Fuqua School of Business Brand Advertising Brand Management System On Building A Brand Price Product Place Promotion Managing Across Brands Professor Carl Mela Marketing 460 Product Management Fuqua School of Business

Agenda Advertising Planning Advertising Efficacy Trends in Advertising

Advertising Planning Introduction Situation Analysis Objectives Budgeting Strategy Execution Evaluation Marketing Communications Brand Management Market Intelligence

Advertising Planning Execution Agency Copy Media

Execution - Agency Selecting an Agency Account reviews How well will they execute the strategy in your advertising plan? Agencies pitch an execution strategy Deutsch for VW 95 days, 50 of 175 employees, and $360K just for final pitch and lost!

Execution - Agency WSJ 2006

Execution - Agency Agency Organization Account services (sales and strategy) Marketing services (research, events, pr, direct marketing) Creative (creates message) Production (produces advertising) Media (where, when, and how much) Administrative (accounting and billing)

Execution - Agency Agency Compensation Commission (typically 15% of media, less for big clients) Fees (hourly rates) Leads to conflicts with respect to billing supplies and support across clients Pay for Results (sales, awareness, etc.) P&G may switch from sales-based to Gilette’s incentive based approach

Execution - Agency

Execution - Copy Agency Client Account Exec Copywriter Senior Writer Account Exec & Legal Product or Brand Manager Senior Managers

Execution – Copy (Firm)

Execution – Copy (Agency)

Execution - Copy

Lodish et al. (1995) Little relation between recall/ persuasion measure and brand sales Ad elasticity is 0.13 2001 Interbrand study – only 1/6 of campaigns meet sales and budget objectives

Why Ad Elasticities Are Low

So, How to Break Through New media trends

Trends in Communication Strategy Medium 2006 Spend ($MM) % Change Direct Mail $58,507 6.5% Broadcast TV $46,889 5.9% Newspapers $46,589 -1.7% Cable TV $25,439 7.5% Internet $16,157 36.0% Radio $19,941 -0.6% Yellow Pages $16,289 2.0% Magazines $13,332 3.0% Outdoor $6,696 7.4% Business Papers $4,233 1.5% Miscellaneous $36,763 Grand Total $291,036 4.7% Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

Internet Ad Spend

Trends in Communication Strategy Mediametrix

Internet Ad Spend

Paid Search

Trends in Communication Strategy

Trends in Communication Strategy Viral and Word of Mouth Marketing (Ford Sportka) Web logs (blogs) http://blogsearch.google.com/ Advertainment Branded content Product placements Other Media Cell phones In-store TV (P&G diaper ads in restrooms) Video games

Trends in Communication Strategy

Trends In Communication Strategy

Trends in Communication Strategy Product Placements $4.25 billion in ‘04, an increase of 22.8 from ’03 (NYT)

Trends in Communication Strategy $ 10 MM of Electronic Arts $4 BB 2004 Revenue (NY Times). Will grow now that Nielsen can track Issues of fit (this deodorant placement seems sensible)

Trends in Communication Strategy

Trends in Communication Strategy Interactive, Customized and Adressable Media Internet ($10 CPM) $12 BB in 2005 market and growing (4% of US spend) MSN Ad -- $1MM for 24 hours ($25 K 4 Years Back) TV -- $2.4 MM for 0:30 Superbowl, $574,504 for Desperate Housewives 1 Page People Ad -- $228,275 Upfront v. bid model for pricing ads Up 27% in 2005 compared to 11% for TV (Jupiter/TNS) DVRs/Video on Demand Direct distribution of TV Internet, DVR (6.5 MM), iPod, Google video and CBS Cell Phones ($35 CPM) $75,000 to $300,000 for campaign vs. $25,000 to $50,000 in 2005 Battle between carriers and content providers over fees slows rollout

Trends in Communication Strategy

Trends in Communication Strategy Relationship Marketing Not only do new technologies deliver content, but they receive information on choices Exploit addressability and interactivity of DVR and Internet to customize and target Media models merging – Internet and DVR

Trends in Communication Strategy IMC - Integrated Marketing Communications consistency across promotional mix and media Publicis has “Chief Holistic Officer Accountability justify your communications expenditures Media Convergence The old media model is shattered and this implies immense opportunity and risk

Media Convergence

Don’t Give up on TV!

Don’t Give up on TV!

In-store TV

Summary “Evaluate marketing communications options strategically to determine how they can contribute to brand equity.” - Keller Engage in advertising planning Planning process Agency, copy, media http://scriptorium.lib.duke.edu/hartman/ Consistent message across promo mix (integrated marketing communications)