Last Updated Dec 31, 2008 12:53 PM EST
What Enfatico must do in 2009 is re-cement its relationship with
Enfatico will be under pressure from WPP chief Martin Sorrell to squeeze every last dime out of Dell as long as their three-year contract lasts, but at the same time if it wants to keep the business the agency must be as cheap as possible. That is going to be a difficult tightrope to walk in 2009. It helps to understand the position Dell is in financially:
Dell's revenue is flat or declining. Its net income is doing the same. Its SG&A expenses (the budget line where ther ad costs are located) fell by 12 percent -- suggesting that Enfatico has saved the company money.
Now check out when that money was saved. According to Dell's own most recent Q3 of fiscal 2009 financial statement (emphasis added):
Advertising expenses decreased approximately $50 million in the third quarter of Fiscal 2009 from the same period in Fiscal 2008.
Advertising expenses decreased approximately $40 million in the first nine months of Fiscal 2009 from the same period in Fiscal 2008.In other words, Dell sharply reduced its advertising expenses in the most recent quarter. Whatever Enfatico was doing back in February, it's doing much less of right now. (Or ought to be, if it's trying to remain sensitive to its client's budgeting problem.)
Further reducing Dell's expenses in Q1 and Q2 of 2009 will help Enfatico. This may mean layoffs. Or it may mean axing some marketing plans.
Dell itself might want to help its own agency save money by reducing the amount of stuff it wants advertised. Everyone already knows Dell is a huge company that sells all kinds of different computers. Whatever kind of machine you want, Dell can give it to you in pretty much any way you want it. So does Dell really need to individually promote every single chip and and button that pops out of its factory? Look at all the products it promoted in the last couple of months:
- Dec 9, "smallest desktop ever."
- Nov. 21, "Dell Adds Eye Candy to Inspiron Mini Mix with Cherry Red, Pretty Pink and Tristan Eaton Designs"
- Nov 17, "Power Up Into the Fast Lane with Dell's Studio XPS Desktop"
- Nov. 11, "Bold New Dell (Product) Red Artwork for Studio Laptops Express Passion for Art, Desire to Make A Difference"
- Oct. 30, "Fresh New Version of the Iconic Dell XPS One"
- Oct. 26, "Slim, Stylish and Well-Connected: Introducing the Dell Inspiron Mini 12"