Intel Inside The Coop Program That Changed the Computer Industry

If you were to ask most owners of personal computers what is inside their PCs, chances are they would respond by saying, "an Intel." And there's a good reason why. Over the past decade consumers have been exposed to hundreds of millions of dollars' worth of ads for personal computers each year that carry the "Intel Inside" logo. The logo has become ubiquitous in PC ads as a result of a landmark cooperative advertising program that is lauded as the most powerful ever and the definitive model for successful "ingredient" branding.

In 1989 Intel was the first computer chip manufacturer to advertise directly to consumers. Its goal was to persuade PC users to upgrade to Intel's 386SX chip from the 286. Known as the "Red X" campaign,the ads depicted the number 286 with a bold, spray-painted X over it. In 1990 Intel selected a new agency, Dahlin Smith White, Salt Lake City, which created the now-famous tagline "Intel. The Computer Inside." The goal of the campaign was to build awareness and position Intel as the real brains of the computer. In early 1991 Intel began pitching the program to PC makers, and IBM,creator of the first Intel-powered personal computer, became the first computer maker to use the logo. Intel then began talking to PC makers about the creation of a co-op fund in which Intel would take 5 percent of the purchase price of processors and put it in a pool to create funds for advertising. The "Intel Inside" co-op program was officially launched in July 1991 and works as follows: In return for showing the logo in print ads and on the PCs, a computer maker can get back 5 percent of what it pays Intel for chips, with the money to be applied to ads paid for jointly by the PC vendor and Intel. More than 150 computer makers signed on to the program and began using the "Intel Inside" logo in their ads.

As the program began, Intel started playing up the logo in its own print ads as well. In November 1991 it moved the campaign to television with the classic "Power Source" spot, which magically took viewers on a whirlwind tour of the inside of a computer to show how the Intel chip streamlined upgrading of a PC. In 1993 Intel introduced the Pentium processor brand with a national TV campaign. However, the company was putting the bulk of its advertising budget into the "Intel Inside" co-op program. In 1995 Intel expanded the co-op program to include TV, radio,and in-flight ads.The move led to a boom in PC ads on television featuring the Intel auditory signature at the end of each commercial. In 1997 Intel expanded the co-op program to include Internet ads and provided incentives to PC makers to place ads on media-rich websites. Intel has also extended the co-op program into retail promotions as well.

Since the co-op program began, Intel has pumped into it an estimated $4 billion, and this has been an awfully smart investment. Intel's share of the microprocessor market has grown from 56 percent in 1989 to nearly 80 percent in 2002, and the company's revenue has gone from $3 billion to nearly $30 billion. Nearly 90 percent of the more than 17,000 PC print ads run in the United States carry the "Intel Inside" logo. The program has influenced a generation of PC users and propelled growth of the entire computer industry.

According to positioning expert Al Ries, "Intel Inside" will go down in history as one of the more magnificent campaigns of the century. He notes,"It's brilliant, and, in a sense, it pre-empted the branding of personal computers." Branding guru Jack Trout notes, "They took an old idea—ingredient branding—which Du Pont pioneered, and took it into technology." Trout was an early believer in the program; he told Advertising Age in a 1991 interview that conceptually it was a good idea, although Intel would need consistent advertising over time for the logo to have much meaning.

Intel's advertising has been consistent over the past decade as its various ad campaigns have strengthened its brand image and demonstrated the power of various generations of Intel Pentium processors. These campaigns have featured the "Bunny People," who were a takeoff on the workers who wear so-called bunny suits to keep chip labs sterile, as well as the Blue Man Group performance artists. In late 2002, Intel launched a new global brand campaign called "Yes" that is designed to connect with young adults and showcase the benefits of a digital lifestyle. The commercials capture today's digital lifestyle by showing

people using their computers for digital photography, CD-burning, instant messaging, and movie-making. The ads play off the famous tagline by showing people burning CDs and then cutting to the copy line "Intel Inside your music" or by showing how a digital photo can be used followed by the line "Intel Inside your photos." The commercials end with the line "Can a better computer really change your life? Yes."

In its early stages the Intel Inside program encountered criticism, as many advertising and computer marketing executives were skeptical about Intel's abil ity to differentiate its chips. The head of one agency noted: "Most people who buy computers don't even know that chip is there. They care about the performance of the computer. It really doesn't matter what the chip is." Well, some may still not know exactly what a microprocessor chip does, but apparently it does matter if there is an "Intel Inside."

Sources:Tobi Elkin,"Intel Goes for a New Overall Branding Look," Advertising Age, Sept. 1,2002, pp. 3, 43. Tobi Elkin, "Co-op Crossroads," Advertising Age, Nov. 15,1999, pp. 1, 24,26.

requirements the ad must meet to qualify for co-op reimbursement, such as size, use of trademarks, content, and format. Verification that the ad was run is also required, in the form of a tearsheet (print) or an affidavit from the radio or TV station (broadcast) and an invoice.

As with other types of trade promotions, manufacturers have been increasing their cooperative advertising expenditures in recent years. Some companies have been moving money out of national advertising into cooperative advertising because they believe they can have greater impact with ad campaigns in local markets. There is also a trend toward more cooperative advertising programs initiated by retailers, which approach manufacturers with catalogs, promotional events they are planning, or advertising programs they have developed in conjunction with local media and ask them to pay a percentage of the cost. Manufacturers often go along with these requests, particularly when the retailer is large and powerful.64

Coordinating Sales Promotion Those involved in the promotional process must recognize that sales promotion techniques usually and Advertising work best in conjunction with advertising and that the effectiveness of an ad campaign can be enhanced by consumer-oriented sales promotion efforts. Rather than separate activities competing for a firm's promotional budget, advertising and sales promotion should be viewed as complementary tools. When properly planned and executed to work together, advertising and sales promotion can have a synergistic effect much greater than that of either promotional mix element alone.

Proper coordination of advertising and sales promotion is essential for the firm to take advantage of the opportunities offered by each tool and get the most out of its promotional budget. Successful integration of advertising and sales promotion requires decisions concerning not only the allocation of the budget to each area but also the coordination of the ad and sales promotion themes, the timing of the various promotional activities, and the target audience reached.

Continue reading here: The Increasing Use Of Sales Promotion In A Market Is More Than A Passing Fad

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