IBM Reviews $150 Mil. Of Global Direct Duties

Move Reminiscent of 1994’s Ad Consolidation

NEW YORK: IBM, whose massive ad account consolidation in 1994 stunned the advertising community, is taking a similar approach with its direct marketing assignments.
Toward that end, IBM has begun a global review for its direct marketing business, intending to cut a number of its 30 direct marketing roster shops.
“We’re looking to reduce the number of agencies we do business with in order to focus a smaller number in a more specialized way,” said John Bukovinsky, a representative for IBM in Armonk, N.Y. He declined to comment on how many agencies will remain: “Less than 30 obviously. Right now, we’re receiving and reviewing submissions. We don’t know what it will be.”
While Bukovinsky declined to comment on billings, sources said IBM spends about $150 million on direct marketing globally.
The strategy behind the direct review is reminiscent of IBM’s move in 1994 when it jettisoned 40-plus ad agencies around the world to consolidate its $500 million ad account at Ogilvy & Mather Worldwide.”The objectives are clearly similar, but we will not end up with one agency,” said Bukovinsky.
The review involves direct marketing duties in all four of IBM’s operating units: North America; Latin America; Europe, Africa and the Middle East; and the Asia-Pacific region. It will also include the company’s three main product lines: servers, software and personal computers.
Sources said IBM is talking to agencies both on and off its roster.
In Europe, contenders include the direct marketing units of McCann-Erickson Worldwide; France’s Publicis SA; Germany’s Scholz & Friends, owned by Bates Worldwide; Young & Rubicam Inc.’s Wunderman Cato Johnson; Rapp Collins Worldwide, a unit of Omnicom Group; Barry Blau & Partners in Wilton, Conn.; and one undisclosed direct marketing shop, said sources.
It is not clear how many of those agencies would pitch business in IBM’s other regions.
As in 1994, this global review is being run by IBM’s vice president of corporate marketing, Abby Kohnstamm. “It’s a worldwide review led by our corporate marketing organization,” said Bukovinsky. IBM executives in the company’s various regions are also “involved” and will have input, he added.
IBM will select the winning agencies sometime during the first quarter of 1998, Bukovinsky said.
OgilvyOne Worldwide serves as IBM’s lead direct marketing agency in North America and is participating in the global review, sources said.
Other direct marketing shops working with the $76 billion company include Bronner Slosberg Humphrey, Boston, and Devon Direct, Berwyn, Pa.
Bukovinsky, however, said no single agency controls more than a 10 percent share of the company’s worldwide direct marketing business.
Bukovinsky noted that the move will allow IBM’s remaining direct shops to work on fewer brands. “The object is greater specialization and depth of knowledge,” he said.
–with Judy Warner