Computer chip giant Intel Corp., which this decade has gone from marketing obscurity to household name, in July will build on its brand by expanding a co-op program for PC marketers to include TV, radio and in-flight ads.
Advertising Age estimates Intel's co-op contribution for electronic media will be as much as $60 million this calendar year. When coupled with contributions required from PC marketers, the overall media increase could reach $100 million worldwide.
That's on top of the more than $200 million Intel is expected to put into print co-op ads this year.
In the past, Intel refunded 3% of a PC marketer's chip purchases as reimbursement for print ads. Marketers got another 2% if they put the Intel logo on a PC sticker. (Neither Compaq Computer Corp. nor IBM Corp. participates.)
Now, co-op participants will get 4% for print. They must use the sticker but won't get paid for it. But they will get a 2% refund good toward electronic ads. On a given media buy, Intel pays up to 60% of the cost, with the marketer kicking in the rest. A bit more than half the money will come to the U.S., and the bulk of the bucks should end up in TV in the prime PC buying season from September to December.
U.S. TV spending by the major computer industry marketers last year soared 38% to more than $150 million as big names-IBM, Compaq, Intel, Microsoft Corp.-took messages to the masses.
"The market is so broad now that advertisers really need to turn to broadcast to get their reach up in an efficient way," said Sally Fundakowski, Intel director of processor brand marketing.
Intel is poised to fuel the boom in PC electronic media advertising just as it did in print.
Many PC companies grouse privately about Intel's power. Yet the "Intel inside" logo can add credibility to PC brands lacking the name recognition of an IBM.
"Really, for us there is no downside" to the co-op program, said Jean Manasian, director of marketing communications for Digital Equipment Corp.'s PC division. Digital and Young & Rubicam, New York, worked on an Intel test of TV co-op ads.
Dell Computer Corp., which tried TV three years ago, expects to use the additional co-op money to reach a wider business audience, said Paul Connolly, account supervisor at Goldberg Moser O'Neill, San Francisco. "This is a great opportunity," he said.
Compaq, Intel's largest customer, and IBM pulled out of the co-op program last year, concerned that it promoted Intel at their expense.
Both also are cutting their reliance on Intel chips. Intel faces growing chip competition but still makes about 80% of PC processors, said Linley Gwennap, editor of The Microprocessor Report.
The co-op changes appear unrelated to Intel's grappling recently with a small flaw in its flagship Pentium chip.
Just four years after running its first TV spot, Intel could leapfrog IBM and Compaq to be the PC industry's top U.S. TV spender this year with its own ads, from Dahlin Smith White in Salt Lake City, and the co-op investment. Last year, Intel spent about $18 million on U.S. TV advertising and an estimated $125 million on global advertising, not including its co-op program. A 30-second co-op spot will include a surprisingly unobtrusive 3-second audio and visual plug for "Intel inside."
Ms. Fundakowski said more than $1 billion in PC co-op print ads have run with the "Intel inside" logo since the program began in 1991, with Intel contributing "hundreds of millions" of dollars. The nearly 1,800 PC marketers that accept Intel print co-op money can soon broadcast their appeal.
Alice Z. Cuneo contributed to this story.