Dell Awards Exclusive Ad Account to WPP

PC manufacturer Dell Inc. has awarded a $4.5 billion, three-year advertising contract to London agency WPP Group plc. WPP's rival for the account was Interpublic Group. WPP will be responsible for all Dell's advertising, direct marketing and public relations. Previously, over 800 agencies around the world were working for Dell, but global marketing VP Casey Jones ultimately deemed it wisest 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," he said. "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." WPP has a challenge before it: Dell lost its leading share of the PC market to Hewlett-Packard this year, and last week, it reported a profit miss that sent its shares tumbling 13%. WPP plans to set up a new agency, to be called Project DaVinci, that will integrate TV and print ad creation with market research and Web ad design, responsibilities that were previously decentralized at Dell. "We think with Dell there is a big opportunity to develop a fully integrated approach that goes across all the marketing and advertising disciplines," said WPP CEO Sir Martin Sorrell. WPP and Dell plan to hire at least 1,000 people over three to six months to work on overhauling Dell's image. The company suffers from a perception that it is "the cheap computer company," said Dell's Chief Marketing Officer Mark Jarvis. "We've started to move to much more of a cool brand," he said, by introducing PCs in vibrant colors and adding features designed to appeal to more sophisticated users. WPP shares were up 1.6% in London trading Monday.

Sources: Wall Street Journal, Reuters, Bloomberg
Commentary: Looking to Buy More Dell • Dell's Turnaround Not as Smooth as Wall Street Hoped • Dell Hopes To Create 'Product Lust' Following Mixed Earnings
Stocks to watch: DELL, WPPGY. Competitors: HPQ, AAPL, LNVGY.PK. ETFs: IAH, PHW, OTR
Earnings call transcript: Dell F3Q08

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