Intel Banks on Branding
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You must invest in your brand. But even I sucked in a lot of air when Intel announced they would back their new brand with a $2.5 billion marketing campaign.
That’s big money . . . unless you are a congressman.
I touched on the need to back your branding in our “Manhandling a Market” white paper. You can (and should) create your brand, articulating what you want the market to think and feel about you and your products. And to make sure the market starts to believe that, you must spend time, money, and manpower to communicate the brand.
Intel’s new brand slogan, Leap Ahead, coincides with their recognition that the PC chip market is becoming less profitable, while new markets are exploding around them. Every customer who has money has at least one PC (I have three in my private office alone), so the new PC market is saturated, leaving upgrades and replacements. And to differentiate in the face of AMD’s aggression, the design work gets harder and more expensive. In short, margins and profits are thinning.
Paralleling the drooping margins in PC and server chip sets, is the new and relatively untapped Digital Consumer (c). Media and entertainment have long been the driving forces in American sedation, and our expanding waistlines. As the Baby Boomers hit retirement age, and the Baby Echoes begin their hyper-earning period, the demand for digital consumer electronics is popping like a volcano, and the need to cross integrate all this gear grows.
If you think this might be overblown, take Mike for example. I don’t know if “Mike” is his real name, but he goes to my gym. I saw him watching video on a handheld device while he sweated on the treadmill (Mike being one of the few Baby Boomers not growing horizontally). I chatted him up, and discovered that on any given day he may use the same device to listen to a podcast from a political feed, listen to an audio book, tune into an internet radio station, take a business call, or watch a video (he would not disclose what he had been watching, so I think the porn industry may be finding new markets).
Intel is smart to attack this market. Thus far, PC’s have been the hub for digital media interchange. But you would be hard pressed to find a TV at Best Buy that wasn’t digital (at least on the inside), and should be able to receive content from any digital source (your set-top-box, via Wi-Fi from your laptop, uploaded from your video iPod). Music, being more portable and pervasive than video should be rapidly interchangeable from your home media center, to your laptop, to your dash board, and the other direction as well.
With Intel changing their market focus, they felt the need to change their brand as well. For years Intel gained a premium for their CPUs based primarily on “Intel Inside” branding. Now Intel must promote two things simultaneously: the new digital lifestyle, and that Intel provides the best electronic guts for the gadgets that make up your new life. And this must be communicated to the entire civilized world, and Washington D.C.
That takes bucks. About two and a half billion of them.
Only the future will tell if Intel’s “Leap Ahead” brand resonates with consumers (my gut tells me it is a step backwards from “Intel Inside”). But Intel is putting their stockholder’s wealth behind the effort, and that is an essential element.
