Commentary by Rance Crain

WHAT CISCO AD SPENDING SAYS ABOUT A BUSINESS COMEBACK

And Why Merrill Lynch's Contrary Action Makes It Vulnerable

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Timing, as they say, is everything. Cisco Systems is spending upward of $100 million to get across its message about "the power of the network. Now."

"Now" is the operative word. During last year, Cisco largely curtailed its advertising

Rance Crain, editor in chief, 'Advertising Age'

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schedule. "The market wasn't ready for the message," Cisco's vice president for corporate marketing, Marilyn Marsereau, told The Wall Street Journal.

Now she thinks Cisco's customers are more receptive. Does she know something her boss, CEO John Chambers, hasn't caught up with? Mr. Chambers in early February told analysts corporate executives still aren't spending on technology. He added that customers have grown even more cautious about loosening their purse strings.

Expecting a payoff
But Mr. Chambers surely wouldn't have approved Cisco's big new ad campaign unless he believed it would pay off. That's why it makes more sense to pay attention to what a company actually does than to what the head guy is saying. To me, Cisco's huge ad commitment is the surest sign I've seen that tech business is on the way back.

(Another, even more robust, straw in the wind is Intel's $300 million, 11-country ad drive for its new Centrino chips and laptops designed for wireless computing.)

Merrill Lynch, on the other hand, doesn't think now is the time to spend big bucks for its "Total Merrill" campaign. "The investor marketplace is frozen. People, because of the geopolitical situation, are frozen," Bob Horton, first vice president of brand management at Merrill's Global Private Client unit, told our publication.

Mr. Horton said research showed that it wasn't the time to spend the money, and added that the financial-services company will do ongoing research to decide whether to resume advertising.

Campaign is history?
Do you get the feeling the Total Merrill campaign is history? Research will no doubt confirm that, even after the possible war in Iraq is over (or we decide not to invade), consumers will still have strong doubts about the economy and the stock market. So there won't be a propitious time to relaunch the campaign until business and the market are booming. By then it will be too late to convince investors to switch to Merrill Lynch.

As I said, timing is everything. Cisco doesn't see any immediate tech spending in the offing but it senses customers will be receptive to its message. And when they're ready to buy, Cisco's ad barrage will be hard to miss.

A faint heart
If I were in the brokerage business, I'd take Merrill Lynch's faint heart as a signal to uncork my own campaign, preparing investors for the upturn that's sure to come and showing how my firm deserves to be the proud custodian of their dollars.

Let's assume the idea of Total Merrill is to demonstrate that Merrill is more than just a stock broker, that it can handle all your financial needs (including banking, mortgages and alternative investment ideas). Then what better time to get across that message than when people are actively looking for new ways to hang on to their money? Down times are what inspired the campaign, and down times are when Merrill Lynch should pour it on.

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