Intel to dramatically increase Web spending

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Intel Corp. is expanding its estimated $750 million "Intel inside" co-op program to the Internet, setting the stage for a dramatic boost in Web advertising.

At a minimum, Intel's program next year should generate $75 million in Web co-op money. PC makers must match Intel's contribution, suggesting a Web site windfall of at least $150 million in ads promoting Intel-equipped PCs.

Intel's investment will make the chip giant the No. 1 Web ad spender. And it is sure to make "Intel inside" as ubiquitous on the Web as it is in PC print and TV ads. Web co-op ads will feature a special moving, or non-static, version of the "Intel inside" logo.

Intel subsidies largely created a robust market for PC print and TV ads, and Intel's move should do the same for the Web.

The Web "is an interesting emerging media. It's something we feel can really showcase the technology," said Jami Dover, Intel's director of co-op marketing.

Currently, Intel gives PC makers a 6% rebate on chip purchases. Of that, 4% can go to print ads and 2% to broadcast buys. The money can be applied to two-thirds the cost of a print ad and half the cost of a TV, radio or in-flight ad, with PC makers kicking in the rest.

In a special promotion from Sept. 1 to Dec. 31, Intel will let PC makers use as much of that 6% as they want for Web ads.

Then starting in Jan. 1998, Intel will let a PC maker allocate the 6% rebate any way for print, broadcast and Web ads for a company's first $500,000 in rebates. Beyond that amount, a PC maker will get 2.4% for print; 1.8% for broadcast; .6% for Web; and 1.2% to be spent on the manufacturer's choice of print, broadcast or Web ads. In the revised program, Intel will pay half the cost of a Web ad and 60% of a print or TV placement.

The changes will give PC makers greater flexibility in allocating ad spending. But the onus is on media to come up with compelling proposals to grab money out of the pool where PC makers have flexibility to pick the medium.

Intel also wants Web media to present ideas that go beyond the banner ad.

For the Web program this fall, and possibly into next year, Intel will require pre-approval on PC makers' Web ads. Intel will encourage PC makers and Web media to employ Web event sponsorships and use push technologies, such as PointCast, to deliver ad messages rather than simply relying on banners.

"The banners are interesting but kind of limiting at this point," Ms. Dover said.

Under Intel's revised program, the percentage of co-op money automatically going to print falls dramatically. But Ms. Dover said the PC market is growing so fast that the money defaulting to print should not fall.

Major tech print media -- as well as broadcasters -- also have added Web products, so much of the Web money likely will go to companies with cross-media offerings. Ziff-Davis Inc., for example, has ZDNet on the Web; ZD next year will launch a computer-themed cable TV channel.

Since "Intel inside" began in 1991, Intel estimates the logo has been seen in $3.4 billion of advertising worldwide. That includes Intel's co-op money and PC makers' portion as well as money Intel spends on its own advertising.

Intel this year will spend an estimated $750 million on co-op ads, not including $150 million Intel will invest in its own ads. Intel is the world's largest tech ad spender; "Intel inside" is the largest co-op ad program in any industry.

Copyright July 1997, Crain Communications Inc.

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