The Modern Marketplace The New Advertising

The Modern Marketplace & “The New Advertising”

Session Objectives: n Review Chapter 2 s The Modern Marketplace & “The New Advertising” n This is a difficult chapter s Not all stories have easy answers or happy endings s It covers complex business issues n Then, Questions & Discussion

The Modern Marketplace n How Advertising Changed n Why Advertising Changed & “The New Advertising” n The New World of “Mar. Com” or “IMC” Integrated Marketing Communications n A New World for Advertising n Why This is Important to You!

“ 1984” n n n n 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: Mac. World, Mac. Week And more. . .

“ 1984” n n n n 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: Mac. World, Mac. Week And more. . .

How Advertising Changed: n Financially-Driven Agency Mergers & The Rise of “Mega-Agencies” n Agency/Client Relationships n Effectiveness Questions n Lower Budgets. More Competition. n The Rise of Regional Agencies

Financially-Driven Mergers: From eighteen big agencies to eight n Saatchi & Saatchi’s Big Idea n s P/E Ratios - London vs. New York s Why is this important? Who is this man?

Financially-Driven Mergers: From eighteen big agencies to eight n Saatchi & Saatchi’s Big Idea n s P/E Ratios - London vs. New York s Why is this important? n n Martin Sorrell - buys WPP (Wire Plastic Products) WPP = JWT + O&M +. . . s Y&R and more…

Agency/Client Relationships: n A Shift of Power s Once, ad agency AEs usually made more $$ than Ad Managers s Now, Ad Managers usually make more $$ than ad agency AEs n n Client Mergers A Maturing Industry Cost Pressures but. . . Compensation Pressures

Agency/Client Relationships: n Example: “Unbundling” s Once, Agencies controlled both media and creative within “full-service agencies” s Now, Clients may assign creative and media separately - forcing agencies to “unbundle” s With each review, clients squeeze fees for both. n Result #1: Media Agencies s Mega-agencies spun off their media departments into free-standing “media agencies. ” n Result #2: Client Purchasing Involvement s Now client Purchasing Departments are becoming involved in this significant business decision. Agencies have even less control.

Effectiveness Questions: n Sales Promotion a Growing Cost s Particularly for Consumer Products s Here’s how it adds up w. all costs s Incentives or Persuasion? It’s better when you do it together. . . l Integrate! l

Effectiveness Questions: Advertising’s 3 Big Problems n Media Efficiency (CPM) s Costs more to reach same # of people n Category Maturity s Experience makes consumers harder to persuade n Consumer Message Overload s Unlimited messages. Limited attention.

Lower Budgets. More Competition. n n “A smaller piece of a bigger pie. ” Survival of the Fittest means. . . Tougher Competitors!!! n More Marketing Choices: s s Sales Promotion “MPR” (Marketing Public Relations) Event Marketing/Sponsorship and now The Internet!

Rise of Regional Agencies: “The Bernbach Factor” n Downloading of Technology n s Graphics and Video Production s “Intellectual Software” n New Major Clients s LA - Japanese Cars

Rise of Regional Agencies: “The Bernbach Factor” n Downloading of Technology n s Graphics and Video Production s “Intellectual Software” n New Major Clients s LA - Japanese Cars s SF - Silicon Valley

Rise of Regional Agencies: “The Bernbach Factor” n Downloading of Technology n s Graphics and Video Production s “Intellectual Software” n New Major Clients s LA - Japanese Cars s SF - Silicon Valley s “Nike, Wal-Mart, etc.

Example: Chiat/Day n Creativity + California Cooler “One more reason to hate California”

Example: Chiat/Day n n Creativity + California + Terrific Talent Lee Clow Surfer, Executive Creative Director

Example: Chiat/Day n n Creativity + California + Terrific Talent Steve Hayden Helped create “ 1984” (Steve now handles IBM)

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Pioneer Car Stereo

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Taco Bell

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Holland American

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Nissan

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Public Service

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Apple Computer

Example: Chiat/Day n n Creativity + California + Terrific Talent + Terrific Work Account Planning s British consumer insight approach s Jay Chiat imports Jane Newman s ChiatDay becomes 1 st US agency with account planning

Example: Chiat/Day n n n Creativity + California + Terrific Talent + Terrific Work Account Planning “Agency of the Decade”

Example: Crispin Porter n A New Approach s less bothered by controversy n n n A Search for “Social Tension” “post-modern” creative attitude Example: IKEA (if we can get the Power. Point to work) + Bogusky

Example: Crispin Porter + Bogusky n IKEA s Problem – people keep furniture long after they’re tired of it. s CP+B’s awardwinning solution.

Example: Crispin Porter + Bogusky n Mini. Cooper s Problem – introduce a very small car with a very small budget s Answer: Highimpact print and outdoor and more…

Example: Crispin Porter + Bogusky n Mini. Cooper

Example: Crispin Porter + Bogusky n Mini. Cooper

Example: Crispin Porter + Bogusky n And then… n VW!

Goodby Silverstein & Partners (San Francisco) Superb Design (Silverstein) n A Search for Story (Goodby) n

Goodby Silverstein & Partners (San Francisco) Superb Design (Silverstein) n A Search for Story (Goodby) n Got Milk? n

Goodby Silverstein & Partners (San Francisco) n “Got Milk? ” Campaign s California Milk Processor Board Unique “deprivation” consumption Halted decline in milkresearch Got Milk? “Aaron Burr”

Goodby Silverstein & Partners (San Francisco) Superb Design (Silverstein) n A Search for Story (Goodby) n Got Milk? n Excellent Digital Capabilities (H -P/Comcast) n

Goodby Silverstein & Partners (San Francisco) n Excellent Digital Capabilities n Example: Comcast

OK, enough fun. Now it’s time to talk about…

Why Advertising Changed: Media Evolution n Consumer Changes n Globalization and World Brands n Competitive Changes n

Media Evolution: n Fragmentation s More Media Choices s Smaller audiences Sidewalk Stencil for Bamboo Lingerie

Media Evolution: n Fragmentation s More Media Choices s Smaller audiences n Media Mergers s CBS/Viacom, NBC/Universal n The Entertainment Economy s “Entertainment Brands” n Cost & Clutter

Media Revolution: n The Internet s Interactivity s Audience Control n New Media Companies s Google, Facebook, You. Tube n New Media Solutions s Now everyone needs an online or a digital strategy. Everyone.

Consumer Changes: Changing Loyalties n Savvier Consumers n More Store Brands n Some Brands Having a Tough Time of It… n

Consumer Changes: Changing Loyalties n Savvier Consumers n More Store Brands n Some Brands Having a Tough Time of It… n s Campbell’s Soup l Good economy = bad business. but then…

Consumer Changes: Changing Loyalties n Savvier Consumers n More Store Brands n Some Brands Having a Tough Time of It… n s Campbell’s Soup l A bad economy is good business for

Consumer Changes: Changing Loyalties n Savvier Consumers n More Store Brands n Some Brands Having a Tough Time of It… n s Levis

World Brands and Globalization: n Multinational Markets = Globalization s Example: Wal-Mart comes to Germany

World Brands and Globalization: n Multinational Markets = Globalization s Example: Wal-Mart comes to Germany n World Brands = Worldwide Competitors n Growth of Marketing Worldwide could mean Worldwide Opportunities for You! s Help Wanted Worldwide: U. S. Ad Grads

Competitive Changes: n n Global Agency Networks Retailers as Marketers s UPC and Retailers l New Information about markets = New Opportunities for New Brands

Competitive Changes: n n Global Agency Networks Retailers as Marketers s UPC and Retailers s Information = Increased Power l More Information > Faster n It all adds up to… n A More Competitive World

The New World for Marketing Communications: n Marketing Public Relations Publicity Photo for Richard Branson & Virgin

The New World for Marketing Communications: n n Marketing Public Relations Direct Marketing Direct Mail for Cadillac Cetera

The New World for Marketing Communications: n n n Marketing Public Relations Direct Marketing Sales Promotion for SONY Credit Cards

The New World for Marketing Communications: Marketing Public Relations n Direct Marketing n Sales Promotion n Event Marketing and Sponsorship n More and more, “Marketing is Everything” n

The New World for Advertising: n More Communication Options s Marketing Communications = Mar. Com n A Wider Range of Clients s Example: Professional Services n New Ad Agency Opportunities n New Media Thinking

More Mar. Com Options: n Greater Sophistication in. . . s s s n Sales Promotion PR & Event Marketing Example: Sports Marketing Smarter Marketers doing Smarter Marketing s Example - Starbucks

More Mar. Com Options: n Greater Sophistication in. . . s s s n Sales Promotion PR & Event Marketing Example: Sports Marketing Smarter Marketers doing Smarter Marketing s Example - Mc. Donald’s s Example - Apple i. Phone

A Wider Range of Clients: n New Marketing Categories s s n Healthcare “Dot Coms” & Internet Services Entertainment Brands Media Products (including digital) New Marketing Needs s Services: Dentists, Lawyers… s Local retailers and media s New Ventures

New Advertising Agency Opportunities: n n Growth of the Media Function More Marketing Services Account Planning Computer-based Services s n In-house Departments Improved Target Marketing The Internet Problems for established firms = Opportunities for bright new companies

New Media Thinking: n Consumer Aperture s The best “window” for messages. n Personal Media Network (PMN) s Your own media choices n Brand Contacts s All the ways you connect with brands n Database Marketing s Connecting with people one at a time s Making communication “interactive”

This is Important To You! n Change is Permanent and Continual n The Speed of Change is Increasing n Opportunities growing Worldwide n Understanding and Managing Change will be a Key Factor in Your Success n So. . . Stay Alert!!

Questions & Discussion