IBM sees promise of marketing partnerships

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John Kahan loves a good partnership. As IBM Corp.’s VP-integrated marketing communications for global sectors and solutions, he presides over much of IBM’s partnership marketing, among the most aggressive in the technology industry.

This year, Kahan spearheaded the "we know, they know" campaign, which highlights IBM’s role as an open, computer services company using best-of-breed software from partners such as Ariba Inc., i2 Technologies Inc. Siebel Systems Inc. and Dassault Systemes.

The campaign, which launched May 1 in publications such as Business Week, The Wall Street Journal and The New York Times, has yielded impressive results, according to IBM’s own tracking. The company said 95% of its target audience understood the partnership campaign, 89% felt it communicated a unique reason for doing business with IBM, and 98% found the campaign believable. An unprecedented 0% percent of the audience was confused by the message, Kahan said.

BtoB Editor Ellis Booker and Senior Reporter John Evan Frook interviewed Kahan at his White Plaines, N.Y. office about IBM’s approach to partnership marketing.

BtoB: How did you learn how to forge a good partnership from a marketing perspective?

Kahan: Fortunately, I had the opportunity to learn from failure. Earlier, a part of IBM tried to deal with Siebel, i2 and Ariba, but really failed at it. It was to the point that [Siebel CEO] Tom Siebel called up [IBM Sr. VP-marketing] Abby Kohnstamm and said, "You know what, I don’t know whether I want to have a relationship with you." It almost cancelled what has turned out to be an incredible, successful relationship. Now, we take the approach—and it’s controversial at IBM—that our partners are 50-50 partners, regardless of the financial or technology relationship.

BtoB: How does that work?

Kahan: We bring our IBM brand and our knowledge of marketing, which in most cases is superior to any of the partners. They bring great technology and good application expertise. Together, we have to develop a marketing program that satisfies both parts. That adds enormous complexity and enormous challenge.

BtoB: How so?

Kahan: A recent four-page advertisement with 14 partners required 30 reviews per partner. You can imagine trying to negotiate the advertisement based on whether each partner was a competitor or a friend.

BtoB: Earlier this year, IBM bucked the trend by increasing marketing budgets 10% to 15%. Given the current economy, does that still hold true?

Kahan: IBM is holding budgets consistent with previous years. We’ve not decreased our marketing budgets. The feeling is that now is the time to seize the opportunity, not step away from it.

BtoB: Why is IBM holding strong?

Kahan: You never forget when you make mistakes. Years ago, we chopped away at the brand. In 1994, we audited our brand externally and independently.

People told us that what they thought about when they thought about the brand was fat, old, white men in white shirts.

BtoB: And what exactly is wrong with fat, old, white men in white shirts?

Kahan: That appeals to about 5% of the population. It does not appeal to 95% of the population. We never forgot this lesson. What it means is that when you invest in marketing, you do so consistently and invest in the future. We’re not de-investing in marketing and not stepping out of the markets we did.

BtoB: B-to-b chief marketing officers tell us they are shifting funds around. For instance, taking funds from one publication to another, or into e-mail direct, or moving from broadcast into events. Is that happening at IBM?

Kahan: It happens naturally. The question for the day is what gives us the biggest boost for our buck. In my area, we changed the mix. We shifted out of events. We do not do broad events because we saw a reduction in the interest in the people who want to go to the 10,000-person events.

BtoB: What’s the focus of your event marketing today?

Kahan: We do a lot more local and customized events. For instance, we had an event just for Ford. We started last year with a couple of banks in Japan. We bring employees from those companies in, and tell them how IBM does what it does, and what it can do to increase revenues or grow businesses.

BtoB: How do you test your advertising?

Kahan: We’ve recently gone out to Oracle bigots, Oracle customers and companies on the fence. We put up our advertisements, and their advertising. We found that half of the customers don’t understand Oracle’s advertising. And, when you explain our strategy vs. Oracle’s strategy to the Oracle bigots in the room, they’d prefer our strategy. That’s because it’s open technology. Their technology is closed.

BtoB: How does IBM measure return on investment from its advertising?

Kahan: We look across a solution area, and look for unaided awareness preference and consideration for that particular technology.

It is not efficient to just look at direct marketing, saying we had a 5% pull and $100 million in revenues. The question across the board is, are we changing their minds in the way they go to market? Are they thinking IBM first, and preferring IBM first?

BtoB: Can you give an example of a solution area, and how you approach it?

Kahan: Take e-markets: we knew it was a booming area. And we knew we had to get out quickly. We partnered with i2 and Ariba, but we did a baseline before we went out. Did customers think of IBM? No, they thought of i2, Ariba, Oracle and Microsoft.

Three months after launch, we went out with a heavy marketing push in a lot of different media. We moved to No. 1 in unaided awareness and were two-and-a-half times higher in level of awareness relative to our competition.

BtoB: Why doesn’t IBM advertise its own, internal success using the Internet?

Kahan: In fact, we talk about IBM in public relations, but only because reporters ask us. It is just not our angle. We use human resources systems, customer relationship management and other systems to improve our own business and to make sure when we sell something to a customer it does what it does for us.

But we’re not out to tout our own internal savings. Oracle has done it. Our own research shows people don’t believe it, and it comes off as arrogant.

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