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UNC-Chapel Hill JOMC 170 - The Modern Marketplace

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The Modern MarketplaceSession Objectives:Slide 3“1984”How Advertising Changed:Financially-Driven Mergers:Slide 7Agency/Client Relationships:Slide 9Effectiveness Questions:Slide 11Lower Budgets. More Competition.Rise of Regional Agencies:Slide 14Slide 15Example: Chiat/DaySlide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Example: Crispin PorterExample: Crispin Porter + BoguskySlide 29Slide 30Why Advertising Changed:Media Evolution:Slide 33Consumer Changes:Slide 35Slide 36Slide 37World Brands and Globalization:Slide 39Competitive Changes:Slide 41Slide 42PowerPoint PresentationThe New World for Marketing Communications:Slide 45Slide 46The New World forMore MarCom Options:A Wider Range of Clients:New Advertising Agency Opportunities:New Media Thinking:This is Important To You!Questions & DiscussionThe Modern The Modern MarketplaceMarketplace& “The New Advertising”& “The New Advertising”Session Objectives:Session Objectives:The Modern MarketplaceThe Modern Marketplace & “The New Advertising”& “The New Advertising” Not all stories have easy answers Not all stories have easy answers or happy endingsor happy endingsComplex business issuesComplex business issuesQuestions & DiscussionQuestions & DiscussionThe 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 . . .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 AgenciesFinancially-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 + ... and now . . . and now . . . Y&R!Y&R!Agency/Client Relationships:Agency/Client Relationships:  A Shift of PowerA Shift of Power Once, agency AEs made more Once, agency AEs made more $$$$ than Ad Managersthan Ad Managers Now, Ad Managers make more Now, Ad Managers make more $$$$ than ad agency AEsthan ad agency AEs Client MergersClient Mergers A Maturing IndustryA Maturing Industry Cost PressuresCost PressuresCompensation 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-standing Mega-agencies spun off their media departments into free-standing “media agencies.”“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 Effectiveness Questions: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 Effectiveness Questions: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


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