IBM moves to downsize interactive agency list

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IBM Corp. is consolidating its roster of interactive agencies, from almost 40 down to about six on its estimated $35 million to $45 million account.

IBM, the No. 2 online ad spender following Microsoft Corp., met with a dozen or so agencies last week; it's believed at least 30 agencies were originally invited to participate.

Michael Ball, IBM worldwide sourcing strategist, is said to be coordinating the review; a decision is expected this week.

IBM hadn't returned calls seeking comment on the interactive review by press time. But VP-Corporate Marketing Abby Kohnstamm last month acknowledged IBM was mulling a review.

OgilvyOne, New York, is currently the lead agency on the account and is expected to retain that status. Other agencies believed to be in the pitch include Studio Archetype; CKS Group; Think New Ideas; and Brand Dialogue, Y&R Advertising's interactive division.

With the consolidation, the remaining agencies can most likely each expect a bigger piece of IBM's online ad dollars. OgilvyOne is expected to continue to handle all online media buying.

"IBM's stuff online has been good and doesn't look disparate, like many agencies have been working on it. But I can still understand why they want to consolidate to a more manageable number," said Evan Neufeld, analyst with Jupiter Communications.


The Web review marks the final piece of Ms. Kohnstamm's plan to consolidate marketing communications partners to give broad and deep assignments to a small group of suppliers.

Ms. Kohnstamm began the move in 1994, in the early days of IBM's comeback story, when she overnight fired 80 ad agencies and consolidated the estimated $500 million ad account at Ogilvy & Mather Worldwide, New York.


This year, IBM cut the roster on its estimated $125 million direct account from more than 30 agencies down to four: IBM's three biggest existing direct shops, OgilvyOne, New York; Barry Blau & Partners, Wilton, Conn.; the Strategic Interactive Group of Bronner Slosberg Humphrey, Boston; and Wunderman Cato Johnson, New York, which had done smaller assignments for the computer giant.

Interactive media spending is tracked by Competitive Media Reporting, which bought Jupiter Communications' AdSpend product, but the most recent data are from 1997. Through October, Microsoft was No. 1 with $26 million and IBM had $13 million, according to the CMR report.

Mr. Neufeld said IBM has talked about raising its online budget to be the No. 1 advertiser online. Microsoft CEO Bill Gates also said previously that he could see Microsoft spending $100 million in online advertising by the year 2000.

Contributing: Bradley Johnson.

Copyright July 1998, Crain Communications Inc.

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