Dell shops consumer PC account

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Dell Computer Corp. is reviewing its $30 million consumer account in a sign it intends to get more aggressive in a category where it is outmarketed by rival Gateway.

The account for the Home & Small Business Group represents one-third of the $90 million in Dell billings at Goldberg Moser O'Neill, San Francisco.

Goldberg, Dell's agency since 1988, is working to defend the business, though there's speculation the agency could resign because of recent frustrations with Dell assignments. Chairman-CEO Fred Goldberg was not available for comment.

AT LEAST 5 CONTENDERS

Other agencies invited to pitch are BBDO Worldwide, New York and San Francisco; Ammirati Puris Lintas, New York; Temerlin McClain, Irving, Texas; and one or two other shops, according to people familiar with the review.

GSD&M, Austin, Texas, declined an invitation.

BBDO, former agency for Apple Computer, snared Dell's brand account last September; Ammirati is the former agency of Compaq Computer Corp.

Paul Bell, senior VP-general manager of the Dell group, was traveling and unavailable for comment late last week, but a Dell spokesman confirmed the review.

The spokesman said the review was simply part of Dell's "general practice" of reviewing business relationships.

"With the company growing as quickly and rapidly as it is, we . . . [periodically] evaluate the various vendors and service providers," he said.

FAST-GROWING BUSINESS

Dell historically has been a small player in the home market, by design. It long has focused on the more lucrative business market, leaving the lower-margin consumer market to others.

Even with no formal marketing push, by 1997 Dell had built a $1 billion annual business selling PCs to consumers and small businesses. It officially set up the consumer division that year, focusing on profitable, higher-powered machines.

The spokesman said Home & Small Business is "one of the fastest-growing business groups" at Dell.

But the consumer division still operates in the shadow of Gateway, longtime leader in the consumer PC direct market. Gateway raised the stakes last year with a campaign from new agency McCann-Erickson Worldwide, New York, and a marketing program, "Your:)Ware," that allows consumers to finance and trade in PCs.

OTHER DELL AD MOVES

The review is the latest in a series of ad moves at Dell. In late '97, Dell chose J. Walter Thompson USA, Chicago and New York, to field a global brand campaign. Three months after JWT's campaign began, the company abruptly fired the agency and hired BBDO for the brand assignment. JWT and Dell later sued each other.

Fueling speculation that Goldberg may resign the business, an executive outside the shop said it is frustrated that the Dell assignments don't allow it to show off its creativity and branding prowess.

In January, Goldberg announced a reorganization to drive the agency's creativity and put it in the same consideration set as such creative powerhouses as Goodby, Silverstein & Partners, San Francisco.

The $500 million Goldberg shop, majority owned by Lowe Group, has produced strong creative work for other clients, including a well-received brand campaign for Cisco Systems.

HISTORIC TIES

Historic ties between Dell and Goldberg run deep: Michael Dell hired the agency--operating then as Chiat/Day, San Francisco--in 1988, when Dell's revenue was $159 million. The agency's punchy campaigns, packed with product and price, made the phones ring and helped Dell become the PC industry's standout performer.

Dell is now the nation's No. 2 and world's No. 3 PC marketer. Its 1998 revenue passed $18 billion.

Copyright March 1999, Crain Communications Inc.

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