Dell Inc.

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Dell Inc.

1 Dell Way
Round Rock, Texas 78682-2222
USA
Telephone: (512) 338-4400
Fax: (512) 283-6161
Web site: www.dell.com

DUDE, YOU'RE GETTING A DELL CAMPAIGN

OVERVIEW

In 2002 Dell Inc. experienced its first-ever yearly decline in net revenue. In 2001 sales hit $31.9 billion, but the next year they fell to $31.2 billion. The drop in sales coincided with an overall decline in computer sales worldwide, and the mail-in computer giant was far from doomed. Still, it was at this time that Dell shifted its advertising approach, introducing its "Dude, You're Getting a Dell" campaign in 2001. The advertisements starred Steven, a "surfer dude" teen, and were intended to attract high school and college students and their parents.

The Chicago office of ad agency DDB created the campaign, which consisted of approximately 20 television commercials that placed Steven in various scenarios in which he could promote the computer, using the ubiquitous tagline "Dude, you're getting a Dell." Such instances occurred during a high school graduation speech, in a college classroom, and during a computer-store sales pitch. Throughout the campaign Steven persistently promoted Dells in a way that appealed to teens and both charmed and annoyed adults. The "dude" became incredibly popular with TV viewers, prompting Dell, from 2000 through 2002, to spend a large portion of its $200 million annual advertising budget on the campaign.

Steven became an instant pop-culture icon. But sales, which had begun to decline in 2001, did not rebound in 2002, and some people at Dell wondered if the popular character was overshadowing the product. Dell and DDB therefore began preparations to move away from the "Dude" campaign by phasing Steven out in late 2002, replacing him with a group of fictional interns. "Dude" fans were outraged, but sales did not suffer. In fact Dell shipments increased by 25 percent in the quarter following the introduction of the intern ads. Sales continued to grow, and Dell more than rebounded from the losses it had experienced in 2002. By the end of 2003 annual revenue had grown past $40 billion, and it increased to nearly $50 billion the following year. Regardless of the effectiveness of the "Dude, You're Getting a Dell" campaign, however, the "dude" was regarded as one of the most memorable figures in the history of advertising.

HISTORICAL CONTEXT

Michael Dell began working with computers at age 15, when he took apart a brand-new Apple computer to see if he could rebuild it. He could. In the 1980s Dell began rebuilding and selling computers from his University of Texas at Austin dorm room, naming his company PCs Limited. In 1985 the company developed its own computer, the Turbo PC, which was advertised for direct sale in national computer magazines. Consumers were attracted by the low prices, so much so that the company grossed $6 million in its first year of business. In 1987 PCs Limited changed its name to Dell Computer Corporation, and in 1992 Fortune magazine listed Dell as one of the world's 500 largest companies. Sales climbed dramatically, giving even the century-old IBM something to worry about. Within a decade Dell had become the largest seller of personal computers in the United States. It lost that spot to Hewlett-Packard in 2002 but regained it within a year. In subsequent years the two continued to battle for the number one spot.

Dell's concentration remained on direct sales even as it moved away from relying solely on its mail-order catalog to reach customers. During the shift Dell used larger and larger advertising campaigns to promote its products and its direct sales approach. Its $70 million "Be Direct" worldwide campaign of 1998 emphasized the advantages of Dell's direct-to-customer business philosophy. But the customer-service team that was then operating Dell's direct sales was often criticized by consumers. Complaints about unknowledgeable and rude sales representatives were made public. There were also accusations about cheap and undependable parts. In response Dell launched "Dell4me," a $30 million ad campaign that was accompanied by the theme "Your thoughts exactly." This campaign shifted the focus from Dell's technical specifications to the company's ability to help consumers get the most out of that technology. Although "Dell4me" represented an attempt to appeal more directly to individual consumers, it was not altogether personable in its approach. To improve Dell's image, a more upbeat advertising campaign was deemed necessary. Thus "Dude, You're Getting a Dell" was introduced in 2001.

TARGET MARKET

Prior to the "Dude" commercials, Dell had been known as a company that primarily targeted business accounts, a fact reflected in its advertising campaigns. The Steven character was intended to broaden the company's appeal to individual consumers. In particular Dell wished to target first-time computer buyers (and their parents). The company reasoned that these customers might be especially intimidated by the task of purchasing a computer that was not available in stores. Steven helped to make Dells seem far less daunting, thus bridging the gap between the computer company and customers.

According to Newsweek, in 1990 about 15 percent of U.S. households owned a computer. Within a decade the number jumped to 50 percent. Further a large percentage of homes with computers were occupied by teenagers. In 2001, when "Dude, You're Getting a Dell" was launched, an incredible 78 percent of American teens had computers and Internet access in their homes. Because many of these computers were purchased by parents, Dell's campaign had to simultaneously target teens and parents. Steven, played by actor Benjamin Curtis, who was 21 in 2001, was himself a representative of the lucrative young-adult demographic. In the "Dude, You're Getting a Dell" television commercials, Steven spoke most directly to parents who were purchasing computers for their high school and college-age kids. The character became a phenomenon among consumers in the 13-to-24 age bracket.

COMPETITION

Dell Inc. was not the only computer company experiencing rapid growth at the end of the twentieth century. Hewlett-Packard (HP), in particular, offered fierce competition for Dell. Since 1999 the two companies had been vying for the spot of number one seller of PCs in the United States and subsequently in the world. The rivalry was amplified by the two companies' battle for Compaq (in 1999 Dell took over Compaq; in 2002 Hewlett-Packard acquired the company). In 2002 Hewlett-Packard launched its "Everything Is Possible" campaign, which, inspired by HP customers' success stories, focused on the company's positive relationship with its customers. HP followed it with the "You + HP" campaign in 2003. "You + HP" won accolades, including being named Campaign of the Year by Adweek. With a wide range of products, including PCs, printers, and servers, as well as high sales (in 2004 sales approached $80 billion) and a soaring net income (in 2004 it was $3.5 billion, representing a one-year net income growth of 37.7 percent), the company gave Dell stiff competition.

Another computer giant, IBM, had long competed with Dell in the field of computer products. In 2004 its sales exceeded $96 billion, with a net income nearing $8.5 billion. The latter reflected an 11.2 percent growth since 2003. But while Dell was finding success with its "Dude" advertising, IBM was met with disdain for its 2001 "Peace, Love and Linux" campaign, which promoted the Linux operating system. For the campaign IBM hired ad agencies to spray-paint stenciled side-by-side images of a peace symbol, a heart, and a penguin (the Linux mascot) on sidewalks in Chicago and San Francisco. Local officials and business owners demanded that the images, which they considered vandalism, be removed.

Following the lead of its rival Dell, Gateway in 2004 closed down all of its computer stores but continued selling its merchandise by phone and through its website. Prior to the shift Gateway had been experiencing major financial difficulties. Its chain of stores was far from profitable, and from 2001 to 2003 the California-based company had lost money during most quarters. From 2002 to 2003 Gateway's revenue plunged from$4.2 billion to $3.4 billion. Even its long-standing and popular spotted-cow advertisements could not help. Closing the stores had some immediate positive results: by 2004 sales had improved nearly $2.5 billion.

In the field of network computing—including corporate networks and websites as well as workstation computers—Sun Microsystems offered challenging competition for Dell. Its sales and net income, though nowhere near Dell's, were admirable. In 2004 its sales exceeded $11 billion, and it had a net income nearing $400 million.

MARKETING STRATEGY

Dell had used the character of Steven prior to the "Dude" campaign. Two agencies, DDB New York and Lowe Lintas, created the character in earlier concepts. In the first Steven ad, which aired during the 2000 holiday season, actor Curtis played a teenage boy asking his parents for a Dell computer for Christmas. When DDB's Chicago office took over the campaign in 2001, it decided to play up the Steven character and gave him the "Dude" tagline.

DUDE, YOU'RE UNDER ARREST

Benjamin Curtis, the actor who played Steven in the "Dude, You're Getting a Dell" commercials, was arrested on February 9, 2003, for buying a bag of marijuana. He was apprehended after a police officer witnessed him buying the drugs on a street in Manhattan. After spending a night in jail, Curtis was released, and the charges were later dismissed.

The goal of the new campaign was to move away from the technology-focused ads that mostly appealed to businesses and the particularly computer-savvy individual. With Steven, Dell could better identify itself with consumers across the board in a personable and familiar way. The company spent a significant amount of money to promote Steven and his "Dude, You're Getting a Dell" slogan. For each year between 2000 and 2002, Dell spent approximately $200 million on advertising. A large chunk of this was used for the "Dude" TV commercials, which began airing in the spring of 2001. In two years Curtis made approximately 20 commercials with Dell. The spots ran during both daytime and prime-time TV shows and appeared on all major networks.

The "Dude" commercials did not vary much from one to another. In each ad Steven, an annoying but somewhat lovable young guy, was seen relentlessly and enthusiastically pushing Dell computers at every opportunity. In one series of three commercials Steven, playing Santa's helper in an elf suit, told kids they wanted a Dell for Christmas. In another spot Steven was with a date in his father's car (trying to pass the car off as his own) when he advised a computer-seeking neighbor, Mr. Foster, to buy a Dell. Steven was also seen giving a speech at a high school graduation, throwing his sales pitch at the end; at a computer store, announcing his Dell pitch on the loudspeaker; and writing his tagline on a blackboard in a college classroom. During the two years that the "Dude" commercials ran, Steven's task seemed to be to connect with teens and annoy adults (such as a high school principal, a store manager, and a college professor). The spots, although not changing in theme, progressed with Steven's fictional life: he was depicted first in his messy bedroom in his parents' home and subsequently graduating from high school, working part-time jobs, and attending college.

OUTCOME

"I would choose a Dell over a Gateway because Steven is cuter than Gateway's cow," claimed one teen, referring to Gateway's long use of the cow in its advertisements. Steven became a cult figure in advertising akin to Clara Peller, star of Wendy's famous "Where's the Beef ?" campaign of the 1980s. Steven fan sites popped up on the Internet, Steven fan mail was sent to Dell, and Curtis was recognized everywhere he went. The campaign's effectiveness in selling Dell products, however, was less clear.

From the third to the fourth quarter of 2000—after the holiday-season introduction of Steven—Dell sales rose 38 percent. But while some credited the "Dude" character for this, others linked the sales to the fact that Dell had lowered its prices. In 2001, when the first 10 or so "Dude" commercials were aired, net revenue actually declined slightly. Dell did not fare much better in 2002; even at $35.5 billion, revenue was down from 2001. By this time Dell was preparing to shift away from ads featuring the Steven character. In the fall of 2002, with plans to fade Steven out, the company introduced a new campaign involving a fictional group of young interns. One of the first three intern commercials ended with an appearance by Steven repeating his familiar tagline. In the other two the phrase "Dude, You're Getting a Dell" was spoken by a voice-over announcer who was not Steven.

Steven fans felt betrayed by Dell. Replacing the character, however, turned out to be perfect timing for the company. Soon after the change Curtis was arrested for possession of marijuana, a situation that would have presented Dell with a PR nightmare. The shift may have also resulted in significant monetary benefits. Dell shipments increased by 25 percent in the quarter following the launch of the intern commercials; the same period after the start of the "Dude" campaign had produced an increase of just 16 percent. The intern commercials were nowhere near as popular as the "Dude" spots. But as Dell's CEO and founder, Michael Dell, put it, "We're not running the Steven TV show." Still, regardless of whether the Steven character took attention away from the computers themselves and whether the "Dude" campaign was in fact responsible for an immediate skyrocket of sales, the campaign did significantly raise awareness of the brand.