You'll be seeing a lot of ads from Compaq Computer Corp. for its hot-selling Presario home PC leading up to Christmas. But you won't read any.
Compaq scrapped its consumer print ads and is putting 100% of its estimated $15 million to $18 million fourth-quarter U.S. budget for home computers into TV ads from Ammirati & Puris/Lintas, New York. It's one of a handful of big and small names in the computer industry that are shifting holiday budgets dramatically from print.
Computer companies turned on the tube in last year's fourth quarter, marking the first time the industry pumped more than $100 million into the medium in a three-month period. Computer TV spending in the quarter just begun likely will surpass $150 million.
Big names like Compaq, Microsoft Corp., Intel Corp., Apple Computer and IBM Corp. will make most of the noise, but they'll be joined by some lesser-known names. The biggest new battleground: inkjet printers.
Epson America, No. 4 in that business behind Hewlett-Packard Co., Canon Computer Systems and Apple, claims it will spend about $18 million on TV and $12 million on print in a campaign breaking Monday from its new agency, Ammirati. Canon, meanwhile, will break into TV by allocating 90% of its $15 million yearend budget into that medium with an effort starting Oct. 9 from Hajjar/Kaufman, Marina del Rey, Calif.
"It's not high-tech advertising anymore," said Exec VP-Creative Director Adam Kaufman. "It's consumer advertising."
There are good reasons for the PC TV boom: The PC is a proven mass product already in more than one-third of U.S. households. Hype around Microsoft's Windows 95 software will only accelerate the booming market, generating more demand for PCs, printers and CD-ROMs.
More than ever, the products--the sounds and video on multimedia PCs, the splashy color of printers--lend themselves to TV.
Canon, for example, came up with the idea of giving away software to turn its inkjet models into the family printer for the home PC. Canon printers can produce greeting cards and iron-on appliques for T-shirts, appealing features for a family that a TV spot plays up.
The massest of media is in part a logical response to a key change in the marketplace: The industry's fabled "influencers," the experts who read publications like PC Magazine and then advise others what to buy, don't have the same level of influence in steering the masses. So TV allows marketers to take the message directly to a great and interested market.
"If you look at good package goods ads, they're selling benefits," said Peter Bergman, Canon's VP-marketing and a one-time Procter & Gamble Co. executive. "That's basically what we're doing."
Part of the TV splurge, perhaps surprisingly, reflects that the computer industry isn't quite as vibrant as it first appears. Tighter profit margins in the intensely competitive market have even the strongest players watching their budgets. While a few companies, such as Microsoft, Canon and Epson, are dramatically stepping up spending, many are seeing moderate or no increases in budgets.
Compaq, for example, soared to the industry's top sales spot by slashing its PC pricing and seeing gross profit margins plummet to 24% in the first half of this year from a lofty 43% five years ago. Compaq's North American second-quarter sales were up 25%, but VP-Communications Jim Garrity says his holiday ad budget will be up only moderately because of tight margins.
Intel, another strong force, will keep its fourth-quarter media budget about even with the same period last year, when the company spent about $25 million on U.S. chip ads. But Intel, too, is shifting some money out of print for the holidays with its campaign from Dahlin Smith White, Salt Lake City.
"We're focusing heavily on TV," said Ann Lewnes, director of worldwide advertising.
Focus seems to be the watchword across the computer industry. Apple and BBDO Worldwide, Los Angeles, are laboring to get the Macintosh message heard amid the Windows 95 noise. Apple will increase spending for the quarter and could spend as much as $33 million, about a 20% increase over last Christmas.
Allen Olivo, Apple's director of worldwide corporate advertising, said he'll put more money proportionately into TV for the holidays than Apple has in the past. He's also trying to focus print spending, which he says may mean fewer titles with heavier schedules.
Copyright October 1995 Crain Communications Inc.