December 19, 2001 03:22
Hewlett-Packard Takes Merger Message to Newspapers
By Tom Fowler, Houston Chronicle
Dec. 19--Computer company advertisements are hardly unusual, but a Hewlett-Packard Co. ad running in a handful of daily papers today signals a new phase in its troubled merger with Compaq Computer Corp.
The ads, running today in USA Today, the Houston Chronicle, the San Francisco Chronicle, the San Jose Mercury News and the Contra Costa Times, are the first to mention the $24 billion merger specifically, and represent a broadening of efforts to sell the deal to investors.
The ad, developed by San Francisco-based ad agency Goodby, Silverstein & Partners, shows one of HP's first products, an oscilloscope, on one page and asks on the other, "What if we had stopped here?"
"We might have stopped at the audio oscilloscope. It was a nice business. We might have stopped at the scientific pocket calculator. After all, HP invented the category. Even now, some suggest we might stop at printers."
The ad continues by talking about how the industry continues to change and that merging with Compaq will be a continuation of HP's tradition of technology innovation.
The ads come a week and a half after one of HP's largest shareholders, the David and Lucile Packard Foundation, said it would oppose the merger if it came to a vote. Before this, both companies used more traditional methods of persuasion to convince investors of the benefits of the deal, including news releases and one-on-one meetings with executives.
While the Packard Foundation announcement has made the merger more difficult, the ads are not a direct response to that event, Compaq spokesman Arch Currid said. He said they are more of an indication of the phase the merger is in, with the federal antitrust review period coming to an end and the issuing of proxies to shareholders for a vote that could occur as soon as late February drawing near.
"If the merger were a book, we're still in the introduction and haven't reached Chapter 1 yet," Currid said. "But as we get near to it, it makes sense to communicate as clearly as we can to the broadest set of people why the merger makes sense."
An HP spokeswoman described the ad as a part of the company's effort to spread what it thinks are the benefits of the proposed merger, and repeated the message that the companies will be more aggressive in spreading that news in the future.
A second ad is expected to run in some papers in the coming days, but HP officials wouldn't comment on the overall campaign, including whether it will spread to other media, such as television, radio or the Internet.
The ads will reach an estimated 3.7 million readers. USA Today has about 2.2 million daily readers, according to the Audit Bureau of Circulations. The Houston Chronicle and the San Francisco Chronicle have 551,000 and 502,000 daily readers respectively.
Despite the large potential audience for the ad, print advertising tends to be a poor tool for getting people to change their opinions, said Laura Ries, president of Atlanta-based marketing strategy firm Ries & Ries.
"The biggest problem with advertising is its lack of credibility," Ries said. "There's too much of it out there, and people know most of it is just self-serving."
Efforts by tire maker Firestone and automaker Ford to salvage their tarnished images when hundreds of accidents were linked to poorly manufactured tires included several full-page newspaper ads that explained the companies' positions.
"Did those make any bit of difference in the mind of most consumers? Not really," Ries said. "Whenever a company takes out a full-page ad in the Wall Street Journal, you know it's because they've done something wrong and they're having trouble getting anyone to believe their view."
Print ads work much better to reinforce opinions people already hold, such as a company's leadership in a market. It's usually public relations efforts -- persuading newspapers to write about certain issues or attributes of a company -- that are better at influencing opinions, Ries said.
"The fact that they are turning to advertising to get this message out seems to indicate they lost that battle with reporters," she said.
An ad aimed at HP and Compaq employees doesn't seem to make sense given the limited influence of those individuals and their shares on the vote, said Tom Austin, a vice president at research firm Gartner Inc.
"I'd much rather see an ad with a list of institutional shareholders who will back the merger," Austin said. "But maybe they believe keeping some sense of a positive morale around the deal is important to keep people from going to work for other companies over Christmas."
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