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