ARMONK, August 9—Two dark horse agencies—Magnet Communications and Text 100—are among the big winners in the $40 million review of IBM’s agency relationships. The third slice of the IBM business will go to a team of Omnicom agencies, operating under the name One Blue and led by Ketchum senior partner Rob Flaherty.
Magnet, a unit of Havas, will be responsible for communication concerning IBM’s reputation for innovation, including its research labs and emerging life sciences business; Text 100, a technology specialist headquartered in U.K., will be responsible for the company’s product communications, including its server and software business; and Omnicom agencies will be responsible for all customer focused communications.
IBM vice president of corporate communications Jon Iwata declined to comment of the exact budgets involved. “I don’t think the most important part of this story is the size of the account,” Iwata says. “What’s important about this from IBM’s point of view is that we are structuring our public relations operations around our mission. We identified three major challenges, and each involves different messages, different audiences, and different media.”
The search began in May with more than 30 agencies candidates, including most of the incumbents, and was narrowed first to 14 firms and then to seven. According to Iwata, “We didn’t find a single agency that could responsibly take on all of our needs, although some of them wanted to. But I don’t believe size and capacity are sensible criteria to make a decision like this anyway. I would never buy a house because it had the most rooms, and I would never choose a restaurant because it served the biggest portions.”
That philosophy apparently paved the way for two smaller agencies, Magnet and Text 100, to pick up large pieces of the IBM business.
Magnet was formed a year ago by the merger of the former Creamer Dickson Basford and Kratz & Jensen, and has a small technology practice headed by Paul Jensen, who will lead the IBM account. Jensen says the firm may draw on some of its Havas partners in other parts of the world, but the structure of the account team has not yet been finalized, and several Magnet personnel in the U.S. have international experience.
Text 100 was launched in the U.K. and has been expanding it’s U.S. operations, billing $33 million worldwide last year.
But Iwata had strong praise for the third winner, Omnicom’s new One Blue group, saying the giant holding company came up with “a very creative solution” to pitching the IBM business. Flaherty would not comment on the make-up of the new unit, except to say that it will draw on public affairs, crisis management, and interactive services companies within Omnicom, but it is believed to include Ketchum, Fleishman-Hillard and Brodeur Worldwide.
Prior to the restructuring IBM’s most significant agency relationships included Omnicom unit Brodeur Worldwide, which handled personal computer and global services business; Manning Selvage & Lee, which handled the company’s software business; and the TSI unit of Golin/Harris International (the former Technology Solutions) which handled the server business and several other projects.
The restructuring followed an analysis of IBM’s communications operations by New York-based consulting firm Osgood O’Donnell & Walsh, which also assisted in the search. In addition to dramatic changes in its agency relationships, IBM made changes in its in-house PR department, creating a product communications board, a customer communications board, and a technology communications board, each of which is being chaired by a senior communications professional on a rotating basis.
According to Iwata, “We looked at our agency partnerships and found we had 50 agencies around the world, operating in a very decentralized structure. There’s nothing wrong with that in itself, but as we thought more deeply about the evolution of IBM and the information technology business, we realized our organization needed to change, to be more closely aligned with the future of our business.”
The new structure reflects a strategy outlined by chairman Lou Gerstner in IBM’s 2000 annual report, in which he writes, “Competitive advantage in the future will rest essentially on three things: technological innovation, the ability to help customers integrate technology with their business; and the ability to make information technology easy to acquire and manage.”
Says Iwata, “What we came to realize was that despite the fact that IBM is a huge company, it’s really about a small number of things. First, it’s about invention; we invest a great deal in innovation and research. Second, it’s about great products. And third, it’s about helping customers employ technology to achieve competitive advantage.”