Sunday, December 2, 2007

Dell Awards $4.5 Billion Ad Account to WPP Group

Dell Inc. awarded its advertising account, valued at $4.5 billion over three years, to WPP Group Plc, giving one of the most-notable wins of 2007 to the London advertising company.

The contract will result in the creation of a one-stop global marketing and communications agency with WPP, Round Rock, Texas-based Dell, the world's second-largest personal computer maker, said today in a posting by Chief Marketing Officer Mark Jarvis on its blog.

Dell hired Jarvis as chief marketing officer from Oracle Corp. in April and he soon began a search for an agency to manage all of Dell's creative work as part of an effort called ``Project DaVinci.'' Casey Jones, vice president of global marketing, found more than 800 agencies worldwide working for Dell after joining in March and decided to ``marry one instead of dating many.''

``We are evolving the processes of marketing along the same lines as Michael Dell did the supply chain processes, by looking at the fundamental DNA and ways to improve inefficiencies,'' Jones said in an interview, calling the contract ``unprecedented.''

``By partnering with WPP, we eliminate competition for a share of the marketing pie and we can invite the agency into our business meetings to help us with a long-term plan.''

Missed Projections

WPP beat Interpublic Group of Cos.'s Martin agency for the contract. The account is worth about $90 million to $100 million of annual revenue to the winner, Wachovia Capital Markets analyst John Janedis estimated in a September report.

WPP fell 9 pence to 614 pence on Nov. 30 in London Stock Exchange trading. The stock is down 6.6 percent year to date.

The firm's challenge is to help Dell regain the cachet and customers it lost after losing the PC market lead to Hewlett- Packard Co., which reclaimed the top spot in PC sales in 2006 after three years.

Dell last week reported profit that missed analysts' projections after failing to win back U.S. consumer sales in the back-to-school shopping season, and its shares plunged the most in seven years. PC rivals Apple Inc. and Palo Alto, California- based Hewlett-Packard beat estimates when they reported.

`Cool Brand'

WPP and Dell are in the process of selecting people to serve on the new ad agency team and at least 1,000 will be hired, Jones said.

The new team, which also will work on other accounts, will consolidate a number of marketing and advertising functions usually handled by a variety of agencies.

The PC maker is in the process of changing its image after more than two decades of ``being branded as the cheap computer company,'' Jarvis said in a July 10 interview. ``We've started to move to much more of a cool brand'' by adding more colorful PCs and adding features to appeal to tech-savvy customers who want more advanced gaming technologies or thinner laptops, he said.

WPP had won the least new U.S. business this year of the seven global ad-agency holding companies, William Blair & Co. analyst Troy Mastin wrote in a Nov. 19 report.

Omnicom Group Inc., the world's largest ad-agency firm, led the rankings through October, with Interpublic Group of Cos. placing second.

Dell fell $3.60, or 13 percent, to $24.54 on Nov. 30 on the Nasdaq Stock Market. The shares have lost 2.2 percent this year, compared with a 24 percent rise at Hewlett-Packard.

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