Dell has riled agency executives by asking for advice that goes far beyond normal bounds. The request is certain to require holding companies to scramble and create a complex client-specific structure to accommodate the computer maker. And there are strong indications shops will be blamed if Dell-demanded marketing solutions go awry, even in the early days before the account is awarded.
Why then, are all five of the major holding companies tripping over themselves on the way to Round Rock, Texas?
It's because Dell is the juiciest account to go up for grabs in years. Not only is it a holding-company review, so near to the hearts of the marketing conglomerates because they justify the umbrella organizations that arch over their myriad agencies, there's the $90 million to $100 million revenue figure the PC maker is throwing around. That's a huge chunk of change, much bigger than the real revenue numbers behind the massive media billings quoted for Bank of America or Wal-Mart—the last major marketers to seek a holding-company solution.
So Omnicom, WPP, Publicis, Interpublic and Havas all have taken the bait. That's despite the fact that executives who have been involved with the review fear that the $100 million may never materialize.
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In this case the ego in question would be that of Dell's VP-marketing, Casey Jones. Mr. Jones, whom several people described as extremely intelligent, is a relatively new arrival at Dell, having just recently quit Interpublic, one of the holding companies pitching the account.
(Somewhat strangely, Mr. Jones was in the middle of an online interview with Federated Media CEO John Battelle when he got his job. He started the interview as exec VP-global strategy director, McCann Erickson Worldgroup, and by the end had been "walked" out of McCann because he'd taken the VP-marketing post at Dell. Read the interview on Mr. Battelle's blog at federatedmedia.net.)
Interpublic rivals were less worried that Mr. Jones had some allegiance to his former company than that the review process and the structure it creates would get in the way of the work that needs to be done. "We've seen this movie before," said one executive involved in the review. "The whole story becomes about the guy and about the weird, crazy new model, and for some period of time, the fact that the advertising hasn't been good and that the performance is not great gets totally obscured by the other things."
Dell's performance certainly could use some work. According to IDC, it recently lost the top spot in worldwide PC shipments to competitor HP, although the Round Rock, Texas-based company is still the lead shipper of PCs in the U.S. A spate of roughly handled PR crises in the past year—a blogger's highly publicized knock on the company's customer service, a huge battery recall and a charge from New York's attorney general regarding a "bait-and-switch" financing offer—all have threatened to dent the company's image among consumers.
Dell's stock also has become more volatile in recent weeks, although the news late last week that Dell had to dial down earnings between 2002 and 2006 by $150 million at the conclusion of a yearlong probe seems not to have shaken shareholder confidence terribly. The stock jumped 24¢ when the news broke.
On the good-news front, recent efforts in emerging markets such as India and China have been deemed successful (65% of Dell's revenue comes from the Americas, according to Ad Age estimates). Locally, a hip, folksy new campaign from Mother for the colorful Inspiron laptops and a deal with Wal-Mart that makes Dell computers available for the first time in a retail environment are also cited as having the potential to create an uptick in sales.
The fear among executives pitching the account is that if things don't turn around in a timely fashion, the advertising agencies will be on the hook for not making Dell's new marketing model, whatever it may be, work. Some of the executives feel that all Dell really needs is a solid CRM model, yet the company seems to be asking for a lot of bells and whistles (word-of-mouth and digital efforts chief among them) from the holding companies.
Even the recent Buzz Summit suggests the company is exploring both above-the-line and below-the-line strategies to move computers.
Holding-company pitch model
With Interpublic and WPP expected to be the finalists, each company will continue to contend in a review where it is not clear who will make the final decision: CEO Michael Dell, Mr. Jones or Chief Marketing Officer Mark Jarvis. What is clear is that both marketing-services companies are looking to validate the holding-company pitch model. Interpublic already has created client-specific teams to retain the Johnson & Johnson media business in North America. It is also said to have the inside edge, given that Mr. Jones joined Dell from McCann.
A spokesman for Dell declined comment for this article, stating that many of Dell's decisions regarding marketing direction—including whether or not the ultimate solution lies in a holding-company consolidation—are yet to be made.
Spokespeople for the holding companies also declined comment for this story.