Rest in Peace, Ingredient Branding

“We want to be the Intel of the [_______] industry.”

If I had a nickel for every time I heard that… well, I might not be able to retire, but I’d sure have a lot of nickels.

There is no denying the “Intel Inside” cooperative advertising campaign was hugely successful. Convincing manufacturers to place the “Intel Inside” logo on their products and focusing the brand message on the value of Intel microprocessors was genius. In fact, it helped catapult the nascent PC market to mainstream status.

As a by-product of this strategy, Intel has become one of the world’s best-known brands and the fact that less than one percent of consumers has ever touched or even seen an actual Intel chip underscores the company’s success. According to the fourth quarter 2011 PC microprocessor market share study from International Data Corp. (IDC), Intel's desktop PC processor segment market share was 76 percent; in the mobile PC processor segment, over 82 percent market share; and in the server/workstation processor segment, 94 percent market share.

When “Intel Inside” was in its heyday, other component manufacturers were eager to hop on the ingredient-branding bandwagon. Suddenly, everyone in the technology space was trying to replicate Intel. Even today, retail outlets are filled with laptops, desktops and other electronic devices labeled with anywhere from three to seven ingredient badges.

While ingredient branding worked well for Intel, its co-advertisers and a smattering of copycat marketers, I believe that it has outgrown its usefulness. Going forward, technology component manufacturers need to think differently about achieving brand success and here’s why:

No one-size-fits-all

When Intel launched its ingredient branding campaign circa 1991, desktop computers were virtually the only computing form factor available. Today’s technology products come in every size, shape and operating system, from desktops and laptops to tablets and smartphones. If your marketing strategy involves backing a platform or OEM (original equipment manufacturer), where should you invest your valuable marketing dollars?

The truth is that in today’s technology marketplace, creating an ingredient branding campaign via a single form factor is very limiting. Even if you have the deep pockets to influence the OEM eco-system, there isn’t a single player big enough—from a market share perspective—to merit the large sums of money required to create a viable campaign.

No place for ingredients to live

Another factor is that the smaller form factors of most devices have considerably less space for promoting ingredients. While desktops and even laptops still have adequate real estate for any number of stickers, most smartphones, televisions and tablets do not. It’s also safe to say that few OEMs are willing to sully their products with stickers.

Furthermore, devices used to have extended startup times, which provided a “stage” for logos and credits. But those days are long gone. Even if a device maker agreed to allow an ingredient marketer to showcase its logo during startup, the runtime would be far too short to provide adequate promotion. Interestingly, Microsoft used logos and credits to distract users during lengthy startups; Apple proved that the user experience is better without these prolonged preludes.

No more tinkering with component parts

As form factors continue to shrink in size, tinkering with devices becomes a thing of the past. Components need to be better integrated (think system-on-a-chip, like Broadcom’s BCM7405 or Snapdragon, a family of mobile system on chips by Qualcomm) to fit into the limited space, rendering most devices too small to modify. In short, you will never see it—and you surely can’t replace it—so consumers will have no choice but to stick with what the OEM places inside.

The ARM ecosystem is driving mobility

ARM pioneered one of the most energy-efficient microprocessors, which fits into smaller spaces and doesn’t require a fan. The company also owns the intellectual property for the chips and allows manufacturers like Motorola, Samsung and Apple to put them into their devices. In essence, ARM developed the technology that lies at the heart of many digital products today, but unlike Intel, ARM does not promote its technology to consumers. In fact, it operates on a completely different plane. ARM wins when manufacturers—and there are hundreds of them—use its microprocessors. ARM recognizes those companies as its primary customers and wants them to succeed.

Consumers don’t care about ingredients

Intel backed its cooperative campaign with a tremendous amount of national advertising, especially TV, aimed at convincing consumers that if they didn’t buy a PC with an Intel microprocessor inside, it wouldn’t perform adequately. Today’s devices perform more than adequately across a broad range of specifications: processing power, graphics, interfaces, mobility, audio and more. Today’s consumer doesn’t much care what’s inside as long as it’s reasonably easy to use, quickly connects to the Internet, has decent resolution and performs basic computing tasks.

A change in perspective

In many technology C-suites, a principal marketing goal is to create buzz around the company’s products, especially via social media networks. These management teams want their products to be the Intel of their industry—the “cool” component. But executives need to ask themselves: Is creating consumer-driven demand the best strategy in today’s marketplace? Based on the facts discussed above, the answer is a resounding “no.”

“Intel Inside” worked because of the specific dynamics of the personal computing market during the 1990s. But the world has changed. Given the market’s channel fragmentation, cooperative and consumer-oriented tactics and messaging will not help ingredient marketers build a stronger brand. On the contrary, component manufacturers need to switch their marketing orientation from a business-to-consumer approach to a business-to-business strategy.

This is a huge pivot point for many companies that seek to emulate Intel and its success by marketing directly to consumers. However, when it comes to creating ingredient branding and actually driving business growth, a strong business-to-business branding orientation may be the best approach for winning in today’s marketplace.

Jason Cieslak is managing director for Siegel+Gale’s Los Angeles office.

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