CLOSE-UP: LIVE ISSUE/COMPUTER ADVERTISING; Will ads be the key to winning the computer war?

Richard Cook outlines the battle plans being drawn by the PC manufacturers

Richard Cook outlines the battle plans being drawn by the PC

manufacturers



This is a story about gorillas, chimps and monkeys. Well, sort of - it’s

actually about computers but that doesn’t seem as interesting, not least

to the industry itself.



Alex Letts, chairman of the specialist hi-tech advertising agency, SMI

Group, says that ‘at most, there will be five or six major vendors -

what the author, Geoffrey Moore, has characterised as gorillas - left in

the computer market in the long term. Underneath them will be monkeys -

niche players or small local assemblers. The chimps, or middle-sized

companies, will be squeezed out due to an inability to compete because

their manufacturing volumes don’t allow them to buy components and

produce so effectively. The increasingly fierce battle is now on to be

one of the gorillas, or to fence-off turf to let the monkeys live

profitably.’



It’s an attractive theory, and one that could lead to a number of

different scenarios. But whichever way you look at it, there will be no

place for the chimps in this new world order. Bluntly, there are too

many PC manufacturers. And this is already starting to have considerable

repercussions, not least in the way that this market sector advertises

itself. What we have seen so far - a promiscuous client/ agency

relationship, a move from product-based to brand-based advertising and

increased adspend - is just the tip of the iceberg. Already, some mid-

sized computer companies - the likes of Apple, Escom and AST in

particular - have reported large financial losses, and the latter two

have had to sell stakes in their companies



to larger companies - Escom to Siemens and AST to Samsung. Apple’s talks

with potential purchasers and partners have all, so far, stalled.



But there is a ray of hope for these mid-sized companies - the consumer

market. And if you need to increase your consumer sales, you need in

turn to advertise. Fujitsu became the latest in a string of computer

companies coming clean about a new advertising direction after

appointing TBWA to its pounds 25 million pan-European account (Campaign,

last week). Fujitsu is the name by which all the ICL personal computers

and servers will henceforth be branded, and TBWA’s first task will be to

enhance awareness of the name among PC buyers.



‘In the past, computer advertising has been about speeds and feeds,

about the technology side of things,’ Steve Barton, Ogilvy and Mather

Direct’s management supervisor, says. ‘The sales pitch has been to the

computer-literate consumer. Now, because the market is becoming

concentrated into fewer dominant players and becoming more and more like

a mature fmcg-type market, we are all trying to create bigger brands

that appeal directly to the consumer. It’s all part of the process that

IBM started when it centralised its advertising into O&M.’



Unfortunately it’s not quite as simple as that. Fujitsu’s stated pounds

25 million ad budget will not, in reality, buy a lot of high-profile,

lavishly produced, brand-building TV campaigns across the whole of

Europe. And IBM has started to temper its ‘global solutions’ brand ads

with some harder-edged product-based work. It appears as if some

computer clients and their agencies have yet to decide whether the

market is ready for brand work, allowing a certain amount of unhealthy

volatility in their relationships to persist.



‘A survey we completed last year revealed that 42 weeks was the average

amount of time agencies hold on to computer accounts,’ Letts says. ‘But

that’s hardly surprising - most ad agencies are struggling with this

business. The clients don’t help themselves by missing the balance in

the great product versus brand debate. Swinging furiously from one

extreme to the other in direct proportion to quarterly market share is

irrational and immature.’



The relationship between BBDO and Apple has been a haven of tranquillity

in the midst of all this uncertainty and false starts. It has lasted ten

years, even though it hasn’t prevented Apple’s market share from falling

by half. But even here, there are now signs of turmoil. The new Apple

chairman and chief executive, Gil Amelio, passed lukewarm comment on the

agency network and then agreed to proposals from his marketing

department to draft in creative ideas from external sources, one of

which was Oliviero Toscani, the creative director behind Benetton’s

advertising.



However, the Abbott Mead Vickers BBDO board account director, Jonathan

Obermeister, believes that the recent advertising frenzy of PC

manufacturers is starting to slow down. ‘The emergence of Windows/Intel

as the dominant platform means that all the brand leverage is now with

the software people,’ he says. ‘It has become harder and harder for the

PC manufacturers to differentiate themselves. So where clients have been

persuaded to invest in brand campaigns that are strategically designed

to extend into product ads, in the future they will have to become more

dependent on below-the-line work like retail marketing.’



But this belief stalls on one key point - Intel is currently helping to

underwrite brand campaigns for the sector, rebating its ad expenditure

against the cost of the chips, and neatly ensuring the vendors stay

loyal to Intel, while at the same time promoting the Intel brand to the

end users. While it is happy to continue, there is little indication of

a ceasefire in this fierce fight for market share.



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PC manufacturers and market share

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Vendor              Units    Share     Value       Share

                              (%)   (dollars m)     (%)

Compaq             468,974   12.3     1,198.0      14.0

IBM                386,173   10.1     1,005.9      11.7

Hewlett-Packard    195,493    5.1       483.3       5.6

Apple              180,547    4.7       471.6       5.5

Dell               176,626    4.6       462.6       5.4

SNI                192,452    5.1       458.2       5.3

Toshiba            127,229    3.3       363.3       4.2

AST                139,193    3.7       300.3       3.5

Digital            104,062    2.7       276.6       3.2

Olivetti           133,530    3.5       264.8       3.1

Fujitsu/ICL        101,353    2.7       240.6       2.8

Vobis              136,637    3.6       227.2       2.6

Gateway 2000        70,779    1.9       179.5       2.1

Others           1,394,562   36.6     2,652.2      30.9

Total            3,807,617    100     8,584.1       100

Source: IDC, May 1996; figures refer to western Europe, all products

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