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Teaching Note
Gateway: Searching for the Right Agency
Case Overview
This case examines Gateway, one of the major competitors in the personal computer industry, and its
search to find the right advertising agency and positioning platform for the company. Gateway has
switched advertising agencies nine times from 1997 to 2005 and three times in a 14 month period from
early 2002 to 2003. Gateway’s sales have declined from a high of $9.6 billion in 2000 to $3.8 billion in
2005, which includes approximately $1 billion of revenue from eMachines which the company acquired
in 2004. Gateway has undergone several changes in management as well as its business strategy over the
The classroom discussion of this case can be enhanced by showing the series of Gateway
commercials that are provided on the DVD provided in the instructor’s supplement package that
accompanies the text. Ten Gateway commercials appear on tape one including four spots from the
“People Rule” campaign developed by McCann-Erickson and six developed by Siltanen/Keehn during its
brief tenure as Gateway’s agency in 2001-2002. Three of the commercials develop by S/K are spots from
the campaign featuring Ted Waitt and the talking cow who advises him on ways to entice customers to
buy Gateway products. The other three commercials are stylish, product-focused ads including a
Discussion Questions
1. Analyze Gateway’s decisions to change advertising agencies so many times over the past six
years. Identify and discuss specific factors that may have led to each decision to change
agencies.
As noted in Chapter 3, some companies have long-lasting relationships with their advertising
agencies while others change agencies more frequently. Decisions to switch agencies can be driven
The first issue that should be discussed is Gateway’s initial decision to hire an outside agency.
As the case notes, up until 1993 Gateway relied solely on print advertising that was produced in–
house. However, as the company grew rapidly, it decided to add television ads to the media mix and
retain the services of an outside agency to work with its in-house advertising department. Some
Carmichael Lynch served as Gateway’s agency for four years until Gateway decided to move
its advertising to a larger global agency, D’Arcy Masius Benton & Bowles. The decision to hire
DMB&B was made because Gateway wanted a larger agency with global capabilities that could help
the company with its growing international business in Europe and Asia. This is an example of a
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conflicts, a lack of rapport between agency personnel and Gateway’s in-house advertising
department, and dissatisfaction with the type of ads the agency was creating. As the case notes,
Gateway CEO Ted Waitt is known for his dislike of traditional advertising that uses actors and
The next agency change to discuss is the decision to move from DiMassimo Brand Advertising
and once again hire another large outside agency, McCann Erickson Worldwide. This decision was
made after Jeff Weitzen, a former AT&T executive, was brought in to run Gateway in early 1998 as
Ted Waitt decided to step back from the day–to-day operations of the company. The decision to hire
Many advertising and industry analysts felt that the “People Rule” campaign developed by
McCann was a very good campaign and was successful in positioning Gateway as a customer friendly
company. However, McCann Erickson’s tenure ended after a management shake-up that resulted in
Weitzen’s resignation and Waitt resuming control of the company in January 2001. It should be
noted that Gateway posted a financial loss in the fourth quarter of 2000 as its core PC business was
not profitable. There are a number of factors that appear to have led to the decision to dismiss
McCann Erickson including the management shake-up, the decline in profits, and Waitt’s dislike for
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some very good creative work for Gateway including the campaign featuring the commercials with
Ted Waitt and the talking cow.
The next agency change to discuss is the decision to drop S/K after only 10 months and hire
the Arnell Group, New York. This decision appears to have been driven by the decision by Gateway
to change its positioning and image from folksy to hip. The Arnell Group was known of its branding
work with retail clients such as Banana Republic and was hired to help with the makeover of the
Leo Burnett’s 16 month tenure represented Gateway’s longest agency relationship since
McCann Erickson had the business from 1998 to early 2001. However, Burnett became the next
agency to go through the revolving door due to changes occurring at Gateway as the company hired
Grey, San Francisco to handle its business-to-business advertising as well as some of its consumer
advertising. Neither of the campaigns developed by Leo Burnett was successful including “The
Comforts of Gateway” consumer effort and the b–to-b-campaign that used the “Humanology” tagline.
Grey had been brought in to handle Gateway’s B–to–B advertising but as new management took over
the company, they were given the opportunity to compete against Burnett for other parts of the
business including back-to-school ads and ads touting Gateway’s Olympic sponsorship. However,
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Gateway computers as a premium brand while eMachines-branded PCs would be positioned as a
value brand. The company was looking for big ideas for a new campaign that would be launched to
help differentiate the Gateway brand and under the direction of its new Senior V.P. of marketing
2005 the agency acquired several other new accounts including Volkswagen and Miller Lite and may
have decided to focus its energy more on these clients. Also, given the problems Gateway was
having, CP+B may have felt hat it was better off resigning the account rather than become the next
agency to be shown the door. Following the departure of CP+B, Gateway moved its advertising to
2. Discuss how Gateway’s frequent agency switching has affected the company’s branding and
positioning efforts. What recommendations would you make to Gateway management
regarding its agency switching and its impact on the company?
Gateway’s frequent agency switching has obviously affected the company’s branding and positioning
efforts, particularly more recently, as the changes have made it difficult to establish any continuity
and consistency in its advertising. Over the past nine years Gateway has used a number of
tagline/campaign themes including the following;
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• “You’ve got a friend in the business (2001)
• “Gateway: A Better Way” (2002)
As can be seen from this list, Gateway has used more than 10 different advertising themes over the past
nine years and six since early 2001. Most of these taglines have lasted less than a year which has made it
difficult for the company to establish a clear identity and image. You might ask students to discuss
whether they feel there is a consistent theme running through all of the different taglines. As discussed in
the case, Gateway has always tried to position itself as a company that assists its customers in
understanding technology and how it can help them in their daily lives. This theme is reflected in the most
recent campaign which uses the “Technology You Can Trust” theme.
3. If you were an executive at an advertising agency and Gateway’s decided to switch agencies
again, would you advise your account development team to pursue the company’s business?
Why or why not?
An interesting issue to discuss is why large agencies keep pitching Gateway when the company has a
history of changing agencies so often. First, it should be noted that despite its recent problems, Gateway
is still a very large company with sales of nearly $4 billion and is the third largest personal computer
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significant market share, a strong product line, and a viable business model as one of the two major direct
sellers of personal computers and other electronic products. Gateway may be able to return to profitability
as the economy rebounds and spending on personal computers and other electronic products by both
businesses and consumers increases.
Some agencies may be reluctant to pursue an account such as Gateway for several reasons, not
the least of which is the company’s track record of switching agencies so often. Agencies often invest a
great deal of money to pitch a new client and become involved with them. A great deal of time, effort,
Another issue agencies must consider is the tendency of Gateway founder Ted Waitt to meddle
with the company’s advertising. Although Waitt is no longer active in Gateway, he is still the company’s
largest shareholder and thus his opinions may still find their way to Gateway’s management. As described
in the case, Waitt is not considered to be a fan of traditional advertising and has played a major role in the
decision to dismiss several of Gateway’s agencies. Consideration must be given to whether Waitt might
interfere with an agency’s ability to develop good advertising for Gateway. Moreover, even if the agency
developed effective advertising, there is still the possibility that Gateway may still find it difficult to