Saturday, March 13, 2010

Hewlett & Packard Probably Want Their Money Back

The Wall Street Journal reported (subscription required to see the original article; Google "HP" and "Wall Street Journal" to see related articles) Thursday, March 11, 2010 that Hewlett-Packard (to me the brand is really their acronym, HP, without the hyphen - although the article uses “H-P” as an abbreviation) is launching a massive, $40 million advertising campaign to accomplish several goals:

  1. Accomplish an “image makeover after an aggressive acquisition spree” (Source: authors of article, Suzanne Vranica and Justin Scheck)
  2. Make potential customers aware that HP is not “just a printer company” (Source: chief marketing officer Michael Mendenhall)
  3. Establish that HP has “a real differentiation in personality and distinction,” (as opposed to simply standing for “reliability” and “quality” (Source: vice president of brand strategy Glenna Patton)

Brand strategist Patton was previously with the music television channel MTV. The campaign is being managed by Los Angeles-based advertising company 72 & Sunny, while Interpublic has done the digital ads.

The ad campaign will feature Dr. Dre (the rapper), Rhys Darby (the comedian), and Annie Liebovitz (the photographer), as well as UPS (because it’s a company that uses “HP technology”) to promote the brand in various TV, print, Internet, and radio campaign spots.

Heavy investing will be placed in commercials to air during the NCAA college basketball championships in March and the finale of the Fox TV show “24.”

The company’s 304,000 employees will not be neglected; they will get to see an “internal video crafted to acquaint workers with (HP’s) range of businesses.”

OK—deep breath here. You see how I was trying to stay neutral and factual as I described this mess? Honestly as I read the article closely I felt kind of shocked at all the obvious mistakes that HP—a huge, well-known, strong brand—appears to be making, and at all the money that is going to go down the drain.

Who knows, maybe they are right and I am wrong. But then again, maybe not—maybe HP’s marketing decisions are coming from a dysfunctional corporate culture rather than rational and objective business decision making. Which is pretty scary--$40 million??? In these challenging times???

That amount is 7.5% of what the company made in profit in HP’s last fiscal quarter (according to the article)—and that amount came mostly from “cutting costs so it (HP) can profit by selling lower-priced computers.” Meaning, they’ve been doing OK this year by launching a commodity strategy—not a brand strategy.

That the culture might be dysfunctional is hinted at by the authors when they write that “Putting a single face on H-P may be a tough task. The company has long had a decentralized marketing organization.” This seems very odd since as far as I know, HP has been branded HP for a pretty long time.

OK. So Here are some of the problems I see with HP’s new strategy.

  1. Right off the bat – there is no integrated brand vision. Nowhere in the article does it say what HP’s new consolidated organization is actually supposed to be known for. The only thing we get is that they’ve acquired other companies (so I guess we could look at what those companies do); that they’ve sold a lot of PCs recently (because they’ve followed a commodity strategy); and that their competitors include Cisco and IBM (because the reporters say so). Oh, and there is an ad featuring UPS that shows some sort of thingamajig that HP helped create that “saves a couple of million pounds of paper a year.” Where is the interview with CEO Mark Hurd, the architect of the “make HP less dependent on printing” strategy, who can explain what the company is actually supposed to be doing in the future in a positive sense? In fact, given that the rivals are IBM and Cisco, I can’t even tell whether this is primarily a B2B company or a B2C company? Seems like even they are confused.

  1. Their brand lead reports to the marketing lead. So marketing – short-term shouting without regard to the long-term results – is seen as the overarching function, while branding is – something else? An aftereffect? A nice-to-have? Really, the brand lead should be not only the chief marketing officer, but in fact the CEO of the entire organization. That is the way to achieve long-term brand success on the basis that HP is a premium company. Plus, the article states that the marketing function is decentralized, and that advertising money has historically been given to separate divisions to spend as they wished. Has this changed? If so, how - where is the money now and who has the authority over it?

  1. The brand person comes from MTV and is using MTV style tactics to promote HP. If that choice has to do with the fact that MTV style branding is desired by HP and appropriate for the company, then great. But if they’re just trying to be cool with no basis in audience research, or if they just liked the candidate and are allowing her to do what she already knows in this unfamiliar environment, the results could be quite damaging to a company which she herself admits has a lot of equity in the “quality” and “reliability” area – two crucial attributes for a technology brand. After all – who is going to buy a computer that is neither of these things? And really – why does HP have to have a “personality” if it is supposed to be a very reliable and differentiated high-tech brand? Unless they’re trying to be Google or something…I don’t get it. IBM doesn’t have much personality (well, I guess bankers have a kind of personality, so there is that) and they are a primary rival. I guess what I’m questioning is, shouldn’t HP have at least some B2B input on its brand if its rivals are huge B2B companies?

  1. The company is spending a ton of money to advertise a brand that has not yet been built. WHY? Advertising is like icing on the cake: If you don’t have the cake, how much icing can you really eat?

  1. The choice of basketball and “24” as outlets for the commercials indicate to me that HP sees its target customer as belonging to the same demographic who watches these shows – obviously heavily male, and the rest I’m not sure about (age, etc.) How does this go with Annie Liebovitz? Do the guys who watch Jack Bauer even know who she is? Plus, the photo that accompanies the article shows a very non-Jack-Bauer type (in fact, the polar opposite—someone who looks like a cubicle-dweller) in a TV commercial with a customer, and he’s got that crazy-looking contraption HP supposedly created strapped to his wrist. If the customer is supposed to associate HP with macho qualities, why have this actor star in the commercial?

  1. The employee video is nice, I guess, but it also seems like an afterthought. I mean – really. Three hundred thousand people and all they can do is a video where a comedian makes fun of the company name? (“I thought the logo stood for ‘Have a Printer’.) And give me a break – even that joke is credible. I don’t believe he ever so much as looked at the logo before getting the job to pitch for HP.
I have a few positive brand associations with HP. I liked Carly Fiorina’s persona, though I know people had different opinions about her leadership, and I also am familiar, from a distance, with the company’s brand heritage – when it was still “Hewlett Packard” and Dave Packard and Bill Hewlett were its legendary icons.

My advice to the company, for what it’s worth, is to go back to the basics: Establish an organizational structure in which the brand is central and stands above short-term marketing efforts. Then, figure out where they can make the most money and have the organizational capacity to deliver on those expectations. Then build the brand internally first, aligning the culture to match the offering. And then go public with advertising targeted straight at the desired customer—very focused—with no distractions.

If I were them I would remember that it is people, like the company’s founders and leaders but also the numerous employees who have spent their work lives inside the organization’s walls, who ultimately built the brand—not advertising nor short-term advertisers. Maybe the campaign will get them some notice in Advertising Age, but I doubt it will establish them as a brand, a unified company, or a differentiated provider of products or services.
(Note: The garage picture in this blog is supposedly the garage where William Hewlett and David Packard started HP. It comes from GStreetSightings.com. The caption states: "This is basically where silicon valley (sic) first started. William Hewlett and David Packard started Hewlett and Packard out of a 12-by-18 foot garage in Palo Alto, California. In 2000, HP bought the lot and did reverse renovations to restore it back to the 1939 appearance.")

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