Last week there was further evidence that the balkanization that is changing the way IBM's operating units function is spilling into its advertising and marketing. In Europe, IBM expanded its agency pool by adding three agencies to the roster available to its operators. Meanwhile, in the U.S., the IBM personal computer company assumed greater responsibility for its own advertising and marketing functions.
As expected (ADWEEK, May 25, 1992), the breakup of Big Blue into a dozen independent operating units continues to add new shops to an advertising agency roster that had previously remained stable for several years.
Last week, in one of the first moves under new chief executive Louis Gerstner, IBM Europe/Middle East/Africa added three new advertising agencies to its existing lineup of Lintas:Worldwide and GGK: D'Arcy Masius Benton & Bowles, J. Walter Thompson and BDDP. The three winning shops beat out McCann-Erickson and Young & Rubicam, which also participated in the final pitch ("Global News," March 15).
IBM officials said the new agencies will vie for assignments from the estimated $60'million European account along with the incumbents. The IBM/Europe unit has grown into the computer maker's largest and most profitable operation, with 1992 revenues of $29.9 billion compared to $24.6 billion for IBM/U.S.
Meanwhile, the power of IBM's Communication Services unit to oversee agencies and ads with the IBM logo continues to dwindle. Last week, the IBM Personal Computer Co., headed by vp/Ray Freeman, took over the PC firm's ad and promotion functions from IBM's central CS unit headed by Jim Reilly.
The change in command at the client fueled speculation that Grey Advertising--which won a $30-million direct response assignment from the PC company recently--or another advertising agency was about to threaten Lintas' hold over the regular portion of the PC account.
To protect its flank, industry sources reported Lintas is negotiating with former Lord, Geller, Federico, Einstein/N.Y. creative Ken Segal (who previously worked with Freeman at LGFE) to join the agency in a senior vp position to bolster its creative product.
Although the CS unit helped create IBM's current U.S. agency structure of Lintas:New York for product advertising and Wells Rich Greene BDDP/New York for corporate advertising, the independence movement among IBM's fledgling Baby Blues is taking most of the decision-making on advertising away from this unit and delivering it into the hands of the IBM companies.
According to industry sources, the next Baby Blues which could eventually seek their own advertising agencies over the next few months include the San Jose, Calif.-based ADSTAR and the Thornwood, N.Y.-based Skills Dynamics.
"We are putting all the different companies in charge of their own destinies," said one IBM source. "Those destinies naturally include advertising."
Moreover, with major global shops such as D'Arcy Masius Benton & Bowles and J. Walter Thompson gaining a growing piece of the IBM pie, Lintas and Wells could come under even more pressure to retain their existing IBM business.
D'Arcy Masius Benton & Bowles, for example, won a new advertising assignment late last week in IBM/Latin America and could be a contender for more business, according to sources.
Copyright Adweek L.P. (1993)