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Intel Corp. has expanded its megamillion-dollar co-op ad program by adding media outlets worldwide that will offer rate deals to PC marketers.

Conde Nast Publications and Hachette Filipacchi Magazines are the latest to agree to discounted deals for Intel customers. In addition, the world's dominant computer chip maker has tripled the number of international broadcasters offering discounts, from 75 last year to 220 in 1996.

These pacts strengthen an already-formidable co-op ad plan, worth an estimated $500 million annually.

Larry Kerr, Intel worldwide advertising media relations manager and point person on negotiating these deals, said nearly every major publication and a growing number of broadcasters now offer discounts or incentives through Intel.

Intel began paying PC makers in 1991 to use an "Intel inside" logo, and this year the company will rebate an estimated $500 million to 1,880 PC marketers.

Intel rebates 6% of the money PC makers spend on chips. PC companies apply that money toward advertising, with Intel paying half the cost of print ads and two-thirds the cost of broadcast.


Compaq Computer Corp., the world's biggest PC maker, this month returned to the program after nearly two years, concluding the money outweighed the risk to Compaq's brand. Intel hopes to woo back IBM Corp., the only major mainstream PC maker not in the program.

Despite long-simmering concerns that the program turns PC brands into commodities, PC makers take the money and run "Intel inside" for two good reasons: Buyers seek out models with Intel chips, and assuming a PC marketer was going to advertise anyway, the co-op money can add more than 1% to PC marketers' gross margins. That's key in an industry where profit margins have skidded to 20% to 25%, half what they were early this decade.


Under an expanded program for 1996, Intel and its agencies-Dahlin Smith White, Salt Lake City; Publicis' Optimedia, London; and Ball Partnership Euro RSCG, Hong Kong-have negotiated about 800 print and 220 broadcast media discount or incentive offers in 40 countries.

Magazine and newspaper discounts range from 5% to 50% off the open rate, Mr. Kerr said. International Data Group's PC offers a 50% discount on incremental pages; Forbes chops 41% off its price; and Conde Nast's Vanity Fair discounts 20%.


Broadcasters generally offer incentives, such as "sponsored by" on-air mentions, rather than straight discounts.

What's in it for media? Incremental advertising that rivals otherwise might get.

PC marketers often can get better deals with media where they advertise frequently, such as computer magazines. But many rely on Intel rates as they expand to consumer and business media.

"For publications like The Wall Street Journal....[and] Forbes, we have found the program to be very advantageous," said Kathy Orr, senior media planner at Poppe Tyson, Los Angeles, agency for notebook PC seller Toshiba America Information Systems.

Gateway 2000, the nation's top mail-order PC marketer, is using Intel's program to stretch its budget as it moves into broadcast.

Intel's program "certainly streamlines the negotiating process," said Scott Haslam, Gateway's global advertising director. "Of course, it doesn't hurt to ask for more."

Kate Bertrand of Business Marketing contributed to this story.

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