Branding Big Blue

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The people at ibm corp. would have you know that contrary to popular opinion and all the hype, e-business isn't e-z. They should know.

As IBM moves much of its business and operations online including IBM.com and ShopIBM, the tech titan has struggled with many of the same issues and obstacles as its customers. Those issues range from how to manage multiple supply chains and procurement processes, to deepening customer relationships and implementing data-mining techniques. Then there's the challenge of building the appropriate backend infrastructure to support these elements and more, within a fast-growing, quickly changing business.

In the realm of e-business, IBM has probably done more than any other company not only to create and extend category awareness but also to offer the essential building blocks -- hardware, software and services -- that help make up unique solutions for each customer.

IBM put "e-business" on the map, and the company's reputation is riding on its ability to practice the discipline it sells so hard.

ADOPTED BY RIVALS

Since IBM popularized the term "e-business" nearly four years ago, the catchphrase has been appropriated by rivals large and small.

For IBM, and Abby Kohnstamm, chief architect of e-business marketing and keeper of Brand Blue, it's much more than a hip, albeit increasingly well-worn anthem for today's super-stoked Internet economy. E-business is an operating principle that guides all the company's business practices, products and services.

Consequently, IBM believes it ought to be core to all businesses and has made a staggering global bid, to the tune of nearly $2 billion, from fall 1997 through the end of 2000, to help them navigate the choppy waters. This year alone, IBM is expected to spend $660 million globally, which represents a modest 10% rise in spending, to spread the e-business mantra.

"We believe that the impact of e-business, and the technologies that enable it, is just beginning to be felt. Therefore as a unified strategy for our business and a marketing platform, we feel it has lots of growth ahead of it," Ms. Kohnstamm said in a recent interview at the company's corporate headquarters in Armonk, N.Y.

Some industry competitors and critics maintain that IBM helped buy them category awareness, and consequently they've had to spend less money.

But the true genius was in sticking with the effort Ms. Kohnstamm led, as senior VP-marketing, in partnership with the creative and account teams at Ogilvy & Mather Worldwide, New York, IBM's ad agency since 1994.

IBM's commitment to e-business marketing comes straight from company chairman-CEO Louis V. Gerstner Jr., who last year appointed Ms. Kohnstamm to a seat on the company's influential corporate executive committee.

"There isn't a company in the world today that doesn't realize that this is an enormous transformation of the way the world runs," she said. "So we don't have to sell anymore the fact that `you need to figure out what your strategy is going to be' in this environment. We do feel, though, that the work that we did that basically defined the category, then explained the opportunity, did give us mindshare lead. And that's helping very much [to have] us be looked to as the company that really understands this, and therefore gives us credibility to talk about the future."

TRIMMED AGENCY ROSTER

Ms. Kohnstamm, 46, seems to revel in big-picture thinking. But her serene demeanor belies a tough-minded and decisive executive with a vision of what she wants and the wherewithal to get it. She came to IBM in 1993 from American Express Co., where she had worked with Mr. Gerstner.

One of her first moves was to consolidate business, trimming IBM's roster from the almost 80 agencies with which it was working.

With no formal review, she named Ogilvy IBM's agency of record in what was the biggest account move in advertising history. Consolidation also took place in the interactive realm in late 1998, when IBM chose six interactive agencies -- since pared to four -- even as its interactive workload increases.

The four shops are: OgilvyOne and AnswerThink Consulting Group's Think New Ideas and R/GA Interactive, all New York; and Modem Media-Poppe Tyson, Norwalk, Conn.

IBM has pressed all four into service to supplement its own growing internal Web force as it prepares a major marketing push around IBM.com. IBM has the luxury of drawing on the internal group that builds e-businesses for outside customers.

The combined effort will showcase how IBM is an e-business and how it conducts customer relationships online, using a mix of Web advertising and other media.

"We have been and will continue to invest heavily in our Web capability and move more and more of our product line, as appropriate, to the Web," Ms. Kohnstamm said. Customers will be able to check out products and services, obtain product information, bookmark a selection and receive service.

BUILDING CAPACITY

"I think we've been building capacity in terms of really being able to have for those customers who want it and for those products that warrant it, the ability to get information, do the configuration, get a price and actually complete the sale. And we're putting more and more of those products into that category," Ms. Kohnstamm said. "That involved building backend logistics systems like we're telling our customers they need to do, building the kind of customer database capability that supports it so that we increasingly can tailor, perhaps, promotional offers."

There have been plenty of challenges ramping up IBM.com.

"We distribute our products through multiple channels, as many companies do, and so finding the right balance of all the channels and integrating those has taken some effort. . . . We also learned from a lot of customer research that we needed to have more of an audience-based focus on IBM.com," she continued.

While IBM plays hardball in the large-enterprise space, it is making forays into the fast-growing small-business segment and is addressing the medium-size market through its partner network. It has dropped out of the next-to-no-margin consumer market.

The company's beleaguered consumer business drew its final breath last year when IBM announced a retail pullout. It no longer sells consumer PCs and software through retail except via retailer Office Max, where its contract has not yet expired.

`BUSINESS INDIVIDUALS'

"I think we finally decided that you can't be in all markets equally well and that what we really are, our sweet spot and our strength -- and frankly, it's a big enough and fast-growing market -- was the business market," Ms. Kohnstamm said. Though IBM has given up consumers, it does market to what it terms "business individuals" and students, who can still find Aptiva PCs loaded with personal-use software and ThinkPad i Series notebook PCs on the Web site.

The demise of IBM's consumer efforts follows a series of missteps dating to the mid-'80s, when IBM bombed with PCjr. IBM seems to have concluded that it is an international marketer of business products and services, not consumer goods.

So what's next for the endlessly morphing e-business campaign? Lots, apparently. Thus far, it has hit key message points around supply chain management, setting up a Web site for e-commerce, business intelligence, technology innovations and customer relationship management.

"Our messaging now is shifting into three basic areas. The first is focused very much around the major solution areas -- re-engineering and transformation of business that companies are going through," Ms. Kohnstamm said.

Advertising and marketing messages will revolve around all aspects of the customer experience. And in a new twist, IBM will partner with business application software companies such as Siebel Systems on ads and other marketing programs that reflect specific customer relationship management practices and solutions.

Messages will focus on actual services and consulting practices IBM and its partners have built to help change the way business is conducted.

"The second layer is really going to be focusing on IBM.com and the ability to buy a lot of products that you need to become an e-business quickly, directly, easily," she said. Dedicated creative for IBM.com will begin in the second quarter.

This segment of the campaign, Ms. Kohnstamm said, will allow IBM to illustrate that it is an e-business, and that the products and services it sells are essential to becoming one. Product campaigns for servers, such as the on-going "Magic Box" effort and others, will all feature a call to action to IBM.com.

Later in the year, IBM will unfurl high-profile creative focusing on the next generation of e-business, or what Ms. Kohnstamm refers to as pervasive computing: "Other devices, and other ways to do e-business beyond the PC" such as with wireless devices.

LAST OLYMPICS

While e-business remains IBM's single, overriding marketing strategy, its Olympic Games sponsorship signifies another linchpin in its overall marketing mix. This year's Summer Games in Sydney will mark IBM's last Olympics as a corporate sponsor.

"I think the Olympics was a great marketing platform for us for its time," Ms. Kohnstamm said. "We used it very successfully to tell our services message. But you can only tell that story so many times."

IBM fumbled with the 1996 Olympics in Atlanta when the IBM-built official Web site ran into a series of glitches. Two years later, IBM rebounded with glitch-free Web play at the Games in Nagano, Japan.

Ms. Kohnstamm said that without the Olympics, IBM will be free to extend its media spending into other areas, as yet undecided. Part of the cost savings may be channeled into joint marketing ad programs with software application partners.

Spectacular creative has helped give IBM a cool, edgy and distinctively human personality. Remnants of the stodgy, buttoned-up culture may still exist, but the future is clearly a lot more free-wheeling, even unknown.

"This industry is enormously competitive. Marketing, by nature, is a competitive endeavor. I think you have to constantly reinvent and reinvent, and when something stops working, just shed it and go to the next thing."

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