HP-Compaq agencies wait

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Regardless of the vote's outcome, this week's balloting in the bitter corporate merger battle over Hewlett-Packard Co.'s $22.3 billion acquisition of Compaq Computer Corp. will usher in changes for two technology brands, their agencies and the nearly $300 million in advertising supporting them.

The merger battle pitted HP against Walter Hewlett, the son of co-founder William Hewlett and an influential shareholder who financed an ad campaign via Gardner Geary Coll, San Francisco, to fight the plan (AA, Feb. 18). HP Chairman-CEO Carly Fiorina fought back with an estimated $30 million-plus effort from Omnicom Group's Goodby, Silverstein & Partners, San Francisco. Compaq ran its own pro-merger ads created by Rives Carlberg, Houston, headlined "Bring it On."

If the biggest tech merger passes, HP faces the daunting task of rationalizing HP's and Compaq's brands and sub-brands, merging cultures and keeping rivals from poaching customers. Initial marketing moves are likely to position the merger as a case of one plus one equals three, said an executive familiar with the issues.

Post-merger, HP likely would keep its "Invent" positioning and relaunch the merged brand, an executive familiar with the situation said. It may also bring back Ms. Fiorina into the advertising.

Also likely to stay is the agency that created those ads and HP's pro-merger campaign, Goodby, Silverstein. "Goodby, particularly if Carly's still at HP, is going to be in the catbird seat," said one executive who's worked with Compaq.

HP's other shop, Publicis Groupe's Publicis & Hal Riney, San Francisco, handles HP commercial printers, computers and enterprise services; Publicis-aligned Optimedia does media buying, while Goodby does some media planning.

The fates of Compaq's agencies, Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, New York, and sibling shop DraftWorldwide, Chicago, remain unclear.

Executives at Goodby Silverstein, Riney and Compaq's Interpublic shops declined to comment.

HP spent $160.9 million in 2000 and $138.4 million in 2001, according to Taylor Nelson Sofres' CMR. Compaq spent $149 million in measured media in the U.S. in 2000 and $137 million in 2001.


If Mr. Hewlett and the Packard family block the merger, each company will have to convince the market they can go it alone after spending six months selling the world on why they needed to merge.

Regardless of who wins or loses, the battle itself inevitably poses problems for the once-pristine HP brand.

"Any time there's a battle like this, it can't help but tarnish the brand," said Bob Gardner, president of Gardner, Geary & Cole.

How serious is the fight's collateral damage? "Can't say," said one executive familiar with HP advertising, adding "You've got to believe people will give HP a lot of leeway" because they understand the nature of proxy battles.

Since the odds are overwhelmingly in favor of management in proxy fights, HP better hope so.

contributing: cara b. dipasquale, tobi elkin and rich thomaselli

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