If there’s an epicenter of the current technology- and telecommunications-driven recession, it might be the Chicago suburb of Schaumburg.
That’s where Motorola Inc. is headquartered. Known primarily these days for its mobile phones, the company is also a b-to-b marketer of semiconductors and telecom infrastructure systems.
The company recently reported its first annual loss since 1930, with no upside expected until at least the second half of this year. Motorola also announced plans to trim its work force, which stood at nearly 150,000 globally less than two years ago, by one-third. And its stock has been trading around 40% below its 52-week high of $23.65.
Motorola’s semiconductor and telecom infrastructure businesses in particular have struggled. In announcing its financial results for 2001, the company acknowledged: "Operating earnings declined due to a decrease in sales stemming from lower worldwide demand for wireless infrastructure equipment by service providers and lower average selling prices." It also said the "worldwide semiconductor industry continued to experience its sharpest decline in history."
It’s not surprising that these battered divisions of Motorola have altered their marketing plans. Motorola’s Semiconductor Products Sector (SPS) has scaled back its aggressive Digital DNA campaign. And the company’s Global Telecom Solutions Segment (GTSS) has shelved ambitious spread ads for its forward-looking Aspira program. Despite claiming to reinvent itself as a marketing-focused company, Motorola, like so many b-to-b marketers in the current recession, has tightened budgets, de-emphasized branding and focused on short-term results.
Focus is key
The semiconductor industry’s performance was dismal in 2001, and Motorola was no exception. Its semiconductor revenue declined nearly 35% to an estimated $5 billion, from $7.7 billion in 2000, according to Gartner Dataquest figures. To top it off, the company’s market share declined to 3.3% from 3.4%.
In response, SPS has scaled back its advertising. Currently, it is running its Digital DNA advertising in EE Times and other trade publications aimed at design engineers. "We are focusing in again on a design engineering audience. And within that audience, we are focusing on key areas of leadership for us, which are communications, wireless and the networking area," explained Maria Carballosa, SPS director of global marketing communications.
This strategy, which eschews broad branding in favor of a focus on providing "information that is highly relevant to the design engineer," Carballosa said, differs from the debut of the Digital DNA campaign.
Developed by technology advertising agency TFABurnett, the initial ads attempted to do for Motorola’s line of semiconductors for cell phones, cars and other products what "Intel inside" had done for Intel’s microprocessors for personal computers. The first Digital DNA ads ran in People and other consumer publications.
That campaign had its critics. "The last thing in the world I’d want to buy is Digital DNA," said Al Ries, chairman of branding consultancy Ries & Ries. "It’s a typical advertising conceit, almost totally meaningless." The campaign was later retooled for a b-to-b audience. The second wave of ads ran in The Wall Street Journal and other publications aimed at top management and investors.
Most semiconductor manufacturers market themselves as either technologically superior or as experts in a particular vertical market. Digital DNA did neither. "Motorola ... struggled with vertical market branding," said Jeremy Donovan, chief analyst-semiconductors for Gartner Inc., "because you can’t emphasize one vertical without de-emphasizing others."
Motorola eventually spun off its commodity semiconductor manufacturing unit as a separate company, ON Semiconductor.
Motorola now markets itself primarily as a manufacturer of custom semiconductors for the communications industry. "Even in the current environment, we are staying aggressive with our marketing program," Carballosa said. "Our activity level is staying at an appropriate level."
To make the most of its budget, Motorola is making increased use of online advertising. "The primary thing that we’re doing is making sure that everything we do is integrated," Carballosa said. "We have a very targeted approach to our design engineering audience."
Carballosa also pointed out that the support from Motorola’s corporate branding effort helps "provide air cover." But that air cover and the Motorola brand—which now is tagged "Intelligence Everywhere"— aren’t as powerful as they once were.
Between 1995 and 2000, Motorola’s brand power—a measure of its recognition and favorability as rated by more than 1,000 corporate executives—declined from a rating of 65 to 58, according to a survey conducted by Corporate Branding L.L.C.