TECH BOOM! BRANDING BLITZ: A HALF-BILLION NEW DOLLARS POUR INTO AD BUDGETS AS TECHNOLOGY MARKETERS POWER UP

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You're about to read about $500 million in ad spending that didn't exist three months ago -- the result of the unprecedented technology branding boom of 1999.

Never before have so many big tech hardware and services marketers done brand promotion on such a scale.

The reasons are multifold: maturing of the PC industry; emergence of new technologies; convergence; a strong economy; a desire to sell a brand story to Wall Street; and a need to keep up with rivals are all strong motivators.

The big winners are not computer publications, but TV networks, consumer and business publications, outdoor sellers and Web sites.

The spending increase by top marketers alone is equal to 10% of the estimated $5 billion spent by technology companies on advertising and marketing communications last year.

GETTING THEIR ACTS TOGETHER

In large measure, spending increases reflect that some major technology companies are finally getting their acts together in brand marketing after aborted earlier efforts.

IBM Corp. paved the way when Chairman-CEO Louis V. Gerstner Jr. made advertising and marketing a priority, consolidated at Ogilvy & Mather Worldwide and, in 1995, launched a seminal tech brand campaign, "Solutions for a small planet." Many tech ad insiders still say IBM does the best tech advertising in the business. But suddenly IBM is facing competition on the brand front like it has never seen.

"The bar has been raised," said Steve Hayden, president of worldwide brand services on IBM at O&M, New York.

The biggest new spending blitz is coming from Hewlett-Packard Co., which over the past month launched two global brand-building campaigns totaling $250 million, mostly incremental -- a big play for a tech giant that in the past has seen ambitious ad plans fizzle when budgets dry up.

Compaq Computer Corp., meanwhile, boosted its global budget this year by 50% to an estimated $300 million as it launched a brand campaign on TV last month -- nearly three years after the company announced plans to do a major global campaign.

BEYOND THE SELLING OF BOXES

Direct PC rivals Dell Computer Corp. and Gateway this month roll out campaigns that continue efforts begun last year to move the brands beyond selling boxes -- PCs -- to differentiate themselves based on service and reputation.

Gateway is expected to spend about $200 million in the U.S. vs. $150 million last year. Anil Arora, senior VP-chief marketing officer, said only that Gateway would have a "significant double-digit increase." Dell spending is expected to be close to Gateway; Scott Helbing, VP-corporate brand strategy, stressed the budget is based on what Dell needs to drive revenues, not rivals' budgets.

Elsewhere in the PC market, Intel Corp. nearly doubled its estimated global budget this year to $325 million to launch the Pentium III chip with the most integrated -- and lauded -- campaign in its history, created by new agency Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York.

Spending on hardware and services is booming beyond the PC. For example, 3Com Corp. today breaks a multimillion-dollar global campaign for Palm, the largest-ever effort for the hot-selling electronic organizer.

Print and outdoor ads, featuring bold images of fictitious Palm users, such as a naked ballet dancer and a hotshot attorney on a motorcycle, sell a lifestyle as much as a product. The "Simply Palm" ads, from Foote, Cone & Belding, San Francisco, are reminiscent of Samsung's "Simply Samsung" ads.

NETWORKING CAMPAIGNS

New work also is rolling out in the networking market, including the first major campaign for Nortel Networks since Nortel bought Bay Networks last fall and consolidated advertising at Temerlin McClain, Irving, Texas, and the Bozell network.

Nortel is boosting its spending to $60 million to $90 million, from $40 million, as it makes its brand play with an integrated TV and print campaign featuring the lyrics of the Beatles' "Come Together," which broke late last week .

The new wave of tech work puts the emphasis either on the brand or on a mix of brand and product messages. Either way, it's a radical departure from the category's old obsession with "speeds and feeds" and other techy fodder.

Mr. Hayden said the mandate from the top of tech companies for better advertising has led to "a professionalizing" of marketing communications departments that in an earlier era, he deadpanned, were populated with "bad engineers" relegated to a function where bosses figured they couldn't do any serious damage.

Tech assignments have become marquee accounts at the world's largest ad agencies, attracting the best and brightest who a generation ago would have gravitated to package goods or cars, said Marty Susz, group account director on Intel at Messner Vetere and former director of advertising in IBM's corporate marketing group.

And there still aren't enough qualified candidates: Mr. Hayden said the biggest challenge in technology advertising today is to recruit agency talent who get tech.

The new brand boom is no boon to computer publications, as tech marketers are reaching out to a broad base of consumers and business customers.

TECH AD PAGES DOWN 5%

Tech ad pages declined 5% last year in computer, telecom, business and news publications monitored by tracking service Adscope, and there's no indication robust growth is on the horizon.

Compaq, for example, is considering shifting more of its print budget from computer titles to business publications and "high impact, high prestige" newspapers such as The Wall Street Journal and Financial Times, said Andrew Salzman, VP-worldwide advertising and brand strategy. DDB Needham Worldwide, New York, is Compaq's global agency.

As tech companies get better at branding, they also are working harder to integrate branding messages and product advertising. Nortel's new TV spots, for example, show specific products -- such as a technology that combines e-mail, fax and voice mail on a PC -- as a means to a bigger brand statement about the networking company's broad capabilities, said Jeffrey Brooks, senior VP-brand management.

"When you put a brand and product together, it's really like holding up a mirror to the company," said Peter Arnell, chairman of Arnell Group, New York, agency for Samsung. "It becomes a pure reflection of the company if you hit it right. That's where it becomes very powerful."

PC companies are holding themselves up to that mirror -- and making changes. Since hiring McCann-Erickson Worldwide, New York, as global agency a year ago, Gateway unified print advertising so that product ads and more brand-oriented TV commercials seem in sync.

Dell product ads from Goldberg Moser O'Neill, San Francisco, intended to move the goods, are far different from brand TV spots from BBDO Worldwide, New York, intended to promote the advantages of Dell's efficient direct-selling model. But Mr. Helbing, a veteran of such consumer brands as Reebok and Pizza Hut, said Dell is working with the agencies to address the issue.

"One of the internal goals right now is to align all of our communications," he said.

Mr. Helbing said the emphasis on the Dell brand simply reflects that PC products are becoming commodities, so advertising must play up attributes beyond product and price.

"Now that the product difference has [virtually disappeared], the brand is what people are buying," he said.

MESHING BRAND & PRODUCT

IBM, the champion of tech branding, is getting better at meshing brand and product in print advertising -- following a mandate from the top. Last year, Chairman Gerstner and Abby Kohnstamm, senior VP-marketing, challenged the company and agency to bring print ads up to the quality of IBM's oft-lauded TV work.

"Both we and the agency were collectively disappointed [with print] and felt we could do so much better," recalled Mr. Susz, the former IBM ad director.

The call to action paid off in a sleek new IBM PC print campaign that simply meshes style -- fashionable photos of IBM products -- with substance -- features and price.

So IBM raised its own bar.

Given all the money, talent and client focus on tech branding, it should be a given that the level of tech branding has never been higher.

But the industry has a long way to go.

"We've got our [Intel] war room here filled with the walls of competitors' print advertising," Mr. Susz said, "and by and large it's pretty bad. Not much of it

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