When engineer Dennis Carter followed “the pull of the business side” from Collins Radio to Harvard Business School in the ’70s, he didn’t know that decades later he’d be the focus of a Harvard Business Review article on the chip industry’s most enduring—and probably its most controversial—marketing campaign.
The newly minted MBA followed the siren call to Silicon Valley, where he joined Intel in 1981 and eventually became the first technical assistant to chief executive Andy Grove. By the late 1980s, with its 486 processor in the works and the need to shell out $1 billion for its next fab, Intel faced a clogged pipeline: OEMs and end users were showing little inclination to upgrade from the 286 to Intel’s flagship 386 processor.
“Up to that time, we were marketing exclusively to design engineers at PC companies. But I had the insight that they weren’t making the [microprocessor buying] decisions anymore; the marketing people [were]—and we had to do something about it [to reach them],” Carter recalls.
With Grove dangling “the carrot of a $5 million ad budget if we found a good idea,” Carter marshaled a small task force to test his thesis that advertising could sway PC buyers to choose the 386. The group came up with what became known as the graffiti campaign: ads showing a 286 logo crossed out in red spray paint, with copy explaining why the 386 was better.
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With Denver as its test market, Intel bought space in print media and on billboards, and polled Denver users before and after the media blitz.
“After a month, both PC sales and 386 sales were up, and planned purchases [of 386 machines] toggled from 10 or 15 percent to about two-thirds” of planned purchases, says Carter. “It was such a profound change” that the team got the go-ahead to take the campaign national.
Soon people in nine U.S. cities were hearing about 386 microprocessors. “Young people were coming into stores asking for 386 radios,” Carter says. “This was the birth of consumer marketing [in semiconductors]. But [we were] still a nascent, small group of people with a small budget.”
And Carter recalls spending “a lot of time … apologizing to [OEM] customers who weren’t necessarily happy we’d done something that changed the market in ways they didn’t predict.”