Chipmaker Advanced Micro Devices (NYSE: AMD) sells its Athlon processors and others to makers and re-sellers of personal computers, and to consumers.
Sunnyvale, California-based AMD considers the Internet an ideal channel for talking with partners and generating sales leads, but questions the use of online advertising as a brand-building medium. The company, by its own estimates, holds a 17 percent share of the PC processor market. Its chief competitor Intel, a heavy Internet advertiser, holds about 80 percent of the market.
In this interview, Bruce Smith, AMD’s director of marketing programs, and Bob Kennedy, director of corporate branding, discuss how 32-year-old AMD is using the Internet for marketing, while watching as the medium matures as a vehicle for advertising.
ECT: What advertising advantages does the Internet offer that other media do not provide?
Bob Kennedy: We do very little pure advertising on the Web, but what it does offer is a level of interactivity that you can’t get with any other media. If a site is designed correctly, it can really be a way to get people to talk back to you.
ECT: What steps, or series of steps, do you take when planning an online advertising campaign?
Bruce Smith: We start by establishing objectives. We look at what is our focus product and what are we trying to do in terms of awareness or demand creation. We try to segment the market and take advantage of interactivity and personalization.
We also try to think a lot about lifetime value. Our customers are lifetime customers, so we’re always looking at something that will give us not just an immediate response, but long-term results. We are also sure to tweak our programs as we go along, using the interactive aspects of the Web to tell us how we’re doing.
An Ounce of Research …
ECT: What are the biggest challenges of marketing via interactive media?
Kennedy: The biggest challenge to date is how do you brand using the Web. I think it’s been pretty tough with traditional banner ads. The Web is so interactive that people are focused on the information they want, not on the ads. I think some of the new techniques being attempted — larger ads or flashing messages — are pretty interesting and they might be enough to capture some attention. You also see the success of a campaign like BMW films. Things like that kind of come out of left field are interesting. Unfortunately, it’s tough to put a return on investment value on a program like that.
Smith: E-marketing is such a radical change from traditional marketing that you have to put your infrastructure in place and then you have to have a philosophy that is well thought out and do your homework on how to segment markets. One of the things that happened is there are a lot of vendors that promise they can deliver personalization and analytics overnight. It pays to take the time to evaluate everything up front. Every hour you spend doing the homework will save you 10 hours later.
ECT: Is the Internet better suited for branding campaigns or lead generation?
Smith: Definitely lead generation. It gets back to the interactive nature of the medium. It allows you to offer up information that is valuable to the target audience and then put out incentives for them to respond and profile themselves so you can get even more valuable information.
ECT: What advantages have you gained through running a banner ad campaign?
Kennedy: We use it sparingly, but one thing is that you can run a campaign with a low out-of-pocket expense. It’s a nice medium to be able to test different offers.
ECT: What advantages have you gained through marketing in e-mail newsletters?
Smith: We have probably four or five pretty consistent e-mail newsletters aimed toward different channel partners, such as retailers or re-sellers. The advantages are that it’s pretty easy to put them together, with none of the layout issues as in print. It also gives customers the ability to respond. In regular newsletters hardly anybody ever writes back to you. With e-mail, we get a fair amount of unsolicited response with people asking questions, wanting more information. Obviously, that’s valuable.
ECT: How do you measure the effectiveness of your Internet marketing campaign? What factors come into play?
Smith: We measure it more from a standpoint of what is the quality of responses. Can you engage them in follow-on activities to engage in actual orders? Can we take them to the next step in the sales cycle? Since we want to build long-term relationships, we want quality responses, not just sheer numbers.
ECT: Based on your experience with Web marketing thus far, what does the future hold for online advertising — both in terms of strategy and technology trends?
Kennedy: For the next 12 to 18 months there is going to be a tremendous amount of trial and error. I believe we haven’t quite figured out how to use this medium. With broadcast and print a lot of the ability to capture attention is in the creativity of the content. With the Web it may be more creative strategy than creative content.
ECT: What advice do you have for a company starting to plan a new online advertising campaign?
Smith: Put in a lot of effort up front into market segmentation and identifying the lifetime value of the campaign. The feeling that you’re going to get left behind is over, so take the time to do the due diligence and do it right.
Kennedy: Dont get snowed by the idea that you’re going to reach hundreds of millions of people or get millions of impressions. So what? What’s it really going to accomplish? Dont get caught up in the frenzy to do something. Think about whether it’s the right thing to do or not.
It is obvious that AMD (with an equivalent product to Intel’s) is so far behind Intel in consumer perception because of Bob Kennedy’s poor judgement on Internet advertising.
Bob, don’t you realize that ALL of your consumers, both B2B and B2C use the Internet and are influenced by what they see on it?
Yes, I agree. Intel, which runs tons of ads all over the Intrenet and has a much better understanding of advertising and marketing strategy, is beating AMD, despite AMD’s great product.
AMD=No Web ads=maybe 17% market share.
INTEL=Tons of Web ads = 80% market share
Draw your own conclusions about what works.
Wow, you took the words right out of my mouth!! I really question the marketing savvy of AMD. For a college project, I developed an advertising perspective for a computer chip that stunned my professor. I was thinking of sending it to AMD to use and I can’t even find out who does their advertising! Do they even have an ad company?
It sounds like Smith and Kennedy acknowledge the power of interactive, but only for lead generation. Are they ignoring study after study that illustrates the effectiveness for b2b marketing? Does their interactive agency realize that AMD needs to place their message in the same hot spots where Intel has pounded away?
Having worked in corporate marketing for 10 years, the past 3 with interactive, there is little doubt that online works well for branding a large company and it comes with built in lead generation too. It comes down to producing a strong creative, clear message, and a value proposition for the audience.
Yes, it does seem very strange that supposed experts are disputing that Internet advertising works well for branding, which is almost undeniable.
Time to wake up AMD!
Maybe what they’re really saying is their advertising budget doesn’t allow them to include a significant piece of web activity in their mix?
Why would you guys pick AMD to comment on advertising? This is a company with fantastic product – and a HORRIBLE record of advertising their product – creating product or corporate image. Online advertising is a supplement to a full-fledged advertising campaign, which they don’t have.
AMD needs to replace their internal marketing staff, and get a new agency to have any chance at surviving against Intel.