IBM HAMMERS OUT WORLDWIDE MEDIA DEALS;COMPUTER GIANT WIELDS ITS SIZE TO THROW AWAY RATE CARDS AT MAJOR AD OUTLETS

By Published on .

IBM Corp. is negotiating sweeping worldwide contracts with a who's who of media giants, including the broadcast TV networks, CNN, Time Warner, Dow Jones & Co., and computer publishers CMP Publications, International Data Group and Ziff-Davis Publishing Co.

The biggest computer advertiser wants to make sure it gets the lowest rates and special treatment for its $600 million account.

GOODBYE RATE CARD

One of IBM's goals is to get "as far away from the rate card as you can because of the worldwide investment," said Michael Baldwin, worldwide account director on IBM at Ogilvy & Mather Worldwide, New York.

"That's another unfair competitive advantage that we want to leverage for IBM," he said.

Over time, IBM expects to buy most of its advertising through global contracts with major media companies, said VP-Corporate Marketing Abby Kohnstamm.

As Big Blue muscles the media, IBM is also accelerating moves to centralize media control at its Armonk, N.Y., headquarters, taking power away from IBM regional operatives. IBM has even compiled a work-in-progress listing of countries where it will advertise and a few where it won't. Finland? Sorry, not a priority; IBM may go dark there for awhile.

"The level of corporate control over there has gone way up," said an executive with a major media company. "There's literally a list of who gets money and who doesn't."

Before 1995, Ms. Kohnstamm said, IBM would have been hard-pressed to know how much it was spending on advertising at a particular time. IBM now monitors, budgets and tests advertising as never before.

Ms. Kohnstamm has final say on how much money is spent on products and in regions. She's gutting spending for some projects funded in the past to free up bucks for higher priorities.

TOUGH DECISIONS

"If there are tough decisions to make, I make them with the support of top management," Ms. Kohnstamm said.

IBM is making media the next step in a remarkable advertising turnaround.

Chairman Louis V. Gerstner Jr. arrived at IBM in 1993 and nixed the idea of busting up the company, betting instead on one Big Blue machine with global products and brand. He quickly recruited his trusted former colleague at American Express Co., Ms. Kohnstamm, to oversee global advertising and marketing.

After spending one year assessing IBM's fractured and ineffective advertising, Ms. Kohnstamm summarily fired nearly 80 ad agencies and handed IBM's global account to O&M in 1994 in the biggest account shift ever. The agency delivered its much-lauded "Small Planet" campaign last year, giving IBM global creative on which to stage its comeback.

NEXT LOGICAL STEP

The next logical step is the worldwide media strategy, being executed now by O&M, Ms. Kohnstamm and Marianne Caponnetto, IBM director of media strategy and operations.

IBM has quietly closed deals with several media companies and is negotiating with many others. "There should be no surprises in the people either we're in talks with or have agreements with," Ms. Caponnetto said.

"They want to feel they get value from being a large global business partner," said one media executive. "Right now, they feel they're not getting the best deal."

For example, IBM will get a better deal with IDG, which has 225 computer publications in 75 countries, if it commits to a global contract, Mr. Baldwin said.

Price is important, but Ms. Caponnetto said IBM also wants to hear about "innovative business opportunities." She insisted media should be partners, not vendors. She said IBM will go so far as to help media companies with their global ambitions by giving them access, for example, to technology.

But IBM is also asking media companies to give it first crack on everything from one-time availabilities, such as a gatefold placement, to special media programs.

"We want first right of refusal on innovative ideas," Mr. Baldwin said.

Jan Jaben and Keith J. Kelly contributed to this story.

4

In this article:
Most Popular