Intel Corp. will rejigger its massive $800 million co-op advertising program to better align with the brand segmentation strategy it embarked upon a couple of years ago. The gargantuan budget supports the chipmaker's ubiquitous "Intel Inside" program, which awards financial incentives to licensees that meet Intel's criteria.
Among the program changes: Tiered reimbursement rates, rolling out globally as of April 1, with the exception of Japan, which see the change Feb. 1. Ads for personal computers with Intel's Pentium III and Pentium III Xeon processors will be reimbursed at the rate of 60%, while PCs powered by the company's lower-cost Celeron chip will receive 40% reimbursements.
Previously, Intel's reimbursement rate amounted to 60% across its product line. The change illustrates Intel's move to emphasize its premium brands.
"It's a natural evolution of the program, to reinforce our brand segmentation," said Jami Dover, VP-Sales and Marketing Group, and director of worldwide marketing operations.
Intel will continue to rebate an amount equal to 6% of a PC maker's chip purchases in co-op funds.
Also new is a Web-based e-commerce component that enables licensees to receive reimbursements for selling qualified Intel-based products on their Web sites.
The Internet component, effective Aug. 1, would make it possible for a PC maker such as Hewlett-Packard Co. to receive a financial incentive for selling an H-P Pavilion PC with a Pentium processor from the H-P Shopping Village. Intel hasn't yet determined how it will extend the Web module beyond PC makers' online stores to other e-tailers that sell products powered by Intel processors.
"We're in a period of assessment. Obviously, we'll focus on e-commerce next year, but it's premature yet," said Ms. Dover, adding, "We're working closely with licensees all over the world [to learn] about what makes sense" for them.
Intel, which had targeted retailers only, now will extend its sales channel program to allow licensees to promote their products with telcos, Internet service providers, financial institutions and supermarkets. That extension will begin immediately. Intel felt it needed to broaden its channel concept as computers are sold through a variety of channels, Ms. Dover explained.
Finally, Intel has decided to pull the plug on the optimized content program it initiated two years ago via a test with Dell Computer Corp. That program, designed to spur the growth of rich media on the Web, rewarded licensees that placed ads on rich media Web sites at a rate of 75%. Intel will help licensees bridge the gap by offering a transitional Web advertising special from Feb. 1 to July 31 that offers 75% reimbursements.
"The intent of the Web special is to enable our [original equipment manufacturers] to continue to focus on Web advertising and, as we introduce an e-commerce module, we'll enable them to experiment on the Web," Ms. Dover said.
Copyright November 1999, Crain Communications Inc.