HP to consolidate global media buys

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Hewlett-Packard Co. will consolidate its global media account with a single agency, a move that comes as Chairman-CEO Carly Fiorina makes good on her promise to Wall Street of $2 billion in post-merger savings.

The winning shop will walk away with a potentially lucrative prize. The combined U.S. measured media spending of HP and Compaq Computer Corp. in 2001 was $275 million. The global budget for the new company is expected to be much larger.

The move, to take place within two weeks, pits two media giants against each other. Zenith Optimedia Group, global media agency for HP, squares off against Interpublic Group of Cos.' Foote, Cone & Belding Worldwide and its Initiative Media. Compaq Computer Corp.'s media buying has been handled by Initiative since it absorbed FCB's media arm, TN Media. Initiative also handles rival Gateway. Compaq's planning is handled by FCB. Zenith is jointly owned by Publicis Groupe and Cordiant Communications Group.

"HP will have one media agency," said Jan McDaniel, formerly an HP ad director but still unassigned a title with the newly merged HP and Compaq. She said the chosen shop would "negotiate across all businesses," and there will be no review.

The consolidation occurs amid slack spending in the tech sector. Ms. Fiorina last week projected flat sales for the calendar first half and dismal prospects for the second half. HP has committed to a revenue drop of no more than 4.9% after overlapping product lines are eliminated, and will lay off 15,000 workers globally.

final figure not certain

Initiative and Zenith both declined to comment. FCB executives did not immediately return calls.

Ms. McDaniel said the final ad-spending figure is not certain, noting that global spending is not likely to reach that of what HP and Compaq spent combined last year. "[That's] not going to happen," she said.

She added she is "hoping" and "praying" funds will be allocated to launch a rebranding effort for the merged company later this year. Ms. McDaniel did not address the possibility of creative reviews.

Currently, Omnicom Group's Goodby, Silverstein & Partners, San Francisco, handles HP's global brand and consumer creative, along with media planning for that business, and media buying for print. Publicis' Publicis & Hal Riney, San Francisco, and its overseas sibling shops are responsible for advertising related to HP laser printers, business products and services. Optimedia handles HP's global print and online media buying and planning; sibling Riney does TV buying and planning.

Agency insiders have speculated for months about realignments. Interpublic's DraftWorldwide, agency of record for Compaq's direct business, and FCBi, an Interpublic interactive unit, are among the agencies jockeying for a larger assignment. FCBi already handles an estimated $75 million in alliance advertising for Compaq.

Ms. McDaniel made her remarks at a forum for the International Advertising Association West on June 5. She said additional details about the merged company's advertising and marketing communications organization will be disclosed within two weeks. She did say the new HP will have no chief marketing officer, in keeping with HP's traditionally decentralized structure.

Marketing strategy will be developed by an HP Worldwide Marketing Council under Allison Johnson, head of the company's global brand and communications organization, and a marketing representative from each of four new business units.

HP closed its $20 billion merger with Compaq on May 6 after an acrimonious proxy battle spearheaded by Walter Hewlett, the son of one of HP's founders.

contributing: richard linnett and rich thomaselli

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