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Dell consolidates huge ad budget with WPP

December 03, 2007|From Bloomberg News

Computer maker Dell Inc. awarded its advertising account, valued at $4.5 billion over three years, to WPP Group, giving one of the industry's most anticipated wins of 2007 to the London-based company.

The contract will result in the creation of a new global marketing and communications agency, the Round Rock, Texas-based firm said in a blog post by Chief Marketing Officer Mark Jarvis.

The account is worth about $90 million to $100 million of annual revenue to the winner, Wachovia Capital Markets analyst John Janedis estimated in a September report.

Dell hired Jarvis as chief marketing officer from Oracle Corp. in April, and he soon began a search for an agency to manage all of Dell's creative work. Casey Jones, Dell's vice president of global marketing, found more than 800 agencies worldwide working for the company after joining in March, the posting said.

WPP's challenge is to help Dell regain the cachet and market share it lost in the personal-computer business amid a comeback by rival Hewlett-Packard Co., which took over the top spot in PC sales last year.

Dell's problems became more urgent in the third quarter, when its profit missed analysts' projections after both HP and Apple Inc. beat estimates.

Dell "was being branded as the cheap computer company," Jarvis said in a July 10 interview. "We've started to move to much more of a cool brand" by adding more colorful PCs and features to appeal to tech-savvy customers who wanted more advanced gaming technologies or thinner laptops, he said.

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