the modern marketplace

The Modern The Modern MarketplaceMarketplace

& “The New Advertising”& “The New Advertising”

Session Objectives:Session Objectives: Review Chapter 2Review Chapter 2

The Modern MarketplaceThe Modern Marketplace & “The New Advertising”& “The New Advertising”

This is a difficult chapterThis is a difficult chapter Not all stories have easy answers Not all stories have easy answers or or

happy endingshappy endings It covers complex business issuesIt covers complex business issues

Then, Questions & DiscussionThen, Questions & Discussion

The Modern MarketplaceThe Modern Marketplace How Advertising Changed How Advertising Changed Why Advertising ChangedWhy Advertising Changed

&& “The New Advertising”“The New Advertising” The New World of “MarCom” or “IMC” The New World of “MarCom” or “IMC”

Integrated Marketing Communications Integrated Marketing Communications

A New World for Advertising A New World for Advertising

Why This is Important to Why This is Important to You!You!

““1984”1984” More than a good More than a good

TV commercialTV commercial A new way of A new way of

thinking about thinking about advertisingadvertising

Total Marketing!Total Marketing! Marketing Public Relations: Marketing Public Relations: Computer Computer

Magazine Reviews, Major Media CoverageMagazine Reviews, Major Media Coverage

New Media Products: New Media Products: MacWorld, MacWeekMacWorld, MacWeek

Sales Promotion: Sales Promotion: In-store materialsIn-store materials

And more . . . And more . . .

““1984”1984” More than a good More than a good

TV commercialTV commercial A new way of A new way of

thinking about thinking about advertisingadvertising

Total Marketing!Total Marketing! Marketing Public Relations: Marketing Public Relations: Computer Computer

Magazine Reviews, Major Media CoverageMagazine Reviews, Major Media Coverage

New Media Products: New Media Products: MacWorld, MacWeekMacWorld, MacWeek

Sales Promotion: Sales Promotion: In-store materialsIn-store materials

And more . . . And more . . .

QuickTime™ and aH.264 decompressor

are needed to see this picture.

How Advertising Changed:How Advertising Changed:

Financially-Driven Agency Mergers & Financially-Driven Agency Mergers &

The Rise of “Mega-Agencies” The Rise of “Mega-Agencies”

Agency/Client RelationshipsAgency/Client Relationships

Effectiveness Questions Effectiveness Questions

Lower Budgets. More Competition. Lower Budgets. More Competition.

The Rise of Regional Agencies The Rise of Regional Agencies

Financially-Driven Mergers:Financially-Driven Mergers:

From eighteen big agencies to eightFrom eighteen big agencies to eight Saatchi & Saatchi’s Big IdeaSaatchi & Saatchi’s Big Idea

P/E Ratios - London vs. New YorkP/E Ratios - London vs. New York Why is this important?Why is this important?

Who is this man?Who is this man?

Financially-Driven Mergers:Financially-Driven Mergers:

From eighteen big agencies to eightFrom eighteen big agencies to eight Saatchi & Saatchi’s Big IdeaSaatchi & Saatchi’s Big Idea

P/E Ratios - London vs. New YorkP/E Ratios - London vs. New York Why is this important?Why is this important?

Martin Sorrell Martin Sorrell - buys- buys WPP WPP ((Wire Plastic Products)Wire Plastic Products)

WPP = JWT + O&M + ...WPP = JWT + O&M + ...

Y&RY&R and more… and more…

Agency/Client Relationships:Agency/Client Relationships: A Shift of PowerA Shift of Power

Once, ad agency AEs usually madeOnce, ad agency AEs usually mademore more $$$$ than Ad Managers than Ad Managers

Now, Ad Managers usually make Now, Ad Managers usually make more more $$$$ than ad agency AEs than ad agency AEs

Client MergersClient Mergers A Maturing IndustryA Maturing Industry

Cost PressuresCost Pressures Compensation PressuresCompensation Pressures but...but...

Agency/Client Relationships:Agency/Client Relationships: Example: “Unbundling”Example: “Unbundling”

Once, Agencies controlled both media and creative within “full-Once, Agencies controlled both media and creative within “full-service agencies” service agencies”

Now, Clients may assign creative and media separately - forcing Now, Clients may assign creative and media separately - forcing agencies to “unbundle”agencies to “unbundle”

With each review, clients squeeze fees for both. With each review, clients squeeze fees for both. Result #1: Media AgenciesResult #1: Media Agencies

Mega-agencies spun off their media departments into free-Mega-agencies spun off their media departments into free-standing “media agencies.”standing “media agencies.”

Result #2: Client Purchasing InvolvementResult #2: Client Purchasing Involvement Now client Purchasing Departments are becoming involved in this Now client Purchasing Departments are becoming involved in this

significant business decision. Agencies have even less control.significant business decision. Agencies have even less control.

Effectiveness Questions:Effectiveness Questions: Sales Promotion Sales Promotion

a Growing Costa Growing Cost Particularly for Particularly for

Consumer ProductsConsumer Products Here’s how it adds Here’s how it adds

up w. up w. all costsall costsAdvertising 20%

Consumer Promo 22%

Trade Promo 58%

Source: Nielsen 7/98

Integrate!Integrate!

Incentives or Incentives or Persuasion?Persuasion?

It’s better when you It’s better when you do it together...do it together...

Media Efficiency (CPM)Media Efficiency (CPM) Costs more to reach same # of peopleCosts more to reach same # of people

Category MaturityCategory Maturity Experience makes consumers Experience makes consumers

harder to persuadeharder to persuade Consumer Message OverloadConsumer Message Overload

Unlimited messages. Limited attention.Unlimited messages. Limited attention.

Advertising’s 3 Big ProblemsAdvertising’s 3 Big ProblemsEffectiveness Questions:Effectiveness Questions:

Lower Budgets. Lower Budgets. More Competition. More Competition. ““A smaller piece of a bigger pie.”A smaller piece of a bigger pie.” Survival of the Fittest means . . .Survival of the Fittest means . . .

Tougher Competitors!!!Tougher Competitors!!! More Marketing Choices:More Marketing Choices:

Sales PromotionSales Promotion “ “MPR” (Marketing Public Relations)MPR” (Marketing Public Relations) Event Marketing/SponsorshipEvent Marketing/Sponsorship and now The Internet!and now The Internet!

Rise of Regional Agencies: Rise of Regional Agencies: ““The Bernbach Factor”The Bernbach Factor” Downloading of TechnologyDownloading of Technology

Graphics and Video ProductionGraphics and Video Production “ “Intellectual Software”Intellectual Software”

New Major ClientsNew Major Clients LA - Japanese CarsLA - Japanese Cars



New Major ClientsNew Major Clients LA - Japanese CarsLA - Japanese Cars SF - Silicon ValleySF - Silicon Valley



New Major ClientsNew Major Clients LA - Japanese CarsLA - Japanese Cars SF - Silicon ValleySF - Silicon Valley “ “Nike, Wal-Mart, etc.Nike, Wal-Mart, etc.

Example: Chiat/DayExample: Chiat/Day Creativity + CaliforniaCreativity + California

California CoolerCalifornia Cooler““One more reason to hate California”One more reason to hate California”

Example: Chiat/DayExample: Chiat/Day Creativity + CaliforniaCreativity + California Creativity + CaliforniaCreativity + California + Terrific Talent + Terrific Talent

Lee Clow Lee Clow Surfer, Executive Creative DirectorSurfer, Executive Creative Director

Example: Chiat/DayExample: Chiat/Day Creativity + CaliforniaCreativity + California Creativity + CaliforniaCreativity + California + Terrific Talent + Terrific Talent

Steve HaydenHelped create “1984”(Steve now handles IBM)

Pioneer Car Stereo

Example: Chiat/DayExample: Chiat/Day Creativity + CaliforniaCreativity + California + Terrific Talent+ Terrific Talent + Terrific Work+ Terrific Work

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


Holland American

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


Public Service


Apple Computer


Creativity + CaliforniaCreativity + California + Terrific Talent+ Terrific Talent + Terrific Work+ Terrific Work Account PlanningAccount Planning

BritishBritish consumer insight approachconsumer insight approach Jay ChiatJay Chiat imports imports Jane Newman Jane Newman Chiat\Day becomes 1st US agency Chiat\Day becomes 1st US agency

with account planningwith account planning


Creativity + CaliforniaCreativity + California + Terrific Talent+ Terrific Talent + Terrific Work+ Terrific Work Account Planning Account Planning

Creativity + CaliforniaCreativity + California + Terrific Talent+ Terrific Talent + Terrific Work+ Terrific Work Account PlanningAccount Planning “ “Agency of the Decade”Agency of the Decade”

Example: Crispin Porter Example: Crispin Porter

+ Bogusky+ Bogusky

A New ApproachA New Approach less bothered by less bothered by

controversycontroversy A Search forA Search for “Social “Social

Tension”Tension” “ “post-modern”post-modern”

creative attitudecreative attitude Example: IKEA Example: IKEA (if (if

we can get we can get the the PowerPointPowerPointto work)to work)

Example: Crispin Porter + Example: Crispin Porter + BoguskyBogusky IKEAIKEA

ProblemProblem – – people keep people keep furniture long furniture long after they’re after they’re

tired of it. tired of it. CP+B’s CP+B’s

award-winning award-winning solution. solution.

QuickTime™ and aSorenson Video 3 decompressorare needed to see this picture.

Example: Crispin Porter + Example: Crispin Porter + BoguskyBogusky MiniCooperMiniCooper

ProblemProblem – – introduce a introduce a very small car very small car with a very with a very small budgetsmall budget

Answer: High-Answer: High-impact print impact print and outdoor and outdoor and more…and more…

Example: Crispin Porter + Example: Crispin Porter + BoguskyBogusky MiniCooperMiniCooper

Example: Crispin Porter + Example: Crispin Porter + BoguskyBogusky And then… And then…

VW!VW!



Goodby Silverstein & Partners Goodby Silverstein & Partners (San Francisco)(San Francisco) Superb Design Superb Design

(Silverstein)(Silverstein) A Search for A Search for

Story (Goodby)Story (Goodby)QuickTime™ and a

TIFF (Uncompressed) decompressorare needed to see this picture.



Story (Goodby)Story (Goodby) Got Milk?Got Milk?

QuickTime™ and aTIFF (Uncompressed) decompressor


“ “Got Milk?” CampaignGot Milk?” Campaign

QuickTime™ and aSorenson Video 3 decompressorare needed to see this picture.

California Milk Processor BoardCalifornia Milk Processor Board Halted decline in milk consumptionHalted decline in milk consumption Unique “deprivation” researchUnique “deprivation” research

Got Milk?Got Milk?““Aaron Burr”Aaron Burr”

Goodby Silverstein & Goodby Silverstein & Partners (San Francisco)Partners (San Francisco)



Story (Goodby)Story (Goodby) Got Milk?Got Milk? Excellent Digital Excellent Digital

Capabilities Capabilities (H-(H-P/Comcast)P/Comcast)



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



OK, enough fun.OK, enough fun.

Now it’s time Now it’s time to to talk about…talk about…



Why Advertising Changed: Why Advertising Changed:

Media Evolution Media Evolution Consumer Changes Consumer Changes Globalization and World Globalization and World

BrandsBrands Competitive Competitive

Changes Changes QuickTime™ and a


Media Evolution: Media Evolution: FragmentationFragmentation

Smaller audiencesSmaller audiences

Sidewalk Stencil for Bamboo Sidewalk Stencil for Bamboo Lingerie Lingerie

More Media ChoicesMore Media Choices

Media Evolution: Media Evolution: FragmentationFragmentation

More Media ChoicesMore Media Choices Smaller audiencesSmaller audiences

Media MergersMedia Mergers

Cost & Clutter Cost & Clutter

CBS/Viacom, NBC/UniversalCBS/Viacom, NBC/Universal The Entertainment Economy The Entertainment Economy

“ “Entertainment Brands”Entertainment Brands”

Media Revolution: Media Revolution: The InternetThe Internet

InteractivityInteractivity Audience ControlAudience Control

New Media CompaniesNew Media Companies Google, Facebook, YouTubeGoogle, Facebook, YouTube

New Media Solutions New Media Solutions Now Now everyoneeveryone needs an online needs an online

or a digital strategy. or a digital strategy. Everyone.Everyone.

Consumer Changes: Consumer Changes: Changing Loyalties Changing Loyalties Savvier ConsumersSavvier Consumers More Store Brands More Store Brands Some Brands Some Brands

Having a Tough Having a Tough Time of It…Time of It…


Having a Tough Having a Tough Time of It…Time of It… Campbell’s SoupCampbell’s Soup

Good economy =Good economy =bad business.bad business.

but then…but then…


Having a Tough Having a Tough Time of It…Time of It… Campbell’s SoupCampbell’s Soup

A bad economy isA bad economy isgood business for good business for soup!soup!


Having a Tough Having a Tough Time of It…Time of It… LevisLevis

World Brands and Globalization: World Brands and Globalization: Multinational Markets = Multinational Markets = GlobalizationGlobalization

Example: Wal-Mart comes to GermanyExample: Wal-Mart comes to Germany

World Brands and Globalization: World Brands and Globalization: Multinational Markets = Multinational Markets = GlobalizationGlobalization

Example: Wal-Mart comes to GermanyExample: Wal-Mart comes to Germany

World Brands = Worldwide CompetitorsWorld Brands = Worldwide Competitors Growth of Marketing Worldwide could Growth of Marketing Worldwide could

mean Worldwide Opportunities for mean Worldwide Opportunities for You!You! Help Wanted Worldwide: U.S. Ad Grads Help Wanted Worldwide: U.S. Ad Grads

Competitive Changes:Competitive Changes: Global Agency NetworksGlobal Agency Networks Retailers as MarketersRetailers as Marketers

UPC and RetailersUPC and Retailers



New Information about New Information about markets markets = New = New Opportunities for New Opportunities for New BrandsBrands

Competitive Changes:Competitive Changes: Global Agency NetworksGlobal Agency Networks Retailers as MarketersRetailers as Marketers

UPC and RetailersUPC and Retailers Information = Increased PowerInformation = Increased Power

More Information > FasterMore Information > Faster

A More Competitive WorldA More Competitive World

It all adds up to…It all adds up to…

The New World forThe New World for

Marketing Public RelationsMarketing Public Relations

Publicity Photo for Richard Publicity Photo for Richard Branson & Virgin Branson & Virgin

Marketing Communications: Marketing Communications:

The New World for The New World for Marketing Communications: Marketing Communications: Marketing Public RelationsMarketing Public Relations Direct Marketing Direct Marketing

Direct Mail for Cadillac Direct Mail for Cadillac Cetera Cetera


Sales PromotionSales Promotion

Sales Promotion for SONY Credit Sales Promotion for SONY Credit Cards Cards


Sales PromotionSales Promotion Event Marketing Event Marketing

and Sponsorship and Sponsorship More and more, More and more,

“Marketing is “Marketing is Everything” Everything”



Advertising: Advertising: The New World forThe New World for

More Communication OptionsMore Communication Options Marketing Communications =Marketing Communications = MarCom MarCom

A Wider Range of ClientsA Wider Range of Clients Example: Professional Services Example: Professional Services

New Ad Agency Opportunities New Ad Agency Opportunities

New Media ThinkingNew Media Thinking

More MarCom Options: More MarCom Options: Greater Sophistication in... Greater Sophistication in...

Sales PromotionSales Promotion PR & Event MarketingPR & Event Marketing Example: Sports MarketingExample: Sports Marketing

Smarter Marketers doing Smarter Marketers doing Smarter MarketingSmarter Marketing

Example - StarbucksExample - StarbucksQuickTime™ and a


More MarCom Options: More MarCom Options: Greater Sophistication in... Greater Sophistication in...

Sales PromotionSales Promotion PR & Event MarketingPR & Event Marketing Example: Sports MarketingExample: Sports Marketing

Smarter Marketers doing Smarter Marketers doing Smarter MarketingSmarter Marketing

Example - McDonald’sExample - McDonald’s Example - Apple iPhoneExample - Apple iPhone

A Wider Range of Clients: A Wider Range of Clients: New Marketing CategoriesNew Marketing Categories

HealthcareHealthcare “ “Dot Coms” & Internet ServicesDot Coms” & Internet Services Entertainment BrandsEntertainment Brands Media Products (including digital)Media Products (including digital)

New Marketing NeedsNew Marketing Needs Services: Dentists, Lawyers…Services: Dentists, Lawyers… Local retailers and mediaLocal retailers and media New Ventures New Ventures

New Advertising Agency New Advertising Agency Opportunities: Opportunities: Growth of the Media FunctionGrowth of the Media Function More Marketing ServicesMore Marketing Services Account PlanningAccount Planning Computer-based ServicesComputer-based Services

In-house DepartmentsIn-house Departments Improved Target MarketingImproved Target Marketing The Internet The Internet

Problems for established firms = Problems for established firms = Opportunities for bright new companies Opportunities for bright new companies

New Media Thinking: New Media Thinking: Consumer Aperture Consumer Aperture

The best “window” for messages. The best “window” for messages. Personal Media Network (PMN)Personal Media Network (PMN)

Your own media choices Your own media choices Brand Contacts Brand Contacts

All the ways you connect with brandsAll the ways you connect with brands Database Marketing Database Marketing

Connecting with people one at a timeConnecting with people one at a time Making communication “interactive”Making communication “interactive”

This is Important To This is Important To You!You! Change is Permanent and ContinualChange is Permanent and Continual

The Speed of Change is IncreasingThe Speed of Change is Increasing

Opportunities growing WorldwideOpportunities growing Worldwide

Understanding and Managing Change Understanding and Managing Change will be will be

a Key Factor in Your Success a Key Factor in Your Success So...So...

Stay Alert!! Stay Alert!!

Questions & DiscussionQuestions & Discussion

the modern marketplace

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