Transcript Chapter Two The Modern Marketplace and "The New Advertising”

The Modern
Marketplace
& “The New Advertising”
Session Objectives:
 The
Modern Marketplace
& “The New Advertising”
 Not all stories have easy answers
or happy endings
 Complex business issues
 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 . . .

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 + ...
 and now . . . Y&R!
Agency/Client Relationships:

A Shift of Power
 Once, agency AEs made more $$
than Ad Managers
 Now, Ad Managers make more $$
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”
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
 + MORE “IMC”
 + “post-modern”
attitude in creative

+ Bogusky
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
Why Advertising Changed:
Media Evolution
 Consumer Changes
 Globalization and World
Brands
 Competitive
Changes

Media Evolution:

Fragmentation
 More Media Choices
 Smaller audiences
Sidewalk Stencil for
Bamboo Lingerie
Media Evolution:

Fragmentation
 More Media Choices
 Smaller audiences

Media Mergers
 AOL/Time-Warner, CBS/Viacom

The Entertainment Economy
 “Entertainment Brands”

Cost & Clutter
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Brands Having
a Tough Time:

Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Brands Having
a Tough Time:

 Campbell’s Soup
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Brands Having
a Tough Time:

 Campbell’s Soup
 Levis
Consumer Changes:
Changing Loyalties
 Savvier Consumers
 More Store Brands
 Brands Having
a Tough Time:

 Campbell’s Soup
 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
Competitive Changes:


Global Agency Networks
Retailers as Marketers
 UPC and Retailers
 Increased Power
Competitive Changes:


Global Agency Networks
Retailers as Marketers
 UPC and Retailers
 Increased Power

The Speed of Competition
means…

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,
Now Appearing
“Marketing
is
at a Mall near you

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
 Example - Starbucks
 Examples - Dell & Gateway
A Wider Range of Clients:

New Marketing Categories





Healthcare
“Dot Coms” & Internet Services
Entertainment Brands
Media Products
New Marketing Needs
 Dentists, Doctors, 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
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
Questions & Discussion