Red Hat Inc., a developer of Linux-based operating system software and services, is gearing up for a review for its $15-20 million advertising account, according to sources.
The Durham, N.C., firm's initial public offering last Wednesday was a huge success. Its stock, which began trading at $14, ended last Thursday at $72 per share, a market capitalization of nearly $5 billion.
Sources said the IPO puts Red Hat in position to place more money behind advertising. The company, which recently unveiled its own e-commerce server product, competes with firms such as Microsoft and IBM. Those companies have each been spending at least $200 million annually on ads in the U.S.
Red Hat employed Farago + Partners, New York, as its agency last fall.
Farago created a print campaign that was approved but never appeared, said agency president Peter Farago. Red Hat has been handling ad duties in-house since.
Sources said Red Hat's new chief marketing director, Tom Butta, is heading the review and has gathered data about select shops nationwide.
Butta has been "instrumental" in convincing Red Hat president Michael Szulik to pursue a "major ad campaign" for the company's products and services--something he has been "recalcitrant" about doing in the past, said one source.
Butta did not return phone calls.
Red Hat public relations director Melissa London, however, said reports that the company is conducting an agency review are "not true." She added, "We are not currently searching for an advertising agency. We are operating within the constraints of a quiet period [following our IPO]." --with Joan Voight