Iomega Slashes Ad Budget By 40%
computer-modeling system ties marketing to sales, manufacturing
full story:
businessjournal.netscape.com
[ Advertising Age, 11/23/98, p.3 ...online 11/30/98 via NewsEdge ]
...Iomega has slashed ad spending for next year to an estimated $60 million, developing an ambitious computer-modeling system to link ad and promotion programs directly to sales and manufacturing.
Iomega's strategy borrows features from efficient PC direct marketers such as Dell Computer Corp. and Gateway, whose ability to rapidly turn over lean inventories gives them a competitive advantage. At the center of Mr. Taylor's philosophy is a belief that buyers, not sellers, drive demand.
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Though Iomega has sold 20 million Zip drives over the past four years, it has been less successful in developing ongoing demand for disks; many owners don't fill up many of the profitable disks, which hold 100 megabytes of data.
However, Iomega expects disk sales to customers who have owned a drive for more than a year will surpass sales of disks to those who have owned their drives for less than a year.
In print ads that broke this month from longtime agency Euro RSCG DSW Partners, Salt Lake City, Iomega shifted the focus to the disks from the drives.
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Mr. Taylor said Iomega may return to TV next year with a similar ''non- fiction'' approach; it is evaluating TV concepts from DSW.
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Using computer models, Iomega tracks sales forecasts and manufacturing. The goal is to meet demand and to manufacture products efficiently.
If the factory runs best at a certain rate of production, Mr. Taylor said, Iomega must manage sales and marketing to match production.
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Much of Iomega's advertising, such as that in magazines, is locked down in advance. But Iomega can turn the volume up or down through newspaper ads, and it also can use promotions, market-development funds and discounts to manage supply and demand, he noted.
In September, the marketer moved media buying to Western International Media, New York, from DSW, specifically to have ready access to Western's media inventory, Mr. Taylor said.
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