Transcript Chapter 2 - AdBuzz.com

The Modern
Marketplace
& “The New Advertising”
Session Objectives:

Review Chapter 2
 The Modern Marketplace
& “The New Advertising”

This is a difficult chapter
 Not all stories have easy answers
or happy endings
 It covers complex business issues

Then, Questions & Discussion
The Modern Marketplace

How Advertising Changed

Why Advertising Changed
& “The New Advertising”

The New World of “MarCom” or “IMC”
Integrated Marketing Communications

A New World for Advertising

Why This is Important to You!
“1984”



More than a good
TV commercial
A new way of
thinking about
advertising
Total Marketing!

Marketing Public Relations: Computer
Magazine Reviews, Major Media Coverage

Sales Promotion: In-store materials

New Media Products: MacWorld, MacWeek
And more . . .

“1984”



More than a good
TV commercial
A new way of
thinking about
advertising
Total Marketing!
QuickTime™ and a
H.264 decompressor
are needed to see this picture.

Marketing Public Relations: Computer
Magazine Reviews, Major Media Coverage

Sales Promotion: In-store materials

New Media Products: MacWorld, MacWeek
And more . . .

How Advertising Changed:

Financially-Driven Agency Mergers
& The Rise of “Mega-Agencies”

Agency/Client Relationships

Effectiveness Questions

Lower Budgets. More Competition.

The Rise of Regional Agencies
Financially-Driven Mergers:
From eighteen big agencies to eight
 Saatchi & Saatchi’s Big Idea

 P/E Ratios - London vs. New York
 Why is this important?
Who is this man?
Financially-Driven Mergers:
From eighteen big agencies to eight
 Saatchi & Saatchi’s Big Idea

 P/E Ratios - London vs. New York
 Why is this important?


Martin Sorrell - buys WPP
(Wire Plastic Products)
WPP = JWT + O&M + ...
 Y&R and more…
Agency/Client Relationships:

A Shift of Power
 Once, ad agency AEs usually made
more $$ than Ad Managers
 Now, Ad Managers usually make
more $$ than ad agency AEs


Client Mergers
A Maturing Industry
Cost Pressures but... Compensation Pressures
Agency/Client Relationships:

Example: “Unbundling”
 Once, Agencies controlled both media and
creative within “full-service agencies”
 Now, Clients may assign creative and media
separately - forcing agencies to “unbundle”
 With each review, clients squeeze fees for both.

Result #1: Media Agencies
 Mega-agencies spun off their media departments
into free-standing “media agencies.”

Result #2: Client Purchasing Involvement
 Now client Purchasing Departments are
becoming involved in this significant business
decision. Agencies have even less control.
Effectiveness Questions:

Sales Promotion
a Growing Cost
 Particularly for
Consumer Products
 Here’s how it adds
up w. all costs
 Incentives or
Persuasion?


It’s better when you
do it together...
Integrate!
Advertising 20%
Consumer Promo 22%
Trade Promo 58%
Source: Nielsen 7/98
Effectiveness Questions:
Advertising’s 3 Big Problems

Media Efficiency (CPM)
 Costs more to reach same # of people

Category Maturity
 Experience makes consumers
harder to persuade

Consumer Message Overload

Unlimited messages. Limited attention.
Lower Budgets.
More Competition.


“A smaller piece of a bigger pie.”
Survival of the Fittest means . . .
Tougher Competitors!!!

More Marketing Choices:




Sales Promotion
“MPR” (Marketing Public Relations)
Event Marketing/Sponsorship
and now The Internet!
Rise of Regional Agencies:
“The Bernbach Factor”
 Downloading of Technology

 Graphics and Video Production
 “Intellectual Software”

New Major Clients
 LA - Japanese Cars
Rise of Regional Agencies:
“The Bernbach Factor”
 Downloading of Technology

 Graphics and Video Production
 “Intellectual Software”

New Major Clients
 LA - Japanese Cars
 SF - Silicon Valley
Rise of Regional Agencies:
“The Bernbach Factor”
 Downloading of Technology

 Graphics and Video Production
 “Intellectual Software”

New Major Clients
 LA - Japanese Cars
 SF - Silicon Valley
 “Nike, Wal-Mart, etc.
Example: Chiat/Day

Creativity + California
California Cooler
“One more reason to hate California”
Example: Chiat/Day


Creativity + California
+ Terrific Talent
Lee Clow
Surfer, Executive Creative Director
Example: Chiat/Day


Creativity + California
+ Terrific Talent
Steve Hayden
Helped create “1984”
(Steve now handles IBM)
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Pioneer Car Stereo
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Taco Bell
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Holland American
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Nissan
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Public Service
Example: Chiat/Day



Creativity + California
+ Terrific Talent
+ Terrific Work
Apple Computer
Example: Chiat/Day




Creativity + California
+ Terrific Talent
+ Terrific Work
Account Planning
 British consumer insight approach
 Jay Chiat imports Jane Newman
 Chiat\Day becomes 1st US agency
with account planning
Example: Chiat/Day





Creativity + California
+ Terrific Talent
+ Terrific Work
Account Planning
“Agency of the Decade”
Example: Crispin Porter

A New Approach
 less bothered by
controversy



A Search for
“Social Tension”
“post-modern”
creative attitude
Example: IKEA
(if we can get
the PowerPoint
to work)
+ Bogusky
Example: Crispin Porter
+ Bogusky

IKEA
 Problem –
people keep
furniture long
after they’re
tired of it.
 CP+B’s awardwinning
solution.
QuickTime™ and a
Sorenson Video 3 decompressor
are needed to see this picture.
Example: Crispin Porter
+ Bogusky

MiniCooper
 Problem –
introduce a
very small car
with a very
small budget
 Answer: Highimpact print
and outdoor
and more…
Example: Crispin Porter
+ Bogusky

MiniCooper
Example: Crispin Porter
+ Bogusky

MiniCooper
Example: Crispin Porter
+ Bogusky

And then…

QuickTime™ and a
H.264 decompressor
are needed to see this picture.
VW!
Goodby Silverstein &
Partners (San Francisco)
Superb Design
(Silverstein)
 A Search for
Story (Goodby)

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Goodby Silverstein &
Partners (San Francisco)
Superb Design
(Silverstein)
 A Search for
Story (Goodby)
 Got Milk?

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Goodby Silverstein &
Partners (San Francisco)

“Got Milk?” Campaign
 Unique
California
Halted
decline
“deprivation”
Milk Processor
in milkresearch
consumption
Board
QuickTime™ and a
Sorenson Video 3 decompressor
are needed to see this picture.
Got Milk?
“Aaron Burr”
Goodby Silverstein &
Partners (San Francisco)
Superb Design
(Silverstein)
 A Search for
Story (Goodby)
 Got Milk?
 Excellent Digital
Capabilities
(H-P/Comcast)

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Goodby Silverstein &
Partners (San Francisco)
 Excellent Digital Capabilities
 Example: Comcast
OK, enough fun.
Now it’s time
to talk about…
Why Advertising Changed:
Media Evolution
 Consumer Changes
 Globalization and World
Brands
 Competitive
Changes

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
Media Evolution:

Fragmentation
 More Media Choices
 Smaller audiences
Sidewalk Stencil for
Bamboo Lingerie
Media Evolution:

Fragmentation
 More Media Choices
 Smaller audiences

Media Mergers
 CBS/Viacom, NBC/Universal

The Entertainment Economy
 “Entertainment Brands”

Cost & Clutter
Media Revolution:

The Internet
 Interactivity
 Audience Control

New Media Companies
 Google, Facebook, YouTube

New Media Solutions
 Now everyone needs an online
or a digital strategy. Everyone.
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Some Brands
Having a Tough
Time of It…

Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Some Brands
Having a Tough
Time of It…

 Campbell’s Soup

Good economy =
bad business.
but then…
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Some Brands
Having a Tough
Time of It…

 Campbell’s Soup

A bad economy is
good business for
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Some Brands
Having a Tough
Time of It…

 Levis
World Brands and
Globalization:

Multinational Markets = Globalization
 Example: Wal-Mart comes to Germany
World Brands and
Globalization:

Multinational Markets = Globalization
 Example: Wal-Mart comes to Germany

World Brands = Worldwide Competitors

Growth of Marketing Worldwide could
mean Worldwide Opportunities for
You!
 Help Wanted Worldwide: U.S. Ad Grads
Competitive Changes:


Global Agency Networks
Retailers as Marketers
 UPC and Retailers

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
New Information
about markets
=
New Opportunities
for New Brands
Competitive Changes:


Global Agency Networks
Retailers as Marketers
 UPC and Retailers
 Information = Increased Power

More Information > Faster

It all adds up to…

A More Competitive World
The New World for
Marketing Communications:

Marketing Public Relations
Publicity Photo for
Richard Branson
& Virgin
The New World for
Marketing Communications:


Marketing Public Relations
Direct Marketing
Direct Mail for
Cadillac Cetera
The New World for
Marketing Communications:

Marketing Public Relations
Direct Marketing

Sales Promotion

Sales Promotion for
SONY Credit Cards
The New World for
Marketing Communications:

Marketing Public Relations
Direct Marketing

Sales Promotion

Event Marketing
and Sponsorship
 More and more,
“Marketing is
Everything”

QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
The New World for
Advertising:

More Communication Options
 Marketing Communications = MarCom

A Wider Range of Clients
 Example: Professional Services

New Ad Agency Opportunities

New Media Thinking
More MarCom Options:

Greater Sophistication in...
 Sales Promotion
 PR & Event Marketing
 Example: Sports Marketing

Smarter Marketers doing
Smarter Marketing
QuickTime™ and a
TIFF (Uncompressed) decompressor
are needed to see this picture.
 Example - Starbucks
More MarCom Options:

Greater Sophistication in...
 Sales Promotion
 PR & Event Marketing
 Example: Sports Marketing

Smarter Marketers doing
Smarter Marketing
 Example - McDonald’s
 Example - Apple iPhone
A Wider Range of Clients:

New Marketing Categories





Healthcare
“Dot Coms” & Internet Services
Entertainment Brands
Media Products (including digital)
New Marketing Needs
 Services: Dentists, Lawyers…
 Local retailers and media
 New Ventures
New Advertising Agency
Opportunities:




Growth of the Media Function
More Marketing Services
Account Planning
Computer-based Services
 In-house Departments
 Improved Target Marketing
 The Internet

Problems for established firms =
Opportunities for bright new companies
New Media Thinking:

Consumer Aperture
 The best “window” for messages.

Personal Media Network (PMN)
 Your own media choices

Brand Contacts
 All the ways you connect with brands

Database Marketing
 Connecting with people one at a time
 Making communication “interactive”
This is Important To You!

Change is Permanent and Continual

The Speed of Change is Increasing

Opportunities growing Worldwide

Understanding and Managing Change
will be a Key Factor in Your Success

So...
Stay Alert!!
Questions & Discussion