IBM Advertising Trickling out of WSJ

Tech Giant's Withdrawal From PCs Spurred Drop in Its Overall Spending

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Big Blue is no longer such a big advertiser in The Wall Street Journal -- or overall.

IBM Corp., the Journal's largest advertiser as recently as 2004, dropped to No. 9 last year and didn't make the top 10 in this year's first quarter, according to TNS Media Intelligence.
IBM Chart
Source: Ad Age DataCenter analysis of company filings


One reason: IBM's exit from personal computers, a category that spent heavily in the Journal and other business and consumer media. IBM sold its PC division to China's Lenovo Group in April 2005.

IBM's measured ad spending in the Journal's print edition last year plunged to $16.9 million from $37.6 million in 2005 and $41.5 million in 2004, according to TNS.


Strong ties
The technology-services, hardware and software firm long has been one of the Journal's most prominent advertisers. In 1999, IBM ran a 32-page placement that the Journal billed as "the largest single advertisement in the history of American newspaper publishing."

In recent years, IBM has slashed advertising -- both in the Journal and overall -- after a remarkable run that helped rebuild a fallen icon. IBM's stated worldwide spending on advertising and promotion rocketed from $716 million in 1993, when Louis Gerstner arrived as CEO of the then-troubled giant, to a 1999 peak of $1.76 billion. Spending has fallen each year since then; IBM last year spent $1.2 billion, down 32% from 1999. IBM ad spending as percent of revenue last year was 1.31%, down from a 2%-plus share from 1996 through 2000 and not far from 1993's level (1.14%).

IBM consolidated its ad account at Ogilvy & Mather in 1994 and rolled with its celebrated "Solutions for a small planet" campaign in 1995.

A spokesman declined to comment on IBM's ad spending, its relationship with the Journal or a potential News Corp. takeover of Dow Jones.

'Efficiencies'
Some reasons for the spending decline are clear. The biggest cuts -- from 2000 to 2002 -- were "primarily due to a strategic initiative to consolidate and centralize certain advertising at the corporate level in order to gain additional efficiencies," according to a 2003 IBM regulatory filing.

The PC sale further reduced IBM's need for mass-media spending. Finally, IBM has put more emphasis on digital channels -- IBM.com, online media, viral efforts such as video -- that cost less than traditional media, allowing IBM to reach its target while spending less.
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