Advertising Age that the other agency holding companies included Havas, Interpublic Group of Cos., Omnicom Group and Publicis Groupe.
"It was very nontraditional," Jones said. "We haven't allowed spec creative, we haven't allowed spec strategies or spec media plans. We asked about their capacity to sell us a solution instead of a bunch of siloed, stove-piped agency products, which is how most agency services are bought in the world nowadays."
Jones said Dell is seeking to build an agency model that goes beyond what most agencies offer today. "There is tremendous difficulty in attributing actual business value to any particular part of what an agency does for a corporation," he said. "Advertising may contribute, and pricing may contribute, and it may be affected by the economy and it may be affected by changes in your product portfolio."
Pointing to Dell's database-intensive infrastructure, handling more than 5 million conversations a year with customers, Jones said Dell is looking for an agency partner that is willing to build analytics and measurement around its marketing communications programs.
"We need an agency [that] is willing to dive into that with us and help us analyze how to better communicate with them," he said. "We need a partner who is completely there with us and who is listening to us and creating solutions and communications with us."
WPP execs declined to be interviewed for this story, noting that it is still too early to talk about the new agency structure and the services it will provide.
Speaking at a UBS media conference in New York last month, WPP Chairman-CEO Martin Sorrell said, "The Dell thing is a new approach. It's really taking a radically different point of view. It's really building an agency from scratch, which Dell and ourselves will prove to be a model for other clients to use."
He said WPP did not win the Dell business based on integrating its existing services across its various agencies, but on agreeing to design a custom agency in much the same way that Dell would custom-build a computer for a customer ordering at PC online.
WPP is now in the process of staffing the agency, which will have more than 1,000 employees from existing WPP shops as well as new hires.
"We want to attract the kind of talent that cares about Dell's business success and that wants to create shareholder value, not just get an industry award," Jones said.