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Humans, Not Tech, Define a PC-Free IBM

With Business Focused on Analytics and Marketing Based on Character, Fabled Computermaker Is Poised to Surpass Coke as No. 1 on Interbrand Chart

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IBM's path to marketing success began strangely enough with a retreat from the very thing most consumers knew it for best -- the personal computer. Since the 2004 decision to divest the business to China's Lenovo and focus on business services and analytics, the IBM brand has never been stronger.

In the annual Interbrand rankings, IBM has added 50% to its value, now nearly $70 billion since then. The brand has reached No. 2 with a bullet, passing Microsoft in 2008 and rising faster than No. 1 Coca-Cola the past three years. Should IBM and Coke maintain their brand-value growth rates of the past year this year, IBM is poised to surpass Coke to become No. 1 by next year on the Interbrand chart. Much of that is based on how investors value IBM, which has seen its stock price soar 78% since 2004, despite a major financial crisis in 2008 that has left U.S. stocks as a whole well below their 2007 peak.

A 'Smarter Planet,' Thanks to IBM
A 'Smarter Planet,' Thanks to IBM

A big part of that financial success has been branding, said Jon Iwata, senior VP of IBM's marketing, communications and citizenship organization, in a presentation to the Association of National Advertisers conference in October.

IBM's "Smarter Planet" campaign focused on its role in solving the world's problems. Its campaign pitting the Watson supercomputer and artificial-intelligence system against human contestants on "Jeopardy" and its Centennial campaign focused on 100 years of innovations have all played a role in IBM's success.

Yet the move to get out of the PC business that helped unleash IBM's growth was controversial and a big risk for the brand, Mr. Iwata said. "From a pure economic standpoint, this was an easy decision to make, because we knew that PCs would continue to commoditize over time," he said. "But we had intense debate internally [because of the effect the divestiture] would have on the IBM brand. You see, the PC was the last touch-point that IBM had with an individual consumer and business user."

IBM was divesting a business with $10 billion in revenue -- one that had just sold its 100 millionth PC, which is a whole lot of consumer presence.

Along with the divestiture came big changes in marketing strategy, Mr. Iwata said. "We changed our goal. We did not focus on brand recognition or brand visibility. Our goal has been relevance."

That meant talking less about the IBM brand and more about its character. The process that had already begun in 2003 with some corporate introspection led by then-new CEO Sam Palmisano.

IBM used the equivalent of internal social media through its intranet to pose three questions all employees were expected to answer in 72 hours about the company's ethics, value and purpose, including, "What would happen to the world if IBM disappeared tomorrow?"

"It was emotional. It was messy. It was a little concerning at times because of what people were saying," Mr. Iwata said. "But in the end it was constructive."

Some of the answers ultimately helped shape the "I am an IBMer" tagline within the 2009 "Smarter Planet" campaign from Ogilvy & Mather, New York, as employees talked about the contributions they made. For a company that sells business services, it meant a clear focus on the product, which happens to be its people.

 One of the biggest hits of 2011 for IBM, however, came by focusing not on a person but on a personified advanced analytics system: Watson, the successor to the Deep Blue supercomputer that defeated chess master Gary Kasparov in 1997.

Watson wasn't necessarily the first choice, Mr. Iwata said, as he showed a series of wonky and barely decipherable names and graphics proposed internally for the new system. Ultimately, though, in an indication of how the human touch has won out, IBM chose to name the system after its founder and compete against real people on "Jeopardy." It was a far more complex real-language artificial intelligence test for Watson than Deep Blue had faced playing chess. And it was a test Watson aced, not only winning at "Jeopardy" but also producing 1.3 billion media impressions and $50 million worth of earned media, by IBM's count.

"This notion of character has really helped us market Planet Watson," Mr. Iwata said.

And that character, which could still easily get lost in tech wonkiness or the historical image of white men in white shirts selling computer hardware, takes another turn in January when Virginia Rometty becomes the company's 10th CEO and the first woman to hold that job.

A computer scientist and electrical engineer by training, Ms. Rometty was most recently senior VP-sales, marketing and strategy, making her was one of the rare execs who bridged both marketing and sales. Not only does her elevation bringing a strong marketing background to the company's top post, it signals the importance of the discipline in making IBM what it is today.

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