Gateway ads set to return to house unit

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Gateway this week is expected to take its $250 million account back in-house. The move follows a series of frustrating relationships with large ad agencies and signals the end of a high-profile review.

The company intends to build an advertising department similar to clothing retailer Gap's successful in-house operation, according to executives close to Gateway. Gateway and Gap both are direct sellers of proprietary brands through company stores and the Web. And just as Gap uses Boston creative shop Modernista! for project work, Gateway is expected to hire outside agencies and creatives on a project basis.

With its stock struggling, Gateway is looking to reboot. The PC hardware and services marketer will disclose a new business strategy, including advertising and marketing plans, in a Feb. 28 meeting with financial analysts and media. It is expected the company will announce its in-house marketing approach at the session.

In 1998, amid troubles with incumbent D'Arcy Masius Benton & Bowles, Los Angeles, Gateway brought in DiMassimo Brand Advertising and production company Corra Films, both New York, to produce some TV campaigns. The DiMassimo/Corra duo is expected to have a similar role now.

Independent director Henry Corra is close to Chairman-CEO and founder Ted Waitt and has had a significant influence on Gateway advertising. Mr. Waitt recently took back the CEO seat at the ailing company.

Mr. Corra and a DiMassimo spokesman declined to comment.

Gateway is expected to break a consumer TV campaign this week created in-house. Spokesman Brad Williams declined to comment on whether advertising will in fact go in-house. It's not a new idea: Gateway's in-house group churned out virtual catalogs of print ads for years before the company began turning to agencies.

Gateway had been in close talks with Publicis Groupe's Fallon, Minneapolis, after embarking on a review last month (AA, Feb. 12). That competition included Siltanen/Keehn, El Segundo, Calif.; and DiMassimo. Gateway dropped the incumbent, Interpublic Group of Cos.' McCann-Erickson Worldwide, last month.

Advertising Age has learned a breakdown in negotiations between Fallon and Gateway occurred when an agency presentation missed the mark, attempting to totally rebrand the company.

According to executives close to the review, Fallon wowed Gateway at an initial pitch with Mr. Waitt but failed to capitalize on that in subsequent meetings. Fallon's presentation called for a reinvention of the Gateway brand, which didn't sit well with Mr. Waitt, who always has been keen on promoting his company's homespun values. Execs said Stuart Redsun, VP-advertising for Gateway's consumer business, pushed for Fallon but was overruled by Mr. Waitt. Fallon declined to comment.

At this week's confab for analysts and press, Mr. Waitt will focus on the future of Gateway Country Stores, international and small business strategies and new, beyond-the-box revenue sources, according to David Bailey, research analyst at investment bank Gerard Klauer Mattison. Mr. Bailey maintains Gateway's strategy to grow services is largely dependent on PC unit growth, which has slowed.

A management shakeup last month resulted in Mr. Waitt returning after the resignation of CEO Jeff Weitzen and other key executives. The shakeup also resulted in the dismissal of McCann, New York, which Mr. Weitzen had hired in 1998 after dropping DMB&B. McCann just last month created consumer advertising featuring actor Michael J. Fox; those ads now will be scrapped in favor of in-house work.

Contributing: Hillary Chura and Laura Q. Hughes and Kate MacArthur

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