As technology services and products become commodities, compelling marketing has become increasingly critical. "In maturing industries, where speeds and feeds are less important, brand becomes more so," says Allison Johnson, Hewlett-Packard's (HPQ) senior vice-president for global brand and communications. "Increasingly, people are recognizing the power and importance of brands."
HP will spend some $400 million in 2003 on its Plus HP brand advertising and marketing campaign, which focuses on how HP products are helping its customers. (The campaign is summed up as "Customer + HP = Everything is possible".) That compares to virtually no money spent on the brand in 2002, a year in which HP poured much of its $1.4 billion overall advertising budget into ads arguing the merits of the merger with Compaq. In the spring of 2002, after a bitter and divisive proxy fight that pitted CEO Carly Fiorina against Walter Hewlett, son of one of HP's founders, shareholders approved the Compaq deal.
The Plus HP brand fits in with Johnson's belief that creating an emotional link to HP is key to the company's ability to differentiate its products from those of competitors. This became all the more challenging because of the merger with Compaq, but the integration appears to be taking hold without major problems. And, Johnson figures, aggressively communicating HP's brand and mission has played a key part in reaching the outfit's diverse customer base: large corporations, small businesses, and individual consumers (see BW, 7/14/03, "Can HP's Printer Biz Keep Printing Money?"). BusinessWeek Online Reporter Amy Tsao spoke to Johnson about these issues on June 27. Edited excerpts of their conversation follow:
Q: Much has been made of the notion that under Carly Fiorina, HP seems to be more focused on marketing and less focused on innovation. What do you make of the criticism that HP is a marketing machine?
A: It's terrific to be accused of doing great and aggressive marketing. It's something the company hasn't traditionally been credited with. I want us to be seen and heard.
Q: How have the proxy fight and merger tarnished the HP brand? What steps have you taken to mend it?
A: What's interesting is the Interbrand survey [from 2002] -- which was done in the January-to-April time frame, precisely the time we were in the middle of the proxy battle. Our brand value went up a point as opposed to down. So, I don't believe there was too much tarnish to the brand based on empirical data.
We broke the mold on proxy-based advertising, much to the initial concern of our proxy solicitors, because we weren't willing to do traditional proxy advertising. If you take a look at the kinds of proxy advertising we did -- which was to tell the positive case for the merger -- compared to what our competition did and what is normally done in proxy battles, ours was a huge departure.
Q: Do you think that better marketing helped HP win the proxy fight?
A: I think a number of actions were enormously important. [Marketing was] one component. I wouldn't put it all on advertising, but it was an important piece.
Q: HP is involved in a lot of segments of technology, which in turn reach different audiences. How do you divide resources between consumers and the business audience?
A: One powerful aspect of our brand is that it spans the enterprise and consumer markets. That makes it a brand that can aspire to iconic levels of visibility, similar to Coca-Cola (KO) or Nike (NKE). It's a powerful [testament] to the brand that you see it both in business and in everyday life.
We really benchmark how we divide our people and program ratios to our toughest competitors and make sure that we're adequately supporting the brand in the consumer, small-business, and enterprise segments. We track that very carefully and have a very good handle on it.
Q: What do you want people to think of the HP brand?
A: I want them to think this is a brand that really understands and cares about the role of technology in business and life, and [that] it's a company that wants to make a contribution on many levels. In contrast to some of our competitors, it's a brand that understands the power of technology, not just the complexity of it.
If you take a look at Dell's [Dell
] advertising, it focuses on its business model. [I think] it's hard to build an emotional link to a brand that is about a business model. IBM's (IBM) tends to be about the fear of technology, where tech has failed, and why you need IBM. Ours is about the importance of technology in business and life -- the positive influence -- and HP as an important ingredient of that experience.
Q: What challenges are unique to marketing HP, vs. other brands you've helped manage, such as IBM or Apple (APPL)?
A: What's interesting about working on HP's brand is that it's a global brand with a precious history. You have a whole lot of accountability and responsibility to preserve and protect that. That was first and foremost on my mind as we were working on the proxy battle. We couldn't do anything to tarnish that brand. It's a hugely valuable asset.
Q: I'm sure you're heard the reports of dissent within the ranks at HP. How have employees responded to your branding efforts?
A: It's important to separate fact from fiction. A lot of what was really happening was different than what was reported on the outside. We had a meeting this past week for all employees worldwide. They love what they're seeing from the perspective of the company being about relationships with customers and the positive role of technology in the world. My job is enormously important in the context of helping employees through the change and cultural evolution we're going through.
Q: What return has HP seen so far from the $400 million investment earmarked for 2003 on brand advertising?
A: The return is on several different levels. So far, we've profiled 30 customers in the Plus HP campaign, and we have 150 customers who've raised their hands and want to participate, which is unprecedented. We've fielded several deals as a result of the campaign.
Clearly, for the morale for HP employees, it has been a wonderful campaign. We've also seen our awareness and preference numbers, particularly in the enterprise segment, improve significantly.
Q: How does your ad budget this year compare with previously?
A: Whereas we used to spend more on what I would call traditional product and price-based advertising, we're now focusing roughly 50% of our advertising budget on brand-level advertising and the remaining 50% on product and price-based ads.
In 2002, we spent almost no money on brand advertising. That was because we were going through a merger and integration, and we were in tough economic times. It made sense. Now, we have to change the mix.
Q: What's your outlook on tech ad spending?
A: Strong companies will continue to be stronger, and the weak will get weaker. It's a matter of the companies who've been able to adjust their business models and get their cost structures under control. Those who can invest in brand and marketing are doing so. IBM, Dell, Microsoft (MSFT), Intel (INTC) and HP are in the market.