In addition to the usual beer and salty-snack logos adorning the cars at last weekend's Daytona 500 race, the car driven by two-time NASCAR cup champion Terry Labonte featured the less-familiar initials of a semiconductor used in certain television sets.
The DLP-branded race car represented chipmaker
first experience as a primary sponsor for NASCAR, and comes as the Dallas company, whose actual customers are electronics manufacturers, is stepping up efforts to increase its brand awareness among consumers.
"The demographic, the people who follow NASCAR, was just a perfect match for us and we wanted to reach that audience," said Jan Spence, director of the TI brand at Texas Instruments.
The sponsorship is part of a broader branding campaign by TI, which includes national television and radio commercials. After experimenting with television commercials in select local markets in 2004, TI broadened its TV efforts last fall with national ads during football season.
Right now, the ad campaign is focused on the DLP, or digital light processing, chips used in new high-definition televisions. But according to some industry experts, the ads could represent a first step as TI extends its branding push into some of the other hot consumer markets that its chips are involved in.
"I certainly think that this potentially is their launch platform," said Dean Crutchfield, the chief growth officer of brand consultancy firm Wolff Olins, a unit of Omnicom. "This obviously marks a turning point for TI," says Crutchfield, as the company looks "to follow a new strategy for their brand."
Texas Instruments, which had annual revenue of $13.4 billion in 2005, won't say how much the advertising campaign is costing it, although an article in
pegged TI's media budget for the ad campaign at $25 million, compared with TI's total media spending of $13 million in 2004.
In pitching its DLP chips to the consumer mass market, Texas Instruments is following a path pioneered by
, which launched the Intel Inside campaign in 1992 and transformed that company into one of the world's most recognized brands.
Intel proved that you can create demand for a component by going directly to the consumer, says Yankee Group media and entertainment analyst Nitin Gupta.
But with the exception of Intel, and to some degree graphics-chip firms like
, it's still relatively rare for semiconductor companies to trumpet their message on Main Street.
And recently, Intel has begun to alter its branding approach, emphasizing platforms like Centrino and Viiv, rather than the actual microprocessor inside the box. In January, the company unveiled a new branding strategy, retiring the Intel Inside logo and introducing a new "Leap Ahead" catchphrase.
That's because the PC market has matured, say analysts, and consumers aren't necessarily interested in the fastest microprocessor anymore.
"At a certain point in the PC product category, you could associate that fast Intel processor and the quality of the experience. We're kind of past that," says the Yankee Group's Gupta. What Intel is finding now, Gupta says, is that as a product category evolves, consumers are less interested with the component inside the box and more interested in the overall experience that the product provides.
The market for digital televisions, however, is still young and fragmented, making it well suited to the kind of advertising TI is doing, Gupta and other analysts say. TI's DLP chip is one of several competing technologies that consumers can choose from when shopping for a high-definition television.
"With the confusion out there in the market, people don't really know the difference between technologies," said TI's Spence. "That's why we're trying to educate people on the difference."
And just as Intel's processor marketing once revolved around clock speed, the chips at the heart of high-definition televisions have a single, easy-to-understand message to pitch: picture quality.
It's unclear what impact the advertising is having on TI's DLP sales so far. The company's DLP revenue was up 10% year over year in the fourth quarter of 2005, but much of that growth reflected a recovery from an inventory glut of DLP chips that plagued TI at the end of 2004. And the fourth-quarter DLP growth owed to an uptick in demand from the projector market rather than the high-definition television market, which experienced a sequential decline in sales during the quarter.
TI's biggest growth engine in recent quarters hasn't been high-definition televisions, but cell phones. As the world's largest maker of cell-phone chips, TI's product line includes everything from radio chips to power-management technology.
The company's line of OMAP application processors, which provide advanced graphics for things like video games and movies on cell phones, would seem an ideal candidate for a consumer advertising campaign. It's easy to imagine vendors differentiating their high-end, feature-rich cell phones by drawing attention to the application processor inside the handset. And with TI aiming to assert its brand in the consumer electronics market, cell phones clearly represent an important piece of the puzzle.
TI says its advertising is focused exclusively on HDTV at the moment, and that when it comes to the wireless business the company prefers to let its customers, i.e., the handset vendors, have the spotlight.
In fact, the cell-phone industry may not be so eager to share the spotlight with TI.
Whereas television manufacturers have welcomed additional efforts to educate consumers as a way to spark sales of new HDTVs, the cell-phone market, which saw unit shipments surge 16.7% to 825.5 million units in 2005, isn't necessarily looking for marketing help.
Handset makers don't know why they should be touting the chips inside the phone, says Allen Liebovitch, the director of consumer and communications semiconductors at industry research firm IDC. "I don't think they've really caught onto it yet," Liebovitch says of the handset makers.
Complicating matters is the fact that many consumers associate their cell phone's functionality with service providers like
, rather than with the handset makers, leaving TI one more step away from the consumer.
Faced with these kind of barriers, TI's consumer branding strategy has plenty of challenges if it ever intends to grow beyond the television market. Navigating these obstacles will take more than a champion race car driver.