Advise & conquer - Brief Article

Brandweek, May 14, 2001 by Todd Wasserman

Adjusting its e-business services pitch to a market increasingly wary of empty Internet claims, IBM is positioning itself as an overall business expert in a $100 million campaign touting its consultants as "People who get it. People who get it done."

The effort, via Ogilvy & Mather, New York, positions IBM as less of a technology giant and more of a pure business consultant on par with mainstays such as Accenture, McKinsey & Co. and Bain & Co. It builds on CEO Lou Gerstner's vision to make IBM more services-oriented and less reliant on hardware sales. It also contrasts IBM's long record of producing results in the face of fly-by-night dot-cam players.

Creative features actual IBM employees, a tack the company pioneered in 1999 with ads for its Global Services unit, Rivals like Hewlett-Packard and WorldCom, which are entering the space, have also spotlighted their employees in recent advertising.

This latest round, however, features more results-oriented copy than previously A black-and-white head shot of a smiling IBM team executive, Patrick Howard, notes that he "managed a team at a major publisher that brought sales of books, music and videos online--from design to deployment--in under five months."

Supporting copy, which was not finalized at presstime, goes on to explain the "e-business revolution"--a movement coined by IBM--is over, "If anything has proven true, it's that e-business must translate into real value," it reads, mentioning heretofore unaddressed goals like higher profits, earnings and customer retention.

Print ads break this week in the Wall Street Journal, and continue in Business Week, The New York Times and vertical industry trades beyond year-end. TV ads are also a possibility later this year.

The emphasis on tangible results came from market research that indicated decision-makers are increasingly looking in that direction. "E-business is very much a reality today. But people are looking at returns on investment, short-term impact," said Lisa Baird, vp-worldwide advertising for Big Blue. "People want a key partnership to strategize and help them implement their strategy."

Though IBM is known for its technical expertise, Baird said many customers don't know that IBM has general business consultants in industries like retail, automobiles and health care. Future ads will address that and another misconception--that IBM consultants only push IBM's own wares. In reality 60% of the products IBM Global Services sells are from rivals, like Siebel or SAT? per a rep.

IBM'S long-running services push has made the stock a safe tech haven for investors, despite IBM's foundering PC unit and overall stagnant hardware revenues. Despite slower growth in 2000, IBM's high-margin Global Services unit continues to drive profits. Services provided 37.5% of IBM's $88.4 billion in revenues, up from 36.7% in 1999.

Citing continued demand for services, Gerstner last week predicted high single-digit or low double-digit growth in IBM's current fiscal year even as tech rivals like H-P, Compaq and Dell look to establish themselves in the category.

IBM's optimism is also evident in its decision to increase its global ad budget to $650 million this year. It spent $408.5 million in the U.S. last year, per Competitive Media Reporting.