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A. Strategies to Increase Overall Attention
Marketing of
Media
Products
© Eli M. Noam, March 27, 2010
II. 1st STEP IN MARKETING THE
MEDIA PRODUCT: MARKET
ANALYSIS
1. Demand Analysis
y
2. How Do Firms Forecast Demand for
New Products?
3. Product Positioning Requires
Competitor Analysis
1
I. WHAT’S DIFFERENT ABOUT
MARKETING OF MEDIA
1. Marketing: General
A. Basic Types of Marketing
(1) Strategic Marketing
(2) Tactical Marketing
2. Marketing: Structure &
Organization
A. Chief Marketing Officer (CMO)
10
3. How Does The Marketing Of Media
Products And Services Differ from
Marketing of Other Products?
A. Fundamental Economic Characteristics of
Media
(1) Strong
St
andd divergent
di
t economies
i off scale
l
(2) High uncertainty and instability
(3) Public good characteristics
(4) The Attention Budget
11
A. Competitive Leverage Analysis Tool
4. Product Positioning
A. Optimal Positioning
B. Market Niche Positioning
1. Brand Centered View
2. Product Design
3. Product Innovation
4. Product Diversification
5. The marketing Plan
III. BRAND CREATION
13
5. The Creation of “Lock-ins” of
Customers
IV. PRICING
1. How a media firm sets prices
V. PROMOTION
A. Word of mouth
B. Publicity and Public Relations
C. Using the Star Power
D. Influencing the Influencers
E. Marketing to Business
1
VI. ADVERTISING
1. Advertising Agencies
A. Ad Agency Services
2. Strategy
3. Advertising:
g the Budget
g
4. How Much to Spend on Advertising?
5. Estimating ROI of Advertising:
Customer Value Modeling
6. Media Mix
IX. ANALYZING MARKETING
PERFORMANCE
1. Sales Analysis
y
2. Marketingg Cost Analysis
3. Marketing Audit
4. Marketing and the Product
Life Cycle
15
VII. THE IMPACT OF NEW
INFORMATION TECHNOLOGIES
1. Customized Advertising
2. Telemarketing
3 Internet as a Marketing Tools
3.
VIII.REGULATION OF
MARKETING
1. Self-Regulation of
Advertising
I. MARKETING OF TELEVISION
TIME TO ADVERTISERS
1. TV Ad Services offered to
Advertisers
2. Promoting Cable Channels to
Advertisers
3. New ways to sell or buy cable ads
16
2. Government Regulation of
Advertising
II. CROSS-MEDIA PROMOTIONS
OF MEDIA PRODUCTS
1. Major Dimensions of Cross-Media
Marketing
A. of Own Products
B for
B.
f Advertising
Ad ti i Cli
Clientt
III. MARKETING OF NEWSPAPER
AD SPACE
1. Newspaper Advertising Products
2. Newspaper Ads
2
IV. SELLING MAGAZINE ADS
1. Magazine Industry
V. SELLING ONLINE ADS
1. Internet Advertising
A. Search Engine
g Marketing
g
(1) Google AdSense
VI. ADVERTISING IN VIDEO
GAMES
1. In-game ads campaign
2. Def Jam by EA
X. CONCLUSION
1. How marketing is different
for Media?
2. Media marketing: Adding up?
3 Requirements for Media
3.
Marketing
23
APPENDICES
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
A
Appendix
di F:
F
Appendix G:
Appendix H:
Marketing Organization
Viral Marketing
Public Relations and Publicity
The Pricing of Advertisement
New Information Technologies
Ad ti i T
Advertising
Targeting
ti
Telemarketing
The Internet as a Marketing
Tool
Appendix I: Regulation of Advertising
Practices
Appendix J: Sales Analysis
APPENDICES (cont..)
Appendix K: Marketing and the Product Life
Cycle
Appendix L: Release Sequencing
Appendix M: Promoting Film
Appendix N: Promoting Newspaper
A
Appendix
di O:
O P
Promoting
ti M
Magazines
i
Appendix P: Promoting Books
Appendix Q: Promoting Telecom
Appendix R: Music Promotion
Appendix S: Promoting DVDs
Appendix T: Promoting Consumer Electronics
3
APPENDICES (cont..)
Appendix U: Promoting Software, Websites,
Blogs
Appendix V: TV Advertising Sales
Appendix W: Selling Online Ads
Appendix X: Advertising in New Media
Appendix Y: Mobile Advertising
Appendix Z: Major Marketing Practices in
Media Industries
Start of Lecture
30
APPENDICES (cont..)
Appendix AA: Case Discussion- Condé Nast
Fly & Sky
Appendix BB: Product Innovation
Appendix CC: Product Diversification
Appendix DD: Promotional Strategy
The Media Value Chain
Resources:
HR
Finance
Tech
Accounting
of
Performance
Value
Creation:
Production
Marketing
IP Creation
Pricing
Strategy
Environment:
Distribution
Info.
Environment
Law &
Regulation
Demand
31
OUTLINE: Section A: Marketing
Media Products
OUTLINE: MARKETING OF MEDIA
PRODUCTS
I.
WHAT’S DIFFERENT
I.
ABOUT MARKETING OF
MEDIA?
II. MARKET ANALYSIS
III. PRODUCT DESIGN
• Positioning
II.
• Brands
B d andd L
Lock-in
ki
IV. PRICING STRATEGIES
V. PROMOTION
STRATEGIES
VI. ADVERTISING
•
•
•
•
Budget
Ad
Media Mix
Cross-Promotion
IMPACT OF NEW
INFORMATION
TECHNOLOGIES
• Customized Advertising
• Internet
MARKETING OF
MEDIA
• To Audiences
• To Advertisers
III.
REGULATION OF
MARKETING
IV. ANALYSING
MARKETING
PERFORMANCE
V. CONCLUSIONS
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecastingg
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
4
1990s Were the
“Golden Age” for Media and
Information Sector
• More electronic information
• More users
• More innovation (faster,
cheaper, more functionality)
I Introduction
I.
33
36
But after 2002, and again after
2008
• For several years, the sky was the
limit for the information sector.
• Information became cheap, global,
and plentiful. Information products
b
became
faster,
f t smaller,
ll andd cheaper.
h
• Information industries became
convergent, competitive, and
innovative.
(Standard and Poor’s in Alleman, 2002)UUUJU
34
37
*
We experienced:
•The Internet crash
•The dotcom bubble
•The telecom crisis
•The music bust
•The newspaper death-rattle
•The e-publishing stagnation
35
38
http://tech.nscdiscovery.org/newtech/jimmys_stuff/course_materials/PhotoShop_Course/11.%20Clouds.jpg
5
*
We experienced:
Marketing has always been
important:
•The PC sales drop
•The wireless saturation
g recession.
•The advertising
•The semi-conductor slump
•The printing and paper decline
•The IT venture capital slump
• Old Hollywood saying: “There
are no bad movies, only bad
marketing campaigns.”
• True?
42
•In this situation, how do
information firms respond?
•This is a challenge for strategists
and technology
gy creators.
•And it is, in particular, the
challenge to media marketers, to
keep media companies afloat
Distinguish the 2 Meanings
of “Media Marketing”
1. Marketing of general products,
using
i media
di
2. Marketing of media products
themselves
40
• It is therefore not surprising that
the role of marketers in media
has expanded.
41
43
We will focus on the
second meaning
meaning, the
marketing of media.
44
6
OUTLINE: Section A: Marketing
Media Products
I.
In marketing of media, there
are two product dimensions.
1.Marketing of media to
audiences
2.Marketing of media to
advertisers
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecastingg
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
•
•
• This will be the topic of this
chapter on “Marketing of Media
Products”
• Closely related are chapters on
• “Pricing of Information Products”
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
Section A:
Marketing
in Media
• “Demand Estimation of Media”
• “Distribution Networks”
• “Strategy”
46
49
I.1. Marketing
General
47
50
7
Firms can do both functions, or
neither, or one or the other
•No common agreement on term.
Some very fancy definitions. But
the nutshell is:
Marketing: the process of
creating a market for a firm’s
products
51
*
Distinguish
“Marketing” from
“Di ib i ”
“Distribution”
•Example for “marketing but
no distribution”: many
magazines subcontract
distribution to specialists, but
do the marketing themselves
55
*
Distinguish “Marketing”
from “Distribution”
• Often confused with each other
• Marketing is the creation of a
market for the product
• Distribution is the delivery of
the product to that market
•Example for “distribution
but no marketing”: retail
book chains for most of their
book titles.
- availability very little for
marketing
53
8
•Example for both marketing
and distribution: many
newspapers do both marketing
and distribution
- they run their own trucks to
wholesale or retailers
- and they market that product
to audience and advertisers
Marketing goes historically
back to the earliest markets
when a seller tried to generate
sales
57
Early Markets
•Example for “neither”
marketing nor distribution:
Most independent film
productions neither market nor
distribute.
58
Marketing vs. Sales
Marketing is the strategic and
pplanningg function
Sales function executes most of
the strategy
Kates, Amy and Jay Galbraith. Designing your organization. San Francisco: Jossey59
Bass (2007): 63.
http://www.lonelyplanet.com/travel-blog/tiparticle/wordpress uploads/2009/11/Bati-camel-market.jpg
61
• Advertising existed already in
antiquity: Greece, Rome, Egypt.
• By the 1600s, advertisements
were regularly printed in
newspapers.
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
62
9
Ads from Ancient Rome
Imperial Baths in Rome, circa 89 A.D.
63
Source: http://www.finerareprints.com/classical/bartoli/3526.jpg
Ads for media –16th Century
Buy this
Luther
Bible
Advertisement for Martin Luther’s German Bible circa 1534
64
Sources: http://www.ritchies.net/Luther's%20German%20Bible.jpg
Medieval Store Front
Signs
Basic Types of
Marketing
•Strategic Marketing
•Tactical Marketing
65
68
Source: http://farm1.static.flickr.com/157/350902504_34c46ee042.jpg?v=0
10
“Strategic” Marketing
• Set promotion strategies
• Set promotion budget
• Set evaluation programs for
advertising, public relationships
programs, and promotions
efforts
69
*
In contrast
“Tactical” Marketing
• Refine product lines
• Update
U d t needs
d off served
d markets
k t
• Refine pricing
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales72
Forecasting Techniques.Chicago:NTC Business Books,2000
“Strategic” Marketing
• Identify possible markets.
• Assess major social and lifestyle
trends
• Define new p
products & services for
the markets.
• Define target share-of-market.
• Define competitive threats.
• Evaluate marketing technologies
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales70
Forecasting Techniques.Chicago:NTC Business Books,2000
*
“Tactical” Marketing
• Test and implement strategic plan.
• Execute marketing plan:
• ads, leads, mailers, trades shows,
brochures, follow-up system.
• Select of media in which message
is delivered.
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales71
Forecasting Techniques.Chicago:NTC Business Books,2000
74
11
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecasting
g
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
A. Chief Marketing
Officer (CMO)
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
I.2. The
Marketing
Function:
Structure &
Organization
78
76
Chief Marketing Officer
• manages and coordinates marketing
operation.
• must justify budget allocations with
results and business cases, and prove
value
l
• integrate marketing decisions and
activities with the business strategy
• promote a return-on-investment
mind-set for marketing initiative
80
http://www.cmomagazine.com/sponsors/Unica-WP_P&R072004.pdf
12
Marketing Structure #2:
Product-Oriented
• Average CMO tenure is 22.9
months, in contrast to the 53.8
months of the average CEO.
81
• Later, marketing departments
became composed of brand
managers who
h were focused
f
d
on a product’s success
• Often led to a matrix structure,
geography plus product line
http://www.boozallen.com/home/publications/article/659394
Stair, Lila B./Stair, Leslie (2002). Careers in
82
Marketing. McGraw-Hill Trade
Marketing Structure #3:
Customer-Oriented
Marketing Structure #1:
Geography- Oriented
• In the past, marketing was
often organized by geography
• (“California; East Coast;
Asia”)
Peppers, Don and Martha Rogers. The One to One Future. New York,
Doubleday. 1993. Pages 174-207
C. Homburg, J.P. Workman Jr., O. Jensen, “ Fundamental Changes in Marketing
Organization: The Movement Toward a Customer-Focused Organizational
85
Structure” Journal of the Academy of Marketing Science, (October 1, 2000)
83
• Increasingly, marketers focus on
customer relationships or types of
c stomers
customers
• Establish account managers as
single point of contact with major
accounts, selling the entire range of
products and services
86
13
Example for Customer-Oriented:
IBM’s Customer Marketing
Structure
• IBM’s “relationship managers” track
large individual clients.
large,
clients
• Know the share of each customer’s
business IBM is getting and how much
additional business is possible with
each client.
The marketing team for
Apple’s iPod
1) Sr VP Marketing: Involved
with all aspects of marketing;
has knowledge and experience
in both the technical and
marketing areas (“talks both
languages”)
90
87
http://www.myipodplus.com/iPodPlus%20Plan.pdf
Peppers, Don and Martha Rogers. The One to One Future. New York, Doubleday. 1993. Pages 174-207.
The marketing team for
Apple’s iPod
Sales Function within an Organization
2) VP Product Marketing:
Supervises individual product
teams that define, develop, and
launch new product; focuses on
product’s features
Schwartz, Matthew. Fundamentals of Sales Management for newly appointed 88
sales
manager. AMACOM 2006.
91
http://www.myipodplus.com/iPodPlus%20Plan.pdf
The marketing team for
Apple’s iPod
Example: The Marketing
Team for Apple’s iPod
3) VP Marketing
Communications: In charge of
promotions and public relations;
directs ads and product packaging
(benefit-oriented statements)
92
89
http://www.myipodplus.com/iPodPlus%20Plan.pdf
http://www.myipodplus.com/iPodPlus%20Plan.pdf
14
Organizational Level
of Sales Function
The marketing team for
Apple’s iPod
4) VP Strategic Marketing:
Employs consultants and research
firms; responsible for research
and development of product;
focuses on product’s benefits
93
http://www.myipodplus.com/iPodPlus%20Plan.pdf
The marketing team for
Apple’s iPod
Simintiras, Antonis, John Ford, and Earl Honeycutt. Sales management: a global
96
perspective. Routledge 2003.
Sales and Marketing Functions
• “Ideally, sales and marketing activities are
closely coordinated, with salespeople
collecting valuable customer-related
information and passing it to their marketing
colleagues, and marketing using the
information to create customized products and
programs, and thus increasing value for
customers.”
5) VP Technical Marketing:
Involved in news products,
product roadmap, and rollout
stages; involved with engineers
94
http://www.myipodplus.com/iPodPlus%20Plan.pdf
Biemans, W., Brencic, M., Malshe, A. Marketing – Sales Interface Configurations in
97
B2B Firms, 2009.
Book Publishing Sales
Operations
• However, it does not always
work out so well
President of Sales and Marketing
Vice
President,
Retail
Vice
President
Wholesale
Vice
President
Jobbers
Vice
President,
“Other
Sales”
95
98
15
• “Marketing people talk to … business
end-users, while salespeople typically
spend their time with distributors and
purchasing agents. Marketers deal with
market segments and specific product
groups Sales
groups.
Sales, however
however, sees the world
account by account.”
Case Discussion:
Condé Nast
Biemans, W., Brencic, M., Malshe, A. Marketing – Sales Interface Configurations in B2B Firms,
99
2009.
102
Case Discussion
For details see
Appendix
pp
A:
Marketing
Organization
• We’ll follow throughout this
chapter Condé Nast’s marketing
off a new magazine
i project
j “Fly
l
& Sky”
• a hypothetical magazine, but a
real media company
100
103
Parent Company:
Advance Publications
• Privately held
• Si Newhouse and sons Si Jr. and
Donald
• $15 bil personal net worth
estimated by Forbes
• 2006: $6 bil revenues,
101
• Employees 29,200
104
16
Samuel I.
Newhouse, Jr.
Donald E.
Newhouse
http://images.forbes.com/medi
a/lists/10/2002/7EWB.jpg
http://images.forbes.com/me
dia/lists/10/2002/LOKT.jpg
Advance acquired 2 Major
Magazine Groups
105
• Condé Nast (acquired in 1959)
•Founded
Founded in 1909
• Fairchild (acquired in 1991)
•Founded in 1892
• Consolidated them in 2005
108
Condé Nast Magazines
Case Discussion: Condé Nast
Advance Publications has a wide
diversification of media
p p
• Newspapers
• Cable channels and distribution
• Magazines
106
• Newspapers:
• Cable TV (87 systems, 2 mil
HH, VOD)
• 12 TV stations
• 40 City business journals
• Parade Magazine
•22 mil
• Allure
• Architectural
Digest
• Beautyy Biz
• Beauty Report
• Bon Appetit
• Brides
• Cargo
• Children’s Business
•
•
•
•
•
•
•
•
Concierge
Cookie
Details
Domino
DNR
Elegant Bride
Epicurious
Footwear News
109
Condé Nast Magazines
•
•
•
•
•
•
•
•
107
Glamour
Gourmet
GQ
House & Garden
HFN
In Furniture
Jane
Lucky
•
•
•
•
•
•
•
•
Men’s Vogue
Modern Bride
New Yorker
Self
Supermarket News
Teen Vogue
Traveler
Vanity Fair
110
17
Product Line Diversification
Condé Nast Magazines
• Advance is very strong in women’s
titles
g
men’s
• But wants to strengthen
lines:
–Golf Digest
• Vitals
• Vogue
• Women’s Wear
Daily
• W
• Wired
• World of Interiors
• GQ
–Golf World
• Hemmings Motor News –Cargo
–DNR
• Details
111
114
Case Discussion: Condé Nast
112
http://images.google.com/images?q=magazine+covers&hl=en&lr=&client=firefox-a&rls=org.mozilla:en-US:official&sa=N&tab=ii&oi=image
The Magazine Market
• Magazines are one of the least
concentrated segments of the information
industry
• Low entry barriers
• But magazine companies have multiple
titles
• Magazines are inncreasingly specialized
• Magazines Moving fastest into epublishing
113
• CN is now considering the launch of a
start-up magazine “Fly & Sky”
• Focus: aviation.
• Target: men 25-55
• Goals: duplicate success of Advance
Publication’s sister magazine
Hemmings Motor News
• Goal: strengthen male oriented titles
115
Hemmings Motor News
• Monthly
pages
g
• 800 p
• “bible” of car collectors
• Guides, almanacs
• Website –w/classifieds
• Bennington, VT, since 1954
116
18
• Hemmings Notes News
• 210,000 subscribers, plus 50,000 at
newsstands ($6/copy)
• Also car-related magazines
• “Muscle Machines”
• “Classic
“Cl i Car”
C ”
• “Sport and Exotic Car”
• “Collectible Vehicle Value
Guide”
• Special Interest Autos”
• “T-shirts car memorabilia”
Hemmings Website
• Classifieds ads
• pproduct directories
• Car clubs
• Parts locator
• Customer service
117
120
Hemmings Motor News
Conde Nast aims to create
a similar magazine for
aviation enthusiasts as
“Hemmings” is for car
enthusiasts.
“Hemmings Motor News” Hemmings Motor News: Auto Classifieds. Last accessed on 25 June 2008 at
http://www.hemmings.com/subscribe/current_issue.html?publication=HMN
118
Hemmings Muscle Machines
121
Question:
• What marketing efforts should
Condé Nast undertake to make
the planned magazine “Fly &
Sky” magazine a success?
“Hemmings Muscle Machines” Hemmings Motor News: Hemmings Muscle Machines.
Last accessed on 25 June 2008 at
http://www.hemmings.com/subscribe/trial.html?ctry_cde=USA&pub=MUS
119
122
19
Fundamental Economic Characteristics
of Media
1. High fixed costs, low marginal costs
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Convergence of production
Divergence in cost trends in value chain
Accelerating returns
Excess supp
Network effects
Non-normal distribution of demand
Price deflation
Intangibles
Public goods
Non-maximizers of profit
Role of Government
•126
I.3 How Does the
Marketing of Media
Products and Services
Differ from Regular
Marketing of Other
Products?
124
Marketing of Media Products
& Services
• Many similarities to general
marketing
k i
• But some special aspects
125
Special Aspects of Media
Marketing
• Low or zero marginal cost and
high fixed cost means that
customers cannot be charged a
price that covers full cost.
• Excess supply and competition
then lead to price deflation down
to marginal cost.
127
• Media products are therefore
often given away rather than
sold to identifiable users
(broadcasting, free and online
newspapers, website
information).
128
20
• Often simultaneous “dual”
marketing:
• Content pitched to audiences for
their attention
• Audiences pitched to advertisers
• Another consequence:
• To maintain price level above
competitive level: oligopoly
• This means much less price
competition, and more non-price
competition, such as marketing
efforts
129
• Special complicating factor:
some media industries are in
secular decline.
• Daily circulation of American
ne spapers dropped 2.5
newspapers
25
percent, to 45.5 million, in
2005/6.
Bosman, Julie. “Online Newspaper Ads Gaining Ground On Print.” The New York
Times. 6, Jun. 2006
130
130
<http://www.nytimes.com/2006/06/06/business/media/06adco.html>
• From 1950-2000 penetration
in US declined from 38% to
24% of the population
• Circulation increased 19%,
but population up 70%
131
132
Special Aspects of Media
Marketing
• Low marginal costs and high fixed
cost also mean:
• Strong economics of scale
• This creates incentives for
investment in marketing ahead or
market
133
Changing Distribution Technology
• Creates numerous new
distribution channels
• Creates fragmentation of
markets
134
21
Especially high Uncertainty
and Instability of Demand
The Long Tail
• Content moving away from
mass audience
• This
Thi “l
“long ttail”
il” arises
i from
f
distribution, especially
internet
• Thin audiences
Chris Anderson. “The Long Tail.” Wired Magazine Issue 12.10 (2004)
• Users often do not
know, or articulate, or
communicate well their
preferences for content.
• Many products are
"Experience goods”
which are hard to
sample in advance by
consumers.
135
• “If we release twenty-eight films,
we need to create twenty-eight
different audiences, twenty-eight
different marketing campaigns.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
136
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
http://ia.imdb.com/media/imdb/01/I/14/72/70m.jpg 138
Non-Normal Distribution of
Demand
• Skewed distribution of success
• Top five products across all media
segments can generate between
bet een oneone
and two-thirds of revenues, although
they represent just 1 to 2 percent of
the total number of products
released.
139
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
*
• Compared to 1998, fewer than
half the new releases make it to
the bestsellers lists, reach the top
of audience rankings,
g , or win a
platinum disc.
• In 1965, 80% of women
aged 18 to 34 could be
effectively reached with
three TV ads.
• By 2000, 97 ads were
needed.
http://www.bizjar.com/images/main/aram_tv.jpg
Aris, Annet, “Value-Creating Management of Media Companies”,
McKinsey & Company, Inc., Chapter 8, 2003
137
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
140
22
• In TV, only about a quarter of
new shows survive beyond their
debut season, whereas in the mid1980s,, about a third managed
g at
least a second season (US
network TV, prime-time).
• Another consequence: Attempts at
customer “lock-in”
• Many sales are for long-term
subscription arrangements
• cable TV
• telecom, wireless
• ISPs
• Magazines
• DVD Services
• book clubs
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
http://tell.fll.purdue.edu/JapanProj/FLClipart/Nouns/Things/TV.gif
141
• Commercial lifespan of a media
product is time-sensitive.
• Some minimum scale for
efficiently promoting and
exhibiting a new film,
film
• Limit on the number of films that
can be pitched in the market at one
time
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.
142
Cambridge: Harvard University Press, 2000
*
• Often short product cycle,
short marketing window (for
films often only 1-2 weeks)
143
144
Special Aspects of Media
Marketing: Intangible Products
• Hard to prevent piracy
• Can’t compete with “free”
• Because of increasingly easy piracy,
media companies’ price levels are
collapsing
145
Special Aspects of Media
Marketing: Strong “network
effects”
• Preferences of users are often shaped
by the usage of others
• demand for some products depends on
supply of other products
•DVD players depends on supply
of DVD (discs) which depends
on number of other DVD player
buyers.
146
23
I.4 The Attention
Budget
Special Aspects of Media
Marketing: Network Effects
• Often fad-driven
• Often hit-driven
147
http://users.rcn.com/copley.ma.ultranet/StereoNE/3D%20audence%20LIFE%20500h.JPG
150
http://www.appraisal-smart.com/multi%20tasking.jpg
*
• For these and other reasons,
marketing is particularly
important in the media and
information field.
• And particularly difficult
148
Special Aspect of Media
Marketing: Excess Supply
• Huge and growing number of
competing products
• In the U.S., 70,000 new book titles each
year
• 28,000
28 000 different magazines
• 500 full time simultaneous TV channels
• Millions of online sites
• Tens of thousands of new songs
• 400 new theatrical films
• Plus already existing content, aggregated
over decades and centuries
151
Special Aspects of Media
Marketing
• But perhaps the most significant
special aspect of marketing of
media to audiences: a huge
excess supply
• Competing for consumer’s
time/attention budget, not only
money budget
b d t
http://www.shkaminski.com/Classes/images/Attention.gif
149
152
http://www.shkaminski.com/Classes/images/Attention.gif
24
Abundance- Advertising
Abundance- Magazines
153
156
www.winterhouse.com/vancouver/10-magazine-rack.jpg
http://
Source: http://www.signindustry.com/led/articles/2002-07-30-LBledBillboards.php3
*
Abundance- Books
•The more efficient the
distribution technology, the
greater this overabundance,
overabundance (even
without the rapid increase in
content production).
154
157
http://www.glcc.org/ThingsToDo/pics/bookstore.jpg
• In 1960, the mass media supplied
to an average American household
was about 3 million words per day
(including unwatched TV, unread
papers unlistened radio,
papers,
radio etc.)
etc )
• By 1980, this figure had increased
by 267% to 11 million words.
• By 2000, risen to 75 million words
Abundance- TV
155
158
http://www.september11news.com/Oct7thLondonCanBushTV7.jpg
25
• Estimate of the annual growth
rates of business information is
12%; 8% for scientific
information;; and 5% for
entertainment.
• All growth numbers are
accelerating.
159
• These three elements have to exist in
some relation to each other.
• In the past, the three stages of
information grew slowly and more
or less in tandem.
• More recently, the parallel trends
diverged. This has serious
implications.
162
• The real problem is not
production of information, and
certainly not distribution, but
rather its consumptions.
163
The Information Processing
Capacity
• Communications process consists
of three major and interactive
stages:
t
• Production of information
• Distribution
• Consumption
161
• The fast-growing content
production and the hugely
growing distribution, meet
attention
tt ti that
th t is
i hardly
h dl growing
i
164
26
Human Capacity
165
http://www.biawa.org/images/humanbr
ain gif
Limits to Human Information
Handling and Processing
•Classic study found an
average
g person
p
cannot deal
well with more than seven
pieces of information in their
mind at a single time (Miller,
1956)
166
• other research has shown
that a person will on average
have difficulty integrating
information if facts arrive
faster than one every three
minutes, in a sustained way.
(Dennis, 1996)
• sustainable reading speeds which
include comprehension of the
information and its absorption, are
about 50 bits/sec.
• speed of speaking and of listening
comprehension are somewhat slower
and universal.
• Universality of these ceilings
indicates that the constraints are in
coding and decoding them mentally.
168
Human Processing Capacity
•Single-peaked curve (Taylor,
1984).
•With
With both light and heavy
loads, processing is low.
• Boredom and information
overload create low/processing
cognitive rate.
169
Processing
Capability
Boredom
Overload
Information Load
http://sprott.physics.wisc.edu/fractals/collect/2000/time%2520out.jpg
167
170
27
• Provide entertainment content
• Dotcom company CyberGold was
such an attempt
- it paid money and coupons to
consumers to watch online ads
171
A. Strategies to Gain
Attention
174
2. Add Time Allocation
• (spend more time on
informational activities)
3. Increase attention time
• Coffee, pharmaceutical
entrances
http://creative.gettyimages.com/source/classes/FrameSet.aspx?&UQR=nfoagi&pk=4&source=fron
t&lightboxView=1&txtSearch=attention&selImageType=7&chkLicensed=on&chkRoyaltyFree=on
172
1. Pay for Attention
175
4. Multi-tasking
• Consumers could be paid directly for
reading advertisement or providing
their demographics
• Money,
Money campaigns
campaigns, as discounts
• But most efforts to structure such a
system have failed for now
• Consumers can be “paid” by
entertainment content provided for
free
173
28
6. Information Screening
The compression of information
• editing down of masses of
facts
• “The
The Value-Added
Value Added is the
Information Subtracted”
5. Change the
Way
Information
Gets
Presented
http://www.ramshacklegames.com/users/harley/images/btv.jpg
http://creative.gettyimages.com/source/classes/FrameSet.aspx?&UQR=nfoagi&pk=4&source=fron
t&lightboxView=1&txtSearch=attention&selImageType=7&chkLicensed=on&chkRoyaltyFree=on
177
• Shift to a dense form of presentation
with more visual and symbolic
information
• Television advertisements are an
example.
• Eyes can get visual information at a
broadband megabit rate.
• Written information gets absorbed at the
much slower rate of about 300
words/min., or 200 bits per second
• Ears are even slower about 200
words/min. or about 150 bits per second.
178
180
7. Increase Marketing
Effort to Gain Attention
For One’s
One s Content and
Usage
181
• In consequence, there is a great
future potential for media that
can provide parallel information
tracks.
•Pictures
•Text
•Sound
•Even smell, taste, touch.
179
http://www.thespiderawards.com/AwardsPass/WINNERS-NOMINEES/PRO-advertising/images/The-Five-Senses.jpg
29
Together, these two trends create
the fundamental problem for media
marketing: The Price/Cost Squeeze
•This is the squeeze in which
media
di fi
firms find
fi d themselves
th
l
186
*
To Sum Up:
*
• The most fundamental problem for media
marketing: the rising competition for
attention
• There is:
• Increased creation and production and
distribution of information
• But only slow growth of overall
attention
• This leads to rising costs of seeking
attention for media products
184
•It is partly alleviated by a greater need for
all other industries to gain attention, which
leads them to raise their advertising
volume, which benefits media as platforms
for advertisingg
•But even here, a much greater competition
lowers unit prices for advertising
187
• So we have a cost inflation
for media products and
services
• And a cost inflation for
media marketing
30
*
III.2 Product
Design
http://www.directshopper.de/image/zoom/app/apple-powerbook-g4-667-mhz-dvi-combo-m-.jpg
ttp://comparestoreprices.co.uk/images/unbranded/t/unbranded-the-lord-of-the-rings--the-two-towers-poster.jpg
189
192
• Media firms must determine right
portfolio mix between “Mass
Market” and “niche content.”
The “4 P’s” of Marketing
• Product
• positioning
• Pricing
• Promotion
190
We’ll discuss first the
“product” and its design
Eli M. Noam, Production
193
*
One observation from the
earlier Chapter “Production”:
product creation moves from a
one-wayy process
p
into an
interactive process of product
designers, marketers, and
consumers
194
31
Trend: Increasing Integration of
Marketing and Product Design
• Emergence of “MTS-circles”
(marketing technical sales) meetings
(marketing-technical-sales)
• Engineers and designers accompany
sales and marketing people on their
customer visits
• Study marketing surveys
195
“TV franchise formats such as Big
Brother and Pop Idol were
designed, tested, and produced for
extended international cross-media
revenue from the start.”
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
198
• TV blockbuster formats such as
Big Brother and Pop Idol were
designed, tested, and produced for
extended international cross-media
revenue from the start.
start
External Analyses
• Customer surveys
• Focus groups
• Demographic
D
hi
analysis
• Feedback to related projects
http://www.medigent.com/assets/Images/subpages/photos/management.jpg
Eli M. Noam, Production
196
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
http://us.ent4.yimg.com/tv.yahoo.com/images
Eli M. Noam, Production
McKinsey & Company, Inc., 2003
/he/photo/tv_pix/cbs/big_brother_3_ph
otos/daniellelisa.jpg
199
Who Wants to be a
Millionaire?
• The film Fatal Attraction was
test-screened for four
diff
different
t endings.
di
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
197
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
http://www.cnn.com/interactive/entertainment/0201/reality.tv.gal/10.millionaire.jpg
Eli M. Noam, Production
200
32
External Design
American Idol
• A nicely designed DVD
provides incentives to buy the
movie rather than downloading
a pirate copy.
http://www.fox.com/idol2/showinfo/images/show_info_photo.jpg
Eli M. Noam, Production
204204
201
Consumers Vs Marketing - The DVD War
http://www1.epinions.com/content_4286750852
*
• A new type of marketing-oriented
editor. Concept of “The Total
Newspaper,”.
- Newspapers tried to coordinate their
editorial and business departments in
order to create an attractive “product”.
Survivor
Eli M. Noam, Production
http://money.cnn.com/2001/03/14/companies/ncaa_cbs/survivor.jpg
*
205
202
Dennis Derrick, “Media Management in the Age of Giants,” Iowa State Press
Content Design
• Many journalists find that
integrating marketing into the
editorial side is bad for
newspapers and magazines’
quality and credibility
•media companies adopted “test
tube” design
g pproducts,, picking
p
g
performers for
•boy and girl bands
•reality-show heroes
http://www.trifectaly.com/heidiblog/nsync.jpg
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 4”,
McKinsey & Company, Inc., 2003
203
206206
206
33
*
Product Innovation
• Gets out of commodification
• Enables higher price
• Enables spin-offs and sequels
• But
• higher risk
• Development cost
• Consumer acceptance
• Fine line between pushing
innovation too far for
consumer acceptance, andd off
being a “me-too” product.
207
*
210
*
Sensitivity
“Originality”
• Media companies are sensitive on
how much marketing should
influence editorial functions
((“product
product design
design”))
• For newspapers, separation of
business and editorial
• If quality declines, credibility of
brand declines
• Making a product “cool”
= not cool
Source: www.sonystyle.com
= cool
Source: www.apple.com/itunes
208
211
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
*
Product Development
A aK
As
Key F
Factor
t
209
But originality also must
overcome barriers :
Familiarity
• New products appeal to a broader
market if they are familiar in style,
appearance or operation to previous
products
• Having to learning new genres,
character relations, and functions
prevents many consumers from
choosing a product
212
34
• A media firm needs must create a
transparent selection process
• Not just based on the personal
jjudgments,
g
, but reflect perspectives
p p
of
the company as a whole, in a
structured and transparent approach.
(e.g. creative aspects, financial target
of ROI.)
Eli M. Noam, Production
Eli M. Noam, Production
213
• This may mean including
advertisers and market research
perspectives – a sensitive
subject.
Eli M. Noam, Production
•Peter Chernin, President of News
Corp.:
“All the benefits of size, whether
it’s leverage, synergy or scope,
are fundamentally the enemies of
creativity.”
216
(7) Statistical Tools for Product
Selection?
Eli M. Noam, Production
214
• But danger: the more structured
the process is, the higher the risk
of stifling creativity.
217
MOVIEMOD
• MOVIEMOD model produces
forecasts of box-office performance,
and offers diagnostic insights into the
di
drivers
off box-office
b
ffi performance,
f
including marketing strategies.
• The models do not work well.
http://raga.ouvaton.org/action/materiel/outils/danger/att%20danger.gif
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
Eli M. Noam, Production
215
Eli M. Noam, Production
Erasmus Universiteit Rotterdam, December 1997
218
35
Trade-off Analysis – Conjoint
Analysis
• Disaggregate a product into the
value given for each attribute
by consumers
consumers.
Thomas T. Nagle & Reed K. Holden, “The Strategy and Tactics of Pricing: A Guide to
Profitable Decision Making,” Second Edition 1995
*
How can one analyze the
design of a product?
Conjoint Analysis is one
approach
222
Planning for Sony’s BetaMax
• “We don’t believe in market research for
a new product unknown to the public…so
we never do any. We are the experts’”
(Akio Morita: legendary founder of Sony)
• Sony competes with a higher picture
quality
• But it’s rival Matsushita (Panasonic)
promoted its greater play length – few
tapes to buy, rent and load.
223
Cooper, Lee, G., “Strategic Marketing Planning for Radically New Products,” Journal of Marketing Vol.64 Jan. 2000(in Lyons, 1976, p110).
*
• Conjoint analysis decomposes
customer’s preferences for
products and services into the
“ ili i ” associated
“utilities”
i d with
i h eachh
level of each attribute of the
product
Lilien, L.Gary. Rangaswamy, Arvind. Bruyn De, Arvind. “Conjoint Analysis:
Marketing Engineering.” Decision Pro. Last accessed on 11 June 2008 at
221
http://www.mktgeng.com/downloadfiles/technotes/TN09%20-%20Conjoint%20
Analysis%20Technical%20Note.pdf
• This approach did not work
for the Betamax
• missed importance
p
to
consumer of full-feature
length of play, over the
picture quality.
224
Cooper, Lee, G., “Strategic Marketing Planning for Radically New Products,” Journal of Marketing Vol.64 Jan. 2000
36
*
• A conjoint analysis based on
consumer surveys may have
provided Sony with a
different product strategy
strategy.
228
• There are computer packages
(i.e. ACATM, Adaptive
Conjoint Analysis) that
generate an optimal
g
p
set of
trade-off questions and
interprets results.
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecastingg
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
226
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
The “4 P’s” of Marketing
• Product
• Positioning
• Pricing
• Promotion
227
230
37
*
II. 1. Demand
Analysis
Understanding One’s Customers
231
234
http://www.sunways-direct.com/magnifying%20glass.JPG
*
Positioning to Differentiate
The way one wants
customers to perceive,
think,, and feel about
one’s brand versus one’s
competition.
For details on Market
Analysis, see the
Chapter “Demand
Measurement for Media”
• The following are only a few
points
232
• For positioning of product,
need to understand one’s
market.
k t
235
• The challenge for
media companies is to
predict consumer
preferences
• Which customer
Preferences
themselves do not yet
know
Lamb, Hair, Mc Daniel, Marketing, 1996, South-Western College Publishing, Cincinnati, Ohio, page 330
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t&lightboxView=1&txtSearch=attention&selImageType=7&chkLicensed=on&chkRoyaltyFree=on
236
38
1.
2.
3.
4.
5
5.
6.
7.
8.
9.
10.
11.
Demand Forecasting
Methods
Test marketing
• From those data, marketing
departments can determine the
effective of other targeted
television and campaign
advertising
d
i i succeeded.
d d
Expert surveys
Retailer surveys
Historical analogy
Surveys/sampling
Focus groups
Psycho-physiological tests
Automated sample metering
releasing of sales
Lab experiments
Econometric and conjoint estimations
237
• Its first job of content
marketing is to identify the
composition of the content’s
most likely
lik l audience,
di
based
b d
on an analysis of the story,
genre, and style.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
238
238238
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• For film, for example, they can
also learn a great deal about the
makeup of the audience by
conducting exit polls, (like those
i elections),
in
l i ) to evaluate
l
socioi
demographics of audiences.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 239239
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 240240
• If the people who show up at the
theater demographically match the
group the studio targeted in their
advertising campaign, the film has
high “marketability,” the advertising
h bbeen effective
has
ff ti to
t activate
ti t a
particular audience and will probably
also work in other markets.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 241241
• If a film continues to generate
large audiences after the early
advertising ends, it has high
“playability,” i.e., that
moviegoers are recommending it
to others.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 242242
39
• On the other hand, when films have
large opening audiences which
declines rapidly, they have “high
marketability, low playability.” (This
actually shows the effectiveness of the
marketing:
k ti
“it’s
“it’ a feather
f th in
i our hat,
h t
since it shows we did a good job with
a bad movie.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 243243
Market and market size?
• Pilot population: ~3 mil globally
• People strongly interested in aviation:
estimated 5 mil worldwide
• Service & pproduct providers
p
• Insurance, fuel, maintenance, resorts:
estimated 300,000 WW
• Total: 8.8 mil WW
• Of these one quarter in US= 2.2 mil ->3%
of US population
246
•Market size
• Indicator: Airshows are 2nd largest
outdoor events, by audience, after
NASCAR
• Weeklong Airshow in Oshkosh, WI,
draws 800,000,
800 000 of whom 80% are
non-pilots
244
247
http://imagesource.allposters.com/images/pic/PTGPOD/440584~Ex
tra-300-Aircraft-at-Airshow-Oshkosh-WI-Posters.jpg
Sub- Audiences for Aviation
Magazines
Case Discussion:
Estimating the
Demand for “Fly
& Sky” Magazine
245
•
•
•
•
•
•
•
•
Student pilots
Old-timers
Military
Weekend flyers
Helicopters
Airlines
Women
Private jets
• Do-it-yourselfers (homebuilders)
• Techno geeks
• Space buffs
• Flight controllers
• Professional service
providers
• “Walter-Mitty” adventure
dreamers
248
40
Potential Reader Segments
“Competitor Analysis” is
being discussed in the
chapter “Strategy”
Strategy . It is
only briefly touched here.
2 million140
120
100
1 million 80
60
40
20
A
dv
en
tu
Sp r e
ac buf
e fs
B
W S uf
H e tud fs
el ek en
i c -e t
op n s
te d e
r
r
Se Pil s
ap ots
A
ct Ult lan
iv ra es
e
lig
D Am ht
o- a s
it- te
yo ur
ur s
A
irl
s
i n M el f
Pr e il
of Ca ita
Se p t r y
rv ain
ic s
e
Pr
o
0
Magazine
249
252
Tools: for positioning radar
chart
253
Tool: Competitor strength grids
II.3. Product
Positioningg Requires
q
Competitor Analysis
xx
xx
xx
xx
xx
xx
xx
xx
xx
xx
xx
BMG
U i
Universum
Sony
EMI
Warner
251
254
41
Identity Competitors
Positioning
Audiencee
• Easier said than done.
Example: Who is Porsche’s main
rival?
A
According
di tto Porsche
P
h CEO,
CEO it is--i
Rolex!
• Competes for disposable income of
high-income, prestige-seeking,
middle aged males.
255
Q
Program Content Level
258
Eli Noam, Media Strategy
Optimal Positioning
Product
Positioning
Audiencee
X
Qx
Program Content Level
256
Audience Distribution and Content
Quality Level
259
Audiencee
•A second and third content
provider Y and Z will position
themselves relative to X so as
to maximize
i i sales,
l too.
Content Quality Level
257
260
42
*
Audiencee
Market Niche Positioning
Y
X
Example: Fox TV Network
• “Generation Fox”- label for
company’s desired core
demographic
• Goal: to promote News Corp.
Corp as a
company strong in capturing young
adults
Z
Content Quality Level
264
Atkinson, Claire, “’Generation Fox takes on Viacom,”
Advertising Age, April 17, 2006. p. 41
261
Examples for Positioning
• Fox TV
• Apple iPad
• ESPN
• Eastman Kodak
• CBS Entertainment
• Disney Videogames
• Nintendo Wii
Eli Noam, Media Strategy
262
*
News Corp’s “Generation Fox”
• Promotes the entity as a one-stopshop buy for the 12-24 year old
demographic.
• Goal is to outdo Viacom’s MTV
networks, and CBS/Time
Warner’s CW
Examples for
Positioning
263
Atkinson, Claire, “’Generation Fox takes on Viacom,” Advertising Age,
April 17, 2006. p. 41
266
43
*
Generation Fox
• Emphasize breadth of youthoriented properties, social
networking site (myspace.com),
gaming site,
site network TV and
syndication shows and Mobizzo, the
global phone-content company from
Fox Mobile Entertainment.
Women influence 3/4ths of all
purchases
W
Women
: demonstrates
d
t t needd for
f
product
Men : demonstrates product features
Heller, Laura. “What women want: CE gadgets - consumer electronics Marketing Technology to the Female Consumer”. January 5, 2004
267
Atkinson, Claire, “’Generation Fox takes on Viacom,” Advertising Age, April 17, 2006. p. 41
Eastman Kodak
Positioned as an alternative to
Amazon.com, Kindle, and Sony’s
Reader, with color and larger
screen. This enables magazine
use (ads) and other color
applications
268
Example: Positioning of
Disney’s ESPN
• Positioned not as a sports news
network but as an entertaining
brand
• 'the game behind the game'
• Special effects – launching the
first 3D channel in 2010
269
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T8828588056&format=GNBFI&sort=RELEVANCE
&startDocNo=1&resultsUrlKey=29_T8828588059&cisb=22_T8828588058&treeMax=true&treeWidth=0&csi=235906&docNo=9
270
*
Example: Apple’s iPad
Positioning
http://it.tmcnet.com/news/2010/02/22/4634238.htm
Marketing Consumer Gadgets
to Women
Women more influenced by product’s
ease of use
Marketing stresses ‘ease
ease of use’
use and
‘user – friendliness’
Technical details like “mega pixels”
are left to fine print on the back”
Holmes, Tamara E. “Branding tactics and packaging designs shift to attract
female shoppers ”. April 1, 2004
271
Example: CBS’ Positioning the
show Entertainment Tonight on
CBS
The show had declining ratings,
and a lack of loyalty from viewers;
71% of viewers said they would be
“not very” or “somewhat”
disappointed if the show is
cancelled
Trout, Jack. New Positioning: The Latest on World’s No. 1 Business Strategy.
McGraw-Hill, 1996, p. 103
272
44
Positioning Videogames
Competing shows on “news of
entertainment”
- Today Show, Good MorningAmerica CNN
America,
CNN’ss Hollywood
Minute, Hollywood Insider
Trout, Jack. New Positioning: The Latest on World’s No. 1 Business Strategy.
McGraw-Hill, 1996, p. 104
• Targeting female audience
• Partnership with TV shows,
s ch as game related to
such
“Desperate Housewives”
• Print ads in soap opera
magazines
273
CBS’ Positioning
Entertainment Tonight
274
277277
277
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006
Content
Example: Disney’s
Positioning Videogames
• Women account up to 40% of
gaming audience.
• 64% of online gamers in the
U.S. are women.
275275
276
• Disney’s Buena Vista Games
offers game “Disney
Princess” (young girls) and
“Desperate Housewives”
(first game ever targeted for
18-49 year old).
Plan of action:
-Shift from “news” to “inside”
-Stress the word “inside”… i.e.,
beyond gossip, exclusive access
-Re-title show segments (Inside
Movies, Inside TV)
Trout, Jack. New Positioning: The Latest on World’s No. 1 Business Strategy.
McGraw-Hill, 1996, p. 105
276276
Source: Video games unveil feminine side, Advertising Age 2006
275
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006
• Stress personalization,
dialogue and characters with
aspirations.
• Also women tend to play in
shorter time segments.
278278
278
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006
45
Example: Positioning
Nintendo’s Videogame
Consoles
Wii experiment by
Nintendo
• Nintendo merged viral
marketing strategies with
Tupperware parties in Japan
• Nintendo attempted
p to reach
the female market though the
Wii game console.
279
279
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006
Nintendo Wii
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
282282 segment of
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Wii experiment by
Nintendo
• The so-called “alpha moms”
were invited to play together
with their friends.
friends
280280
http://wii.nintendo.com/images/04_hardware/feature_img_main_hardware.jpg
Nintendo Approach
• Nintendo’s objective: to
position the Wii as a game
board that will remain in the
living room instead of the
teenager's bedroom.
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
281281 segment of
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
283283 segment of
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Wii experiment by
Nintendo
• They weren’t video game
players, but they could be
influential within their
communities.
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
284284 segment of
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
46
Wii experiment by
Nintendo
• Getting the simplified and
wireless controller in the hands
of this segment
g
of ppotential
users was a key element of
Nintendo's marketers strategy.
Condé Nast:
Product Positioning
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
285285 segment of
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Wii controller
http://www.sciam.com/media/externalne
ws/2006-1215T175532Z_01_NOOTR_RTRIDSP_2
_TECH-NINTENDO-RECALL-DC.jpg
http://www.clubskill.com/downloads/Nin
tendo%20Revolution/Wii_nunstyle2_050
1.jpg
286286
288
Case Discussion: Conde
Nast
Example for diversity:
US Magazines on subject
of Amateur Flying
(partial list)
289
Case Discussion: Cande Nast’s
Fly & Sky Competing US
Magazines on Subject of
Amateur Flying (partial list)
-AOPA Pilot
-Kit
Ki Pl
Planes
-Sports Pilot
-Sea Planes
-Private Pilot
-Cessna Pilot
-Aviation Consumer
-Light
Li h Plane
Pl
Maintenance
M i
-IFR
-Plane & Pilot
-Aviation Safety
290
47
-Ultra
Flight
-Flight Journal
-War Birds
-Air Enthusiast
-Flying
Flying
-Air Classics
-Air and Space
- Air
International
-Airway
-Flight Training
-Aeroplane
-Aviation History
-Air Craft
Illustrated
-IFR Refresher
-Northeast Flyer
-Cessna Pilots’
Magazine
-Bonanza
291
Conclusion
• The market for serious Pilots is
saturated
• But the market for flying “adventure
buffs” (“Walter Mitty” types) is underserved
294
Additionally, there are several magazines for:
•
•
•
•
•
•
•
•
•
•
Commercial pilots
Helicopter pilots
Military pilots
Airline managers
Ai
Airport
managers
Air freight companies
Mechanics and Repair Shops
Designers and manufacturers
Avionics
Military contractors
2 million
1 million
292
[Arian: This
needs serious
clean up]
293
48
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA
•
•
•
II. MARKET ANALYSIS
ƒ
ƒ
I.
NEW INFORMATION
TECHNOLOGIES
II.
REGULATION OF
MARKETING
Structure and Organization
Products and Services
The Attention Budget
•
Forecasting
Positioning
•
•
III. BRAND CREATION
•
•
Design
Diversification
III.
IV. PRICING
V. PROMOTION
•
VI. ADVERTISING
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
Viral Marketing
Internet as a Marketing Tool
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
Branding Advantage
• Creates differentiation, instead of
commodification
• Provides a weapon to counter retailer
power
• Simplifies consumer choice
• Communicates quickly
• Projects credibility
• Strikes an emotional chord
• Motivates the respondent
• Creates user loyalty
• Permits pricing at a premium
300
Strong Brand
III. Brand
C ti
Creation
298
301
Difficult Brand
Branding
299
302
49
Consumer Electronics
• Consumer electronics markets
are crowded with brands and
products and near commodity
products,
Parry, Caroline. "Analysis: Sharp Aims for High-End Electronics Market."
303303
Marketing Week 29 (2006): 11.
• Example: Sharp is repositioning
itself to become a ‘premium’
electronics brand,
brand on the high
end.
303
306
• Example: Philips tried to
reinvent its image to one of
‘sense and simplicity’.
CE and Branding
• Heavily dependent on brand
to communicate unique
benefits and positioning of
products and the parent
company
304304
Best Global Brand 2006- A Ranking by Brand Value. Interbrand/Businessweek
Parry, Caroline. "Analysis: Sharp Aims for High-End Electronics Market."
306306
Marketing Week 29 (2006): 11.
304
Trend
• Emphasis is on advertising
the corporate brand than the
product
• Focuses on consumer lifestyle
307307
307
Campbell, Kerry. "Thinking Simple At Philips." Business Week 4013 (2006): 50.
Ultimate Marketing Tool for
Newspapers: Credibility
• Research shows that the more
people trust the newspaper, the
greater
t the
th strength
t
th off it’s
it’
circulation.
“Who Needs Friends? Study finds P-O-P stronger influence than word-of-mouth,” P-O-P
305
Times Dec. 2005: 78.
305305
308308
308
Source Philip Meyer and Yuan Zhang……, 2002
50
Brand especially important for
media products where users do not
have much informationm and search
costs are high
• Cable p
programs
g
• Film
• Authors
• Consumer electronics
309
Branding for Media Firms
312
HBO: “It’s not TV, it’s
HBO”
• Name, logo, etc.
• Color, distinctive look, etc.
• Promotion
P
ti off brand
b d identity
id tit
310
CNN
On-Screen Logos
• Network positioning as a
knowledge provider, summed up
by the phrase “Be the first to
k
know”
” – repeated
t d both
b th off
ff (mobile,
( bil
web and radio) and on the air
• Many channels keep a logo on
screen
sc
ee
• Allows “Channel surfers” to
quickly identify what they are
watching
311
http://www.books.com.tw/magazine/item/cnn/logo.jpg
http://chinese.discovery.com/discoverychannel/features/images/logo.gif
313
http://www.lifetimetv.com/
314
Tungate, Mark. Media Monoliths: How Great Media Brands Thrive and Survive. Kogan Page, 2004,
p. 21
51
Brand Extension
•Licensing &Merchandising
•Nickelodeon: toys, theme parks
•Disney
http://www.depauw.edu/photos/PhotoDB_Repository/2007/2/CNN%20Logo.jpg
315
CNN
Branding through “Anchor Programs”
• Ensures that its marketing message is
consistent in all platforms- screen to
poster to press.
• CNNI
CNNI’ss branding is incorporated in
set design, music, graphics and the
on-air look of the channel. The
network’s logo is an important
element in its strategy.
316
Tungate, Mark. Media Monoliths: How Great Media Brands Thrive and Survive. Kogan Page,
2004, p. 21
Cross-Media Brands
• An increasing number of brands appear in
multiple media
• TV and cable networks have substantive
((not jjust promotional)
p
) Internet sites
• cnn.com
• TV networks have multiple cable
channels (NBC, MSNBC, CNBC)
• Some magazines have TV channels –
Playboy
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 401, 1998 318
317
•Making one program the flagship
of the network
• For a time A&E’s brand
centered around the show
“Biography”
• Comedy Central’s brand image
“South Park.” “The Daily Show”
with Jon Stewart, and the
“Colbert Report”
http://www.londonpostcard.co.uk/images/southpark/spmp3057.jpg
319
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 400, 1998
Strategic Questions for
Media Companies
• How to develop a cohesive and
effective brand structure
• Which brands to emphasize and
build
• Whether to use the same brands
across product groups and countries
• How different brands should be
interrelated
320
http://money.cnn.com/2005/08/17/news/midcaps/adultentertainment/playboy_bunny.03.gif
52
•The branding task is easier for
specialty channels like Nickelodeon
and MTV.
•Traditional TV Networks have task to
create one identity
y as they
y sell an array
y
of dissimilar products directed at
different audiences, such as:
news, sports casts, sitcoms, movies &
cartoons
321
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 399, 1998
•Traditional broadcast networks do not
control the affiliated stations which
may have a different brand strategy
(“Fun 4”)
•National networks increasingly
g y require
q
local TV affiliated stations to call
themselves by the network name and
use the network logo (i.e. NBC10)
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 400, 1998 322
Promoting the AT&T Brand
• SBC launched a huge
marketing campaign in 2005
g with SBC in
after the merger
order to rebrand the company
as the new AT&T
323323
Source: Integrated Marketing SUCCESS STORIES, B 2 B 2006
323
Promoting the AT&T Brand
• Examples were a huge billboard
on New Year's Eve in Times
Square and an online “roadblock”
Square,
roadblock
on websites advertising
• Live programming und TV spots
at big events, such as Super Bowl
or the Academy Awards
Source: Integrated Marketing SUCCESS STORIES, B 2 B 2006
324324
324
Local Television Promotion
• At almost all of the local
television stations in the United
States, promotion of news has
the single highest priority to
give stations identity and
credibility.
325
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P,
2006
Promoting Cable Channels
to Audiences
• NBC’s own in-house
marketing agency NBC
Agency offers services
regarding advertising and
promotion to all NBC entities,
such as CNBC, and the
afilliated stations
326
53
Internal “Brand Auditing”
• One major function of
brands is to help central
management establish
control norms over a
heterogeneous
organization
• Brands are major
expression of corporate
culture and strategy
*
330
The “Centralized Brand” View:
• Firms must have a consistent
branding
• Consistent brand architecture
across countries
i andd product
d
lines
• Leads to push for brand
consistency
Centralized
Brands
• Same color, logo size
*
*
• Brands can be so important that the
“Virtual firms” emerge
• Nationally recognized brand name
becomes major asset
• The role of the company becomes
coordination rather than production,
or even design.
329
331
The “Diverse Brand” View
• But a single brand aiming to
project to a heterogeneous
ppopulation
p
mayy be less effective
than several sub- brands
•Time Warner: AOL,
Warner Bros., Time
Magazine, Etc
332
54
Diverse Branding Strategies
• Viacom, NewsCorp, Time
Warner, Bertelsmann (in US):
Weak overall brand; strong
sub-brands
• Disney: strong overall brand;
often weak sub-brands (“Buena
Vista”)
333
Viacom Brands
“User Generated content.” User Generated Content: New York Picketing. 15 November 2007.
Last accessed on 17 June 2008 at
http://img.pte.at/lowrespics/1124891633i26720.jpg
336
*
Viacom Branding
• Viacom’s networks, MTV and
Nickelodeon, are highly recognizable
brands. Similarly Paramount
Pictures. Blockbuster Video and CBS
were showing individual brands
when owned by Viacom, and could
be readily spun off on their own
• But Viacom itself is not well known
334
Viacom Brands
Corporate Image Advertising
• Creating a positive image for the
firm
• Boosting employee morale and
smoothing labor relations
relations.
• Helping diversified companies
establish an identity for the parent
firm rather than relying solely on
brand names.
“Conglomerate Business Law Economics Society.” Conglomerate. Last accessed on 17 June 2008 at
335
http://entrepreneur.typepad.com/photos/uncategorized/viacom.png
338
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
55
*
Media Brand Creation
Vivendi
Brand Creation:
Corporate Image Advertising:
• Stresses its field, not itself.
Projects best as servicing human
need, and not flimsy light
entertainment.
• Theme “Entertainment. It’s vital.”
Rolled out in France in 2007
1. Consumers are often not interested
in this form of advertising
2 Often
2.
Oft perceived
i d as costly
tl selflf
indulgence
3. Often perceived as the firm must be
in PR trouble (ex: oil companies)
“Money Digest”. The Hollywood Reporter, November 28, 2006
339
342
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Entertainment. It’s Vital.
“Advertising campaign Manifesto.”Vivendi. Last accessed on 10 June 2008 at
340
http://www.vivendi.com/pub/en/manifeste.php
*
Vivendi
• Ads highlight the significance
of entertainment in daily
g, equating
q
g the need for
living,
entertainment with the need for
food and water
• An a-technological image.
341
Stars as Brands
344
56
Brand Name Stars
• Actors, singers, directors,
composers
• Characters(“James
Ch
t (“J
Bond”)
B d”)
• It often takes a major marketing
investments to build a star brand
•New FTC Regulations on
Testimonials and
Endorsements, 2009
- Must disclose connections
between advertisers and
endorsers
345
Economic Worth of Celebrity
Endorsers: Study
• Announcements of 110 celebrity
endorsement contracts were analyzed.
• The impact of these announcements
on stock returns was positive and
suggests that celebrity endorsement
contracts are viewed as a worthwhile
investment by the market
346
Jagdish Agrawal & Wagner A. Kamakura, “The Economic Worth of Celebrity Endorsers: An Event Study Analysis,” Journal
of Marketing, Vol.59, July 1999
Jamie Lee Curtis
Catherine Zeta-Jones
http://justendeal.com/blogimages/jamie.png
http://justendeal.com/blogimages/czj.png
57
How Does the
Internet Affect Media
Branding?
a d g?
3 stages
Led to view of brands as:
• Brands are Industrial Age
legacies
• Internet leads to end of mass
marketing
• Price comparison shopping would
overwhelm brand image
351
Stage 1 Perception:
The Internet Destroys
“The
Brands”
352
• The Internet was assumed to
be a level playing field
• Low barriers to entry
• Low economies of scale
354
• But then, pendulum
swung in other direction
355
Stage 2 Perception:
“Brands are Essential on the
Internet”
353
356
58
*
*
It Was Soon Found That Brands Are
Important
Branding Structure
• Meta-brands
With sub
sub-brands
brands tailored to sub
submarkets.
• Over 100 million websites in
008
2008
• Most Internet users go to the
same sites again and again
357
360
*
• As a result, in the dot.com bubble,
companies spent as much as 90%
of their capital on advertising and
marketingg their brand ((BusinessWeek
11/15/99)
• Seeking large market share
• In the 1950s, societies were more
homogeneous, and advertising on
major networks reached and
appealed to most of population
• In the 1980s, US and others
society recognized heterogeneity,
and sub-brands emerged
358
361
• A single product and marketing
approach to a heterogeneous
population may be less effective than
several sub-products
• Technology
gy enables customization
Stage 3 Perception:
Internet Enables
“Brand” Customization:
from mass-brands to customized, subbrands
359
• Cable TV
• Internet
• Computer data bases
362
59
• Firms know their customers better
than ever due to Web based
information flow
• Can observe the behavior of
millions of customers and
immediately produce customized
ads, adjust brand strategies
363
• The Internet generates more
human interaction, not less.
• Therefore do not expect Internet to
cut costs of relationship-creation.
• On the contrary, Internet
technology and marketing requires
more people, more effort, more
creativity
366
Customization Issue: Privacy
Protection
“It’s a fine line
that
h separates
good customer
good service from
stalking”.
364
(http://channel6000.com/news/stories/news-981004-202141.html)
*
III.5. The
Creation of Brand
L lt andd off
Loyalty
“Lock-in”
The Cost of Customized
Branding
• Creating information and
interaction is not cheap
• Requires skilled people and
technology
365
368
60
*
• For media companies, cell phone
service providers, or cable
operators facing a saturated
market and competition, retention
and are low churn critical success
factors
http://msnbcmedia.msn.com/j/msnbc/Components/
Photos/040218/040218_hmed_cellphones_1030p.h
medium.jpg
Elements for Lock-In:
• Loyalty programs
• Brand-specific training
• Creation of community and
network effects
• Contractual commitments
369
372
Seller Strategies for Lock-in
Goal of Lock-in
• Customer will require concessions
to agree to be locked in
• Seller must invest in lock -in
through up-front discounts.
• Focus on buyers with high
switching costs
• Reduce user’s ability to
switch
370
373
Elements for Lock-In
Lock-In Strategies
• Differentiate one’s product or
service
• Establish long-term relation
with user
• Raise customer’s investment
in the relationship
• Get customers to invest in the
supplier’s technology by their
participating in customization.
•Customers thereby raise their
own switching costs.
•Increase switching cost by
selling complementary products
371
374
61
Lock-in Through Community
Creation
• A strong sense of community is a
major brand asset among customers
• Substantial time and effort to
develop a vibrant community by
community itself or by marketers.
• Creates switching costs
375
Community Lock-in in
Phones
N
• Ex. AT&T
• “Reach out and Touch
Someone ”
Someone.
• Ex. Alltel
• “My Circle”
• Ex. T-Mobile
•“Stick Together”
•“myFaves”
Howard, Theresa, “T-Mobile Targets Five Folks You Call Most,” USA Today, April
16, 2007. p. 7B
N
Example: iVillage
• The Women’s Network
• A collection of Internet communities for
women that attract and retain a base of
g y loyal
y customers
highly
• Parent Baby Namefinder
• Interactive
Pregnancy Calendar
• Better Health
http://www.westonnewcomers.org/images/ek_2_3.jpg
376
Howard, Theresa, “T-Mobile Targets Five Folks You Call Most,” USA Today, April
379379
16, 2007. p. 7B
Community in Magazines
iVillage Creates loyalty
over competitors:
• Women.com Networks
• CondéNet
• Oxygen Media
• Martha Stewart Living
Omnimedia
• T-Mobile research
• 65% of cell phone calls go
th same five
the
fi people
l
• Consumers wanted networks
built around them
• Magazines offer much more than
information and entertainment.
• They tap into a sense of
g g of
Communityy and belonging
readers
• few audiences are as loyal as
those of a magazines…
-Michael Harvey, Top Gear
377
Liz Clark, “The Rise and Rise of the UK Magazine Market,” London Press Service,
380
29 June 2005, http://www.uktradeinvest.co.nz/media/news/story_19.htm#.
62
*
Case Discussion:
Customer Loyalty
• How could “Fly & Sky” form
relationships with its
customers
t
to
t enhance
h
loyalty?
l lt ?
384
381
• But community can take on a life
of its own and turn against its
creators
•Product chat lines
• Can unite fragmented consumers
382
Case Discussion:
Building a brand for “Fly
and Sky”
• Sponsor airshows or similar
events
• Cross marketing in other male
oriented Conde Nast magazines
like GQ or Hemmings Motor
News
• Create a community
• Create loyalty programs/lockins and use discount programs.
386
63
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecastingg
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
387
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
The Marketing Mix: The “4
P’s”
• Product
• Positioning
• Pricing
• Promotion
Eli Noam, Media Strategy
388
391
• Pricing – the setting of prices
by seller--is expression of a
business’ strategy and of its
marketing plan
IV.
P i i
Pricing
http://fourh.ucdavis.edu/4hresource/clipart/other/pics/dollar%20sig
ns.gif
389
392
64
• Pricing issues are
discussed in the chapter
“Pricing of Information
Products”
• Only a few points follow
here
1. Market Pricing
(matching competitors’
prices)
i )
393
396
Pricing Strategy Goals
• To win customers
• To keep customers
• To gain profitability
• To gain market share
Example: CPM prices for TV
shows appealing to similar
audience
di
394
How a firm
normally sets
prices
If market pricing exists,
Marketing needs to stress
• Product differentiation
• Special features and quality
395
65
3. Value Pricing
Broadband
• Broadband service providers’ use of
bundle packages and steeply
discounted rates have created
consumers who are price sensitive
•Customer’s willingness to
pay (value)
• 81% of broadband subscribers would
consider switching providers to obtain a
better monthly
399399
399
402
Source: http://www.forrester.com/rb/Research/broadband_customer_retention/q/id/51925/t/2?action=5
2. Cost-Based
Pricing
Marketing then stresses
• Lower price (where cost is
lower)
• Greater “value” in terms of
quality (where cost is higher)
•Cost-plus
Cost plus
400
Example: In the past, many IT
firms established their price
b d on costt
based
Value-based pricing
usually means price
differentiation among
customers
404
66
Price Discrimination is
prevalent in media
• Books - hardback first, then
paperback:
•Price difference much larger
than cost difference
•Film: release sequence
•Consumer electronics
4. Flat Rate Pricingg
405
• Newspapers offer discounts for
mass corporate/business
subscriptions
• Discounts for students and teachers
• free online
406406
Marketing:
Niche marketing to subgroups
408
Examples:
• Internet
• Mobile phone (“buckets”)
• Cable TV (independent of
use)
406
Marketing:
• Life-style, convenience
• Target low use customers
67
Marketing:
4. Strategic
P i i
Pricing
• Stress price
411
B. Premium Pricing
• To achieve a strategic goal
such as market share, brand
id tit or market
identity,
k t control.
t l
• High price to create image.
Source: Microsoft Word ClipArt Gallery
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
415
A. Penetration Pricing
• Low Prices (including LossLeader))
• To establish an early market
position
• To deter new competitors from
entering
Marketing:
• Stress quality
413
Montgomery, Stephen L. Profitable Pricing Strategies. New York: McGraw-Hill, 1988.
68
• Later, value-based discriminatory
pricing will be the best strategy
• airline pilots (high professional
value high price)
value,
• student pilots (lower price)
• flight instructors (lowest price
since their word of mouth
generates student subscriptions)
420
Case Discussion:
Condé Nast
For more details on
pricing strategies
see chapter
h
on
“Pricing”
• How should “Fly & Sky” be
priced
• Relative
R l ti to
t other
th aviation
i ti
publications?
• Relative to other Condé
Nast products?
418
• Start with penetration pricing in the
introductory phase to gain market share.
• special discounts for Condé Nast
subscribers of other magazines
419
421
For more details
see Appendix D:
Th P
The
Pricing
i i off
Advertising
422
69
The “4 P’s” of Marketing
• Product
• Positioning
• Pricing
• Promotion
423
426
V.
P
Promotion
ti
424
427
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA
•
•
•
II. MARKET ANALYSIS
ƒ
ƒ
I.
NEW INFORMATION
TECHNOLOGIES
II.
REGULATION OF
MARKETING
Structure and Organization
Products and Services
The Attention Budget
•
Forecasting
Positioning
•
•
III. BRAND CREATION
•
•
Design
Diversification
III.
IV. PRICING
V. PROMOTION
•
•
•
425
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
Viral Marketing
VI. ADVERTISING
Internet as a Marketing Tool
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
70
Getting Attention
http://www.andrew
.cmu.edu/user/rfl/i
mages/attentionred.jpg
429
Promotional
Approaches
• “Movie marketing campaigns
are like election campaigns.”
(film studio executive)
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
432
432432
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
Marketing Plan
• A film’s marketing effort starts
when a project is green-lighted.
• The marketing department creates a
t k force
task
f
to
t create
t an audience
di
for
f
this (yet non-existent) film.
• A marketing plan is designed
• Generate Word of Mouth
• Public relations and publicity
• Advertising
• Direct marketing, etc.
430
Ineffective promotion strategy
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
433
433433
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
Marketing Plan
• Launching computer games is
similar to television show
• Important to hype launch date
• Game previews on TV
• Targeting loyal customers
431
Source: TV, GAMING INDUSTRIES CAPITALIZE ON PARALLELS
434434
Television Week 2006
434
71
*
Video Games
True talent products.
• Artists with unique appeal, such
as Elvis Presley, Mick Jagger, or
Madonna
• Promoting games in own TV
specials
- E.g. Microsoft
i
f andd MTV
produced a special about the
Xbox 360 that was aired on
MTV
435435
*
435
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
Source: MTV Finds A New Ally In Games, New York Times 2005
*
Case Discussion: Condé Nast Fly and
Sky:
438
Mick Jagger
• Condé Nast should try to embrace the niche
market of aviation enthusiasts
436
Different Categories Media
Products Require Different
Types of Promotion
• Talent Products
• Marketing-driven products
• Bread & butter products
• Niche products
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
Castaing, Ariane. “Jogging Through Jaggerland.” France Today. April 2006
Last accessed on 10 June 2008 at
439
http://www.francetoday.com/images/articles/06.06/jagger.jpg
Madonna
437
Ninh, David. “Madonna graces Vanity Fair cover.” The Dallas Morning News
Shopping Blog. 29 March 2008. Last accessed on 10 June 2008 at
440
http://shoppingblog.dallasnews.com/madonnavanity_1720.jpg
72
*
*
Bread & Butter products and
artists.
Potentially profitably, but often low
profile. advisory books (e.g., Dale
Carnegie)
• mystery novels (Sue Grafton)
• True talent products call for
strongg early
y ppromotion,, and
subsequent maintenance of
work-of-mouth
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
*
Marketing-driven media products
• Interchangeable stars such as Britney
Spears or Christina Aguilera; light
entertainment TV formats such as Big
Brother, Survivor, or Pop Idol; and
marketing-intensive magazine titles such
as “Us”
http://www.madonnalicious.com/images/2003/vma_show23.jpg
*
444
Niche products.
• Appeal to specialized audiences
• increasing importance of a highly
fragmented long “tail” of offerings.
• As
A storage
t
andd distribution
di t ib ti gets
t cheaper
h
with the digitization of content,
channels, even products with a very
small audience can be sold profitably.
http://epguides.com/BigBrother/cast.jpg
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
*
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”,
McKinsey & Company, Inc., 2003
442
445
*
• Calls for sustained
ppromotional efforts
• Once the star value drops,
drop promotion.
• Calls for sustained lowintensityy promotion
p
73
450450
450
Books: Selling Seasons.
• The spring release of titles
anticipates the selling window of
July through September (light
summer reading)
• The Fall release anticipates
Christmas sales and is heavier in
non-fiction and specialty books
Timing
http://tubes.ominix.com/art/holi
day/christmas/christmas-treewith-lights.png
451451
451
Source: Lieberman, Al: The Entertainment marketing revolution. Prentice Hall, 2002
Theatrical Release
• Timing
• Peak audiences (X-mas;
Thanksgiving, Summer etc.)
• Peak attention (uncrowded
period)
• summer movie season is mainly a
US phenomenon
449449
449
Basic Principle for Release
Sequence Strategy
• First, distribute to the market
that generates the highest
marginal revenue over the least
amount of time
• Then, “cascade” in the order of
marginal-revenue contribution
452452
452
74
• Prior to 1975, Hollywood used a
“platformed” method of
releasing its movies.
• Movies were first released in
select theaters,
theaters and then added
more theaters in following
weeks and months
453453
453
• But in 1975, Universal Studios
released Jaws instead on more
than 400 screens nationwide, the
biggest release up to that point.
• It also launched
la nched one of the
biggest nation-wide prime time
ad campaigns.
454
www.newyorker.com/talk/content/?030804ta_talk_surowiecki
• The Jaws strategy caught on
• Blockbusters are released on as
many as 7,000 screens
• Accompanied by a huge national
advertising effort
455455
www.newyorker.com/talk/content/?030804ta_talk_surowiecki
456456
456
www.newyorker.com/talk/content/?030804ta_talk_surowiecki
www.newyorker.com/talk/content/?030804ta_talk_surowiecki
454454
• Studios spend most of their
marketing budgets in the weeks
prior to a films opening.
• In 1993, the top ten movies
made half their total box
bo office
gross in the first three weeks.
455
• Foreign release can be delayed
for reasons relating to the
foreign environment (e.g.
French movie theatres are
slower in the summer but very
busy in October).
Martine, Danan. “Marketing the Hollywood Blockbuster in France” Adweek
457457
Magazines' Technology Marketing; Fall 1995; 23; 3; Research Library pg. 131
• The release sequence is being compressed
-due to piracy
-due to increasing revenues from post-theatrical
distribution
-due to marketing spill-overs
• Th
The film
fil Bubble,
B bbl directed
di t d by
b Academy
A d
Award
A d
winning director, Steven Soderbergh, ignored
the traditional release window model and
released film simultaneously in theaters, cable
TV, and DVD.
Bylund, Anders. “First Simultaneous Release Movie Opening Tonight.” 12, Jan.458
2006
458458
< http://arstechnica.com/news.ars/post/20060112-5967.html>
75
Promoting Home Video
• DVDs featuring new movies are
coming out faster.
• The average period between the
premiere of a movie and the
release of its DVD shrank an
additional 10 days in 2006.
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles459459
Times, March 2007
http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
Promoting Home Video
• In 2003-2008 the average time fell
by an entire month to three months
and 25 days.
y
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles460460
Times, March 2007
http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
Promoting Home Video
“The pace of the shrinkage is
of concern to us.”
-- President
P id t off the
th National
N ti l
Association of Theatre Owners, John
Fithian.
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles461461
Times, March 2007
http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
Promoting Home Video
• The key of major DVD marketing
campaigns is the “first-week
business” and studios need to
business
concentrate on that.
462462
http://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
Thomas K. Arnold, By the numbers
Promoting Home Video
• Merchants like Wal-Mart and
Target Stores allow consumers to
buy new DVDs for $15 or less
during its first seven days in stores,
so half of the total sales take place
during that first week.
463463
http://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
Thomas K. Arnold, By the numbers
Promoting Home Video
• It is common to agree crosspromotional partnerships with
retailers: Best Buy, Circuit City and
Wal Mart plug major new DVD
Wal-Mart
releases in Sunday newspaper inserts,
and offer discounted prices to get
buyers into their stores.
464464
http://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
Thomas K. Arnold, By the numbers
76
Release Sequencing
• Sony Pictures made its movie,
Hancock available over the
internet, directly to viewer’s
television sets if consumers own a
Sony Bravia TV with a web
connection
• after its theater run, before its
Arango, Jim. “A movie on your TV at home, before you can rent it.” The New York Times.
30 Junerelease
2008. Last accessed
July 2008 at
onon 8DVD
http://www.nytimes.com/2008/06/30/technology/30sony.html?_r=1&adxnnl=1&oref
465465
465
=slogin&ref=technology&adxnnlx=1215525932-WakRzF5adtz7aAgdOJFGuA
• DVD’s can piggyback on the
awareness of expensive
theatrical marketing
campaigns which creates
incentives to release DVDs
sooner.
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles468468
Times, March 2007
http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
Hancock
“Will Smith stars in Sony Pictures’ Hancock -2008” Yahoo! Movies Summer Movie Guide
Last accessed on 8 July 2008 at
466
466466
http://movies.yahoo.com/summer-movies/Hancock/1809801452/photos/303/9749
• DVD standalone campaigns can
be very expensive
• Spider Man campaign cost $100
M in 2002
• $40 M for TV, radio, print ads,
billboard and mall advertising
Source: Mega marketing campaigns up ante in home DVD segment,
467467
DSN Retailing Today 2002
Viral Marketing
Word of Mouth
(WOM) “Buzz”
(WOM),
Buzz
Marketing
470
77
• Many researches concluded that
interpersonal sources of
information were the most
influencing factor in movie
promotion.
471
*
William Adams, Charles Lubbers. “Promotion of Theatrical Movies,” Kansas
474474
State University
Example: VoIP Advertisement
Vonage vs. Skype
Word of Mouth (WOM)
• Marketing is expensive so word-ofg is a good
g
solution
mouth marketing
to reduce advertising costs.
• Start-ups, as well as independent
films benefit most from this low
cost marketing tool
472
*
• Vonage had $269.2 M in sales in 2005
and a market share of 21.7% in the
U.S. in 2006
• It spend $243.3 M on advertisement in
2005, which means that almost all of
its revenues went into marketing
campaigns
475
Source: Verizon's VoIP Offensive, Business Week 2005; Skype's475475
market share halves
ZDNet 2006
VoIP Advertisement
Vonage
• In 2006 Vonage spent $360$380 mil on marketing, an
increase of 50% over 2005
473
Source: Verizon's VoIP Offensive, Business Week 2005
476476
476
78
VoIP Advertisement
Skype
VoIP Advertisement
Skype
• Skype, the 2nd largest VoIP
provider in the U.S. with a
market share of 14.4%
14 4% in 2006,
2006
has a different approach than
Vonage
• Use mainly viral marketing
Source: Skype's market share halves, ZDNet 2006; A Tale of Two
477477
Marketers, CRMToday 2006
477
VoIP Advertisement
Vonage
• Vonage earned $27 a month
per line in 2005
• In
I comparison
i
it spentt $221.35
$221 35
on marketing a month per line
in 2005, which is factor of over
8
Source: Verizon's VoIP Offensive, Business Week 2005
Source: A Tale of Two Marketers, CRMToday 2006
480480
Creation of Word
of Mouth
• Promotional messages through
film-related sites (show times,
reviews, and trailers)
• Generating “buzz”
478478
VoIP Advertisement
Skype
• No high marketing budget, but
word of mouth marketing
• VoIP
V IP service
i ffor ffree so th
thatt
users are encouraged to get their
friends in
Source: A Tale of Two Marketers, CRMToday 2006
• Skype is marketing their services
by using blogs and forums, which
targets lead users instead of a
mass market
• Cheap way of advertisement
479479
• The Lord of the Rings trailer
downloaded 1.7 million
times on its first day of going
live
482
Adam Finn, Nicola Simpson, Stuart McFadyen, Colin Hoskins. “Marketing Movies on482482
the Internet: How Does
Canada Compare to the U.S.?” Canadian Journal of Communication Vol. 25. No. 3 (2000)
79
PlayStation Launch
• PSP and PS3 launches were
tailored for PR purposes
g buyers
y
- showed eager
waiting in line, which
attracted media coverage
• Examples of creating buzz:
• 1. The Harry Potter Series
• Consumers must wait in line
(nearly all night) to buy copies
of the novel
Rogers, Tim. “JAPAN: Psychology of a Hardware Launch”. 20 October 2006. NEXT
GENERATION. <http://www.nextgen.biz/index.php?option=com_content&task=view&id=4054&Itemid=2&limit=1&limi>
486486
483483
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
*
• Releasing bits of information
or insights into the novel: For
the sixth installment of Harry
Potter, Rowling released the
names of three of the chapters,
which set off a frenzy about the
new plot
Marketing Strategies for
Social Media
Offer products for free or at a
large discount to influential
users andd popular
l buyers
b
=>
create Externalities
487
484484
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
•
• Immediate translating the
novels into different languages
and international release
creates world-wide hype (very
much the case with Harry
Potter)
485485
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
486
Actively recruiting
individuals who are
perceived to be
trendsetters.
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W45-4PF1C0D8&_user=18704&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000002018&_version
488
488
=1&_urlVersion=0&_userid=18704&md5=fb90e94ead7b2a6ba67c6093b1bd3d67
80
Advantages of Word of Mouth
http://www.catalogs.com/blog/images/pr%20buzz.jpg
489
•
•
•
•
•
•
•
•
•
“Live”, not canned
Custom tailored and driven
More relevant and complete
Most honest medium
Self-generating and self-contained
Time-saving, efficient and labor-saving
Unlimited in speed and scope
Becomes part of the product itself
Unlimited in speed and scope
492
Silverman, George. The Secrets of Word-of-Mouth Marketing.
Book Buzz
• Create Hype: One of the best
and most efficient marketing
tactics is word of mouth
• If people talk about a book
before it comes out, readers
will be eager to buy it
• Concept: each user becomes a
salesperson, with or without
their knowledge
490
Robert E. Moor.e. “From genericide to viral marketing: on ‘brand’.” www.sciencedirect.com, May 2003
• According to a 2006 survey by
Advertising Age, American
people engage in 3.5 billion
WOM conversations each day:
• 2
2.5
5 billion
billi are face-to-face
f
f
conversations
• 630 million are over the telephone
• 245 million online conversations daily
Advertising Age, Dec 2006 @
491
http://proquest.umi.com/pqdweb?index=7&did=1174959211&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VTy
http://www.writing-world.com/promotion/buzz.shtml
493493
• Broadway musical audiences
most influenced by word of
mouth rather than advertisements
• In contrast, straight-play
audiences more swayed by
reviews.
494494
494
pe=PQD&RQT=309&VName=PQD&TS=1173973029&clientId=15403
81
• Off-Broadway audiences nearly
1/3 less influenced by advertising
than Broadway audiences.
http://www.moreheadst edu/statement/spg04/offb
st.edu/statement/spg04/offb
way.gif
495495
http://img.gsmarena.com/vv/pics/apple/apple-iphone-3g-01.jpg
495
*
• Google’s Gmail offered
memberships to only a select
number of people, generated
massive word or mouth
marketing
• Creating an online community
Examples of Viral Marketing
• Introduction of Google’s Gmail
• Ilovebees.com (for Halo 2
videogame)
• Microsoft Xbox 360
• Sony PSP
• Cell phones
499
496
*
http://derdo.files.wordpress.com/2008/05/nokia-e61i-00.jpg
497
498
Online communities are
largely viral
500
82
*
*
•
Viral marketing has been
used in the recent past for
effective promotion of
movies.
i
A Viral Marketing Firm:
BzzAgent
• Most major marketing or
advertising agencies have
d l d viral
developed
i l marketing
k ti
capabilities
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W45-4PF1C0D8&_user=18704&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000002018&_version
501
=1&_urlVersion=0&_userid=18704&md5=fb90e94ead7b2a6ba67c6093b1bd3d67
*
• Example: Fox posted first 4
minutes of “Borat” on
YouTube, received a million
views within two weeks,
which helped the small and
quirky movie to earn $26
million at the box office on
opening weekend.
Microsoft Viral Marketing
Emily Steel, “Using Social Sites as Dialogue to Engage Consumers, Brands,”The502Wall
Street Journal, November 8, 2006
*
But there’s also negative
“buzz”:
• MS launched a cryptic web site
at origenxbox360.com.
• The site is composed of a single
page of flash showing a tree, a
green bunny, and a numerical
countdown in the background.
505
http://xbox360.ign.com/articles/644/644110p1.html
Viral Marketing from
Microsoft
• Kryptonite bicycle locks sales
crashed after a blogger posted a
video clip of how to pick the
expensive
i lock
l k with
i h a simple
i l 30
cent Bic pen in 10 seconds.
Jeffrey Hill. “The Voice of the Blog: The Attitudes and Experiences of Small Business
Bloggers Using Blogs As A Marketing and Communications Tool.” Dissertation, 2005
504
503
• Ourcolony.net:
•Information was released
concerning the Xbox 360
through Ourcolony.net.
http://xbox360.ign.com/articles/608/608712p1.html
506
83
More Examples of Viral Marketing:
The Ring II movie campaign
• www.she-is-here.com, a
roleplay website where
characters
h
t discuss
di
their
th i
experiences with the cursed
video
http://en.wikipedia.org/wiki/Viral_marketing#Notable_examples_of_viral_marketing
507
510510
510
• Consumers are reluctant to trust
electronics manufacturers.
• Tend to turn to friends and relatives
for information before making
purchase decisions.
508
Music Marketing
• Labels use peer-to-peer platforms,
that are known for piracy, to
spread their advertisements
• E.g. Jay-Z and Coke infiltrated
promotions in file-sharing systems
Source: Record Labels Turn Piracy Into a Marketing Opportunity,
509509
Wall Street Journal 2006
Source: I Screen, You Screen, The New York Times 2005
Trust Is An Issue
• Social networking sites good
for music marketing as
• cheap
h
• interactive
• authentic
508508
• MySpace.com offers
• Users can become “friends” with bands
• Communicating directly with bands, hired
people respond to fans
• Users can share audio and video files
Music Marketing
Source: I Screen, You Screen, The New York Times 2005
Music Marketing
509
New Strategy:
Concentrate on developing trusted
relationships with previous customers to
511511
maximize brand loyalty and referral
business.
Burke, Kevin. As Consumer Attitudes Shift, So Must Marketing Strategies.
Study Suggests Rethinking the Customer Experience. Audioholics.
Consumer Electronics
Marketing
• Guerilla marketing
• Example: Motorola
• Inviting celebrities and trend
setters to gatherings where they
can try new cell phones
• Aim to have press coverage and
word-of-mouth effect
512512
512
Source: Motorola Looks for More Buzz Per Buck, Adweek 2004
84
Consumer Electronics
Marketing
• One way of guerilla
marketing is to send street
teams to trendy clubs where
they distribute discount cards
to trendy people which can be
cashed in at the next store
513513
513
Source: Motorola Looks for More Buzz Per Buck, Adweek 2004
• Blogs, as a result of their
accessibility and ease of
understanding and increasing
readership, are ideal for creating
“buzz”
• Blogs are attributed with qualities,
such as “authenticity
authenticity, transparency,
transparency
honesty, and openness” which are
more difficult for corporations to
put out
Jeffrey Hill. “The Voice of the Blog: The Attitudes and Experiences of Small Business
Bloggers Using Blogs As A Marketing and Communications Tool.” Dissertation, 2005
516
• Companies like Chikita pay
bloggers to post images or links
of certain products on their site.
Product Reviews And Links Turn Pages
g Into Profit. Sara Kehaulani Goo. The
Washington Post. Washington, D.C.: Jan 11, 2007.
514
514514
Burke, Kevin. As Consumer Attitudes Shift,
So Must Marketing
Strategies.
St d S
t R thi ki th C t
E
i
A di h li
Wii marketing by Nintendo
• Nintendo hired several types of
“ambassadors”:
• An already loyal gamer, to teach
how to use the Wii;
• And an “alpha mom”, with
influence to spread the word in
her neighborhood).
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped
of
515515 segment515
potential users in an effort to promote its new console, Los Angeles Times, Dec 06
517
Limits to Consumer Tolerance
for Viral Marketing
• Though the inventive marketing
tactics of viral marketing tend to
be received well by consumers,
dishonesty erodes brand trust.
518
85
• Example: In 2006, Sony hired a
marketing agency to create the
website:www alliwantforchristmas
website:www.alliwantforchristmas
isapsp.com, designed to create
buzz for its new product, the PSP.
Graft, Kris. “Sony Screws Up,” Business Week, Dec. 19, 2006
519
•
•
Suspicious customers discovered
that the website was registered
with a marketing agency,
agency
They exposed the marketing ploy
and Sony had a PR debacle on its
hand.
Graft, Kris. “Sony Screws Up,” Business Week, Dec.
522
19 2006
*
Viral Marketing Campaigns
• The website appeared to have been
created by a young boy who wanted
a PSP for his birthday and was
launched simultaneously with a
YouTube video of a kid rapping
about his handheld PSP.
Graft, Kris. “Sony Screws Up,” Business Week, Dec. 19, 2006
Sony Ericsson paid 60 actors to
pretend to be tourists asking New
Yorkers to take photos of them using
their new Ericsson camera phones and
demonstrating the features.
Shinn, Annys. “FTC Moves to Unmask Word-of-Mouth
Advertising,” The Washington Post. December 12, 2006
520
523
*
PSP
Federal Trade Commission
looks into viral campaigns
•In response to concerns that some
viral marketing campaigns had
crossed the line from innovative to
di h
dishonest,
t th
the FTC released
l
da
statement that all viral marketing
representatives must disclose their
identities when in the field.
http://www.digihit.cz/jpg/sony-psp-playstation-portable-value-pack-2.jpg
521
Shinn, Annys. “FTC Moves to Unmask Word-of-Mouth Advertising,”
The Washington Post. December 12, 2006
524
86
Public Relations
• “PR is a set of
communications techniques to
helpp an organization
g
to create
a good reputation for itself and
its goals”
For details see
Appendix B: Viral
Marketing
525
Eli M. Noam,
Entertainment
Law and Mediaon
Regulation
Henry, Kenneth, Harvard Business
Journal,
Perspective
Public Relations, 1967.
528
Publicity vs. PR
• Publicity is a subset of the public
relations effort.
• Publicity refers to the generation
off th
the news about
b t a person,
product, or service that appears in
broadcast or print media.
526
529
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
*
V. 2. Publicity and
Public Relations
for Media
Products
527
http://www.toastmasters.org/ImageLibrary/MagazineSection/908MagazineImag
530
es/PowerofPublicity.aspx
87
• “To this end, freelance press agents,
paid by the number of “mentions,”
would provide editors of local
newspapers with items to fill their
ppages
g or,, in a few extreme cases,,
such as the ballyhoo of P.T. Barnum,
would stage pseudo-events to attract
reporters to products.”
•
Publicity
• Publicity is typically a
short-term strategy,
gy, while
public relations is a
concerted program
extended over a period of
time.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
534
New York: E.J.E. Publications, Ltd., Inc., 2005
531
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• “In the latter half of the
nineteenth century, the
publicity business was
generally limited to the
relatively modest objective
of getting newspapers to
mention products that
already existed.”
•
H
H
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
532
New York: E.J.E. Publications, Ltd., Inc., 2005
*
P.T. Barnum
Pix P.T. Barnum in a “media event.”
http://toughsledding files wordpress com/2008/08/ptb jpg
535
•
*
N
• “In the early twentieth
century, however, public
relations began to assume
the far more ambitious aim
of shaping a newly defined
product: public opinion”
http://www.pr-options.com/img/Publicity_Camps.jpg
533
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
536
New York: E.J.E. Publications, Ltd., Inc., 2005
88
Elements of PR
• Press relations
• Product Publicity
• Corporate communications
• Lobbying
• Counseling
• Publicists try to create free
publicity for films in
production.
d ti
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
540
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
537
Lamb, Hair, Mcdaniel, Marketing, South-Western Collge Publishing, 1996
*
*
Target Audiences for PR
Early Film Publicity
• Employees of the firm
• Stockholders, investors and financial
groups
g
p
• The media
• Educators
• Civic and business organizations
• Governments
• The studios’ created publicity
departments, with 3 major
t l
tools
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New
541
York: E.J.E. Publications, Ltd., Inc., 2005
538
*
Publicity
• Marketing of a film requires
creating awareness even
b f
before
early
l in
i the
th advertising
d ti i
campaign.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
539
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
*
1. The studios produced their
own newsreels, seen by national
audiences, into which they
y clips
p of their
inserted ppublicity
stars whose images
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
89
*
2. Studios owned or controlled
major fan magazines, which
included PR stories about their
stars.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• “Easier to generate publicity about
stars than about a film.
• To get a story about a star, the
reporters must often agree to make
references to the film
• Publicity staff often vet stories.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
546
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
*
3. The studios had symbiotic
relationships with the major
newspapers, columnists, such as
Hedda Hopper and Louella
P
Parsons.
Those columns which they red with
gossip generated flow of positive
mentions of their stars.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• “Many magazines also need
cover photographs of stars.
• The studios will provide photo
opportunities in return for
cooperation in timing and content
of the stories.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
547
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
*
• Today, similarly, the film distributors
plant celebrity stories in magazines like
Entertainment Weekly, People, TV Guide,
and the E! channel, which happen to be
y the same major
j media
owned by
companies
• Crew and cast are required to sign
NDA nondisclosure agreements. PR
staff is attached to the production to
control actors’ contacts with a media.
To reduce the risk of negative stories.
stories
• Publicists try to create free publicity for
them.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
545
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
548
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
90
*
• To this end, the studios script
“back stories” that merge the
stars’ activities, real or
invented, with those of the
characters they play in the
films.
•It pretended to be a
documentary with the
director expressing great
f th
fear
thatt Tom
T Cruise
C i would
ld
be killed in one of the
stunts.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
552
New York: E.J.E. Publications, Ltd., Inc., 2005
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
*
*
• For the film “Mission
Impossible, a back story was
scripted in which Tom
Cruise claimed that he,
he and
not a stunt double, had done
the leaps and stunts.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
*
• This back story generated a
publicity short, Mission
Incredible, on MTV and other
cable channels which were
owned by Paramount’s
corporate parent, Viacom.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
551
New York: E.J.E. Publications, Ltd., Inc., 2005
• In reality, six stunt doubles
were used for Tom Cruise’s
part.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
553
New York: E.J.E. Publications, Ltd., Inc., 2005
Oscar Awards/Golden
Globes
http://www.kodak.com/US/i
mages/en/corp/kodakHistory/
academyAward.jpg
http://www.mickeys.net/ima
ge/golden-globe.jpg
554554
91
The Oscar Season
Running with Scissors
• Also, film studios promote other
previous DVDs starring actors who
are nominated. In 2007, Sony
repromoted Annette Bening’s
previous titles, when she was
nominated for Running With
Scissors.
555555
C. Spielvogel, For retailers, there's gold in Oscar® promotions, VideoBusiness, Dec 06
The Oscar Season
• In 2007, for example, 5 of the Best
Picture nominees had per-theater
take increase right after
nominations,
i ti
andd the
th distribution
di t ib ti
expanded to additional theaters.
• "The Departed," for example, rose
from 127 to 1,453 theaters
556556
Patrick Enright, How studios manipulate 'Oscar bump', MSNBC.com, February 2007
The Oscar Season
• For "Little Miss Sunshine",
during the week of
nominations its DVD sales
rose about 60%-200%.
557557
http://www.impawards.com/2006/poste
rs/running_with_scissors.jpg
http://www.sonypictures.com/mo
vies/runningwithscissors/site/do
wnloads/wallpaper/dierdre_tub/d
ierdre_tub_1280x1024.jpg
558558
• Film Festivals like the
prestigious Cannes International
Film Festival and Deauville
Film Festival help increase
awareness of US film and star
news and is fully covered by TV
stations.
Martine, Danan. “Marketing the Hollywood Blockbuster in France” Adweek
559559
Magazines' Technology Marketing; Fall 1995; 23; 3; Research Library pg. 131
• Studios advertise heavily on
MTV and other music-video
channels, as a way to
incentivize them to play
music videos from the movie
during its opening week.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
560
560560
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
Patrick Enright, How studios manipulate 'Oscar bump', MSNBC.com, February 2007
92
For more details see
Appendix C: Public
Relations and Publicity.
See also chapter on
entertainment law and
media regulation
• Big names sell a film, music,
or books more effectively
than other marketing efforts.
561
564
• Investing in initial “signaling”
properties of stars
565
Source: Journal of Management, March 1, 2001
Music Tours
V.3. Using the
Star Power for
Promotion
• Effective way to promote new
album
•Measurable sales increase
i regions
in
i
off tour location
l
i
after a concert
563
566
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 26
http://www.haro-online.com/stuff/thisiss2.jpg
93
Music Marketing
• Music artists signings in stores,
(called “in-stores”)
• Creates press coverage
567567
567
Books Promotion
• Publishers: often passive
• Too many titles, will push only a
few
• Most book marketing depends on
publicity of authors on TV and the
press through morning shows like
“Good Morning America” or
NBC’s “Today” show.
• At times of war or national crisis,
authors and publishers lose this
‘free time’ on TV channels as these
channels focus on the crisis.
Bill Goldstein “War Would Upend Plans of Publishers and Retailers“ The New York
570
570570
Times. March 10, 2003. Section C; Page 7; Column 1.
• This means issuing more new
titles than otherwise and wait
for reaction.
(“throw it against the wall and
see if it sticks”).
ti k ”)
• Large number of titles reduces
marketing focus
•
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.568
568568
Cambridge: Harvard University Press, 2000
• Promoting a potential blockbuster
book requires a large investment
before readers or reviewers show their
reactions.
• Therefore, it makes often sense to
postpone
t
promotional
ti l efforts
ff t until
til
information comes in about the
reactions and then invest more heavily
in promotion.
•
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.569
569569
Cambridge: Harvard University Press, 2000
•
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.571
571571
Cambridge: Harvard University Press, 2000
Talk Shows
• Publishers tend to
promote their top books
on national shows like
O h
Oprah
572
http://www.lewis.army.mil/dpca/library/
Source: Lieberman, Al: The Entertainment marketing revolution. Prentice Hall, 2002 oprahread.gif
94
Promoting Blockbuster Books
TV Talk Shows
• Up to $1 million
• Inflated first printings
• Authors’ tours of TV and
radio talk
talk-show
show circuits
circuits.
- Symbiotic relationship between
broadcasters’ need for material and
authors’ need for exposure
• Affects content
•Attractive Authors
•Simple and provocative
subjects
•Best sellers
http://i.cnn.net/cnn/2004/SHOWBIZ/books/03/04/publishing.religion.ap/cover.davinci.jpg
573
Source: Caves, Richard E. Creative Industries: Contracts Between Art and
Commerce.
576576
Cambridge: Harvard University Press, 2000
576
Book Publicity
• Review-copy mailings to reviewers
• Book launches, parties, and signing
autophraphs
pp
• TV and radio appearances,
• Display material
• Article placements on Internet Sites
574574
Stars as Brands
574
577
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
• If the record company or book publishers
or film studio has share of an artist’s future
earnings, it raises its incentive to promote
the artist's early work and promote him/her
on TV etc.
• This is fair since promotion of one work
generally has positive spillover effects for
the artist’s future and previous work
• Also in music, a large part of promotion
costs are recoupable from the artist’s
royalties.
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.575
Cambridge: Harvard University Press, 2000
Brand Name Stars
• Actors, singers, directors,
composers
• Characters(“James
Ch
t (“J
Bond”)
B d”)
• It often takes a major marketing
investments to build a star brand
578
95
Economic Worth of Celebrity
Endorsers: Study
• Announcements of 110 celebrity
endorsement contracts were analyzed.
• The impact of these announcements
on stock returns was positive and
suggests that celebrity endorsement
contracts are viewed as a worthwhile
investment by the market
579
Jagdish Agrawal & Wagner A. Kamakura, “The Economic Worth of Celebrity Endorsers: An Event Study Analysis,” Journal
of Marketing, Vol.59, July 1999
Jamie Lee Curtis
Catherine Zeta-Jones
582
V. 4. Influencing
the Influencers:
Promotion on
Opinion Leaders &
Critics
http://justendeal.com/blogimages/jamie.png
583
http://justendeal.com/blogimages/czj.png
•New FTC Regulations on
Testimonials and
Endorsements, 2009
- Must disclose connections
between advertisers and
endorsers
Promotional Copies of Music
or Books:
distributed free to:
• Reviewers
ev ewe s
• Radio stations
• Television stations
584
584584
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 21 & 24
96
The Importance of
Reviewers:
Managing Reviews
• Critics become part of the industry
strategy to manage demand.
• Studios
St dios incorporate the potential
response of critics into their
marketing and distribution strategy
for each of their releases.
Source: Journal of Management, March 1, 2001
585
• Getting a positive review in the NY
Times or the NY Review of Books
enhances a book
• Once in a best-seller list, the process
becomes self-sustaining: buzz, sales
588
http://www.serbiainfo.com/g3/images/nytimes-logo.jpg
*
• Studio may engage in a wide
distribution, backed by a
strong marketing push, to
overcome damage from an
p
negative
g
critical
expected
response.
Source: Journal of Management, March 1, 2001
• Book reviews
• Only a small portion of new titles get
reviewed; New York Times reviews ~1,000
books/yr, or 2% of new titles
586
589589
589
http://www.video-business-school.com/Film%20Money.jpg
• Newspaper critics have a
significant impact on the success
of Broadway shows.
• New York Times twice as much
influence as critics from the
Daily News or New York Post.
http://www.bigapplecircus
.org/PressRoom/SourcePa
per/NewYorkPost.gif
Critic Story
• Harold Pinter’s play, The Birthday
Party, premiered in London in 1958,
Received a lukewarm review from the
London Times: “Mr. Pinter’s effects
are never more than puzzling,
puzzling and
after a little while we tend to give up
the puzzle in despair…” (The
[London] Times 1958, p.3; reported in
Bennet 1990, p.43). Partly as a result,
show closed.
587
Source: Srinivas K. Reddy, Vanitha Swaminathan, and Carol M. Motley. Journal of Marketing Research, Vol. XXXV (August 1998), 370-383
http://www.liveperformances.com/settler/newdail1.gif
590
Source: Journal of Marketing Research, Vol. XXXV, August 1998.
http://www.btpl.org/Online_Databases/Online_Databases_-_Alphabetica/logo-london-times.gif
97
*
• Same play was revived 6 years
later now,got an enthusiastic
review in the Times. The Birthday
Party is the Ur-text of modern
British drama: if John Osborne
fired new authors into writing
writing,
Pinter showed them how to write”
(The [London] Times 1964, p.18;
as reported in Bennet 1990, p.43).
• This time, the play had a long run
and big success.
591
Source: Journal of Marketing Research, Vol. XXXV, August 1998.
*
There are two alternative
perspectives on the role of critics.
1. Critics could be opinion leaders
who influence audience demand.
(the “powerful critic”)
2 Critics
2.
C iti could
ld be
b just
j t predictors
di
off
their respective audiences. (the critic
as a “spokesperson”)
Jehoshua Eliasberg; Steven M. Shugan, Film Critics: Influencers or Predictors
Journal of Marketing (Apr 1997)
592
• In other words, media would
hire critics whose tastes, it
believes, are similar to those of
its audience.
audience
593
Research Findings:
• The % of positive and negative
reviews is a statistically insignificant
predictor of box office performance for
early weeks of a film’s release (weeks
1-4).
• It is, however, a statistically significant
predictor of box office performance for
later weeks, and for cumulative box
office.
594
*
• Critics thus appear to act
more as leading indicators
than as opinion leaders.
• Or, an early marketing push
overcomes critics for a while
595
• Findings are inconsistent
with the opinion leader
perspective, which predicts
that the greatest influence of
the
h review
i should
h ld be
b during
d i
the time immediately
following the review.
M
596
98
• Studios arrange hundreds of screenings
for film critics
• Distribute electronic press kits to
television stations.
• Arrange for stars to appear on magazine
covers, in entertainment-news reports,
and on television talk shows.
Implications?
p
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
597
597597
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• To create advance news stories and
reviews, the studios will often fly
entertainment reporters on junkets
to special locations where they are
granted brief “revolving-door”
revolving door
interviews with stars and director
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005 598598
600
• The “powerful critic” theory suggests
that the marketing efforts of motion
picture studios should target critics.
• Wine and dine
• Stars to meet the critics
• Allow critics to get their names in
film advertisements.
• Avoid inviting uncooperative critics
• Avoid pre-screening of bad films
601
Book Promotion
• Schedule reviews to coincide
with a books launch date
http://www.writing-world.com/promotion/buzz.shtml
599599
• But if critics are only early
predictors rather than
i fl
influences,
this
thi seems to
t be
b a
waste of money
602
99
Product Placement
on Video Games
• Advertisers are looking for new
ways to reach 18- to 34-year-old
males who are increasingly
abandoning television (and TV
commercials) and spending
more time playing video games.
• Ads in computer games that are
played over the internet.
Product Placement
http://www.nytimes.com/2005/04/11/technology/11game.html?ex=
1270872000&en=f51cb1a7d7e22135&ei=5090&partner=rssuserland
Disadvantages of Product
Placements
New opportunity: In-game
ads
• Product release difficult to
coordinate with film release
• Ericsson
i
usedd product
d placement
l
for new communicator
• However, when film was released,
product was not ready
605605
Source: Products as Movie Stars, Technology Marketing Intelligence 2000
607
605
• Rather than the typical ad,
they integrate the brand in to
game.
• More than 132 million
gamers 13 years or older in
the U.S.
David Lipke, Big game hunters (…) No wonder marketers like Nike, Adidas and
608
Under Armour are eager to tap into this new national past time, DNR, February 2007
100
“We work hand-in-hand with the
game developers to figure out where
the best places are to put
advertising. We insert our own code
into those p
places,, and once a
consumer is playing the game
online, it starts to communicate
with our server.”
--
ADIDAS In-game ads
campaign
• Adida’s logo present in
virtual players
players’ uniforms and
throughout the stadium
Alison Lange, marketing director at Massive, leading the industry.
609
David Lipke, Big game hunters (…) No wonder marketers like Nike, Adidas and Under Armour are eager
to tap into this new national past time, DNR, February 2007
• Fear alienating fans for minimal
ad revenue.
• Of the $4 billion in game sales
in 2004, only about $10
million came from advertsing.
ad ertsing
610
David Lipke, Big game hunters (…) No wonder marketers like Nike, Adidas and
612
Under Armour are eager to tap into this new national past time, DNR, February 2007
Consumer Electronics
Marketing
• Product placement is popular
way to promote electronics
• Nokia,
ki e.g. had
h d gadgets
d
in
i
Matrix or the X-Files
• Placements measured by time
products are seen
613613
613
Source: Products as Movie Stars, Technology Marketing Intelligence 2000
ADIDAS In-game ads
campaign
The Devil wears Prada
• German sports shoe maker
Adidas integrated ads into
Power Challenge, an online
video soccer game played
simultaneously on the Web.
David Lipke, Big game hunters (…) No wonder marketers like Nike, Adidas and
611
Under Armour are eager to tap into this new national past time, DNR, February 2007
http://media.movieweb.com/galleries/3688/posters/poster1.jpg
614614
101
Telecom’s Marketing
Promotion
• When The Devil Wears Prada
was turned into a film, the
project became a marketers
dream
615615
• In the past, in the era of monopoly, a
“build it and they will come”
approach
• Today:
-identify niche marketing
-customer care
-brand awareness
Ed Finegold, Nothing
Left to Analyze but
Customers Themselves,
618618 Billing
-explain
usefulness
oftheservice
World and OSS Today, October 2006
Promotion
• It generated a media frenzy of
interviews and television
specials concerning Anna
Wintour, Vogue, and Meryl
Streep (who played Priestly in
the film)
616616
Promotion
• Prada supplied many of Meryl
Streep’s bags and shoes, and
the movie became an
advertisement for the fashion
industry’s finest
617617
102
Placement
DVD Advertisement
VI.
Promotion:
Advertising
• $85 M for Ice Age DVD
• 14 partners, such as CocaCola,
l Microsoft,
i
f andd the
h
National Hockey League
622
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA
•
•
•
II. MARKET ANALYSIS
ƒ
ƒ
I.
NEW INFORMATION
TECHNOLOGIES
II.
REGULATION OF
MARKETING
Structure and Organization
Products and Services
The Attention Budget
•
Forecasting
Positioning
•
•
III. BRAND CREATION
•
•
Design
Diversification
III.
IV. PRICING
V. PROMOTION
•
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
Viral Marketing
VI. ADVERTISING
Internet as a Marketing Tool
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
Source: Mega marketing campaigns up ante in home DVD segment,
625625
DSN Retailing Today 2002
625
Advertising Plays 2 Major
Roles for Media
• 1. Advertising in Media: It is
the economic foundation of
many media
• 2. Media products are being
promoted through advertising
626
103
• advertising existed already in
antiquity: Greece, Rome,
Egypt.
• By the 1600s, advertisements
were regularly
g
y printed
p
in news
papers.
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
627
Ads from the 19th Century
Ad for a cure for baldness, Eau Malleron from 1878
630
Source: http://healthcare.zdnet.com/images/patent-medicine-ad-1800s.jpg
• The industrial revolution was
the main driver of advertising,
by creating mass products and
brands
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
628
Ads from the 19th Century
Ad for Lloyd’s Cocaine Toothache Drops from 1885
631
Source: http://scienceblogs.com/neurophilosophy/cocaine_drops.gif
• Advertisements in the 19th
century typically were simply
written descriptions of the
products.
• Until about 1925, advertising
was product-oriented
•information about product
Eyre, Rachel, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford
629
University Press. New York.
2. Subsequent Approach:
Lifestyle-orientation
• based less on the product’s
value and more on what the
product can do to improve the
customer’s life.
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
632
104
• The radio became the main
vehicle for such “lifestyle
advertising” in the 1930s and
1940s.
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
• 1950’s Rapid growth in TV
advertising and its effectiveness
633
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book.
Oxford University Press. New York.
636
*
50s TV
Radio Advertising
“Thumbnails for 1950’s and 60’s TV commercials.” Internet Archive Movie
Archive. Archive. Last accessed on 12 June 2008 at
634
http://www.digitaldeliftp.com/Recommendations/RadioPrintAds/retro13_sentinel07.html
http://www.archive.org/movies/thumbnails.php?identifier=1950sAnd60sTvCommercials
637
-Part1Of3
How does advertising work?
Ads for 1950s TV
• Postmodern Theory: advertising
resonates in association with
cultural “stories.”
• Semiotic Theory: ads have
symbolic meanings to consumers
Ad for Zenith TVs from the 1950s
635
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
638
Source: http://farm4.static.flickr.com/3283/2970805949_498f8e087a.jpg
105
• But despite a plethora of
explanations, it is unclear what
advertising works
1/2 of advertising works great.
• “1/2
We just don’t know which half”
• True? Not really. The
heaviest advertisers were the
TV networks
t
k and
d station
t ti
groups, for this own media
products
642
639
TV Self-advertising
•Networks run spots promoting its
shows, and itself
•Cross marketing.
Who are the heaviest
advertisers?
• in-depth
in depth story about David Letterman on the
local New York CBS channel
• Cast of 60 minutes appeared on Murphy
Brown in 1993.
643
http://ufalocal94.org/graphics/cbsny2_logo.jp
Robin Andersen; Consumer Culture and TV PRogramming: Pg. 41, 1991
g
Heaviest US Advertisers (2002)
• General Motors
$2.9B
• Procter &Gamble$1.7B
• DaimlerChrysler
$1.5B
• Philip Morris
$1 4B
$1.4B
• Ford
$1.2B
• Time Warner
$0.9B
• Johnson & Johnson $0.8B
TV Promotions
All Advertising (including
value of unpaid TV promos)
% of Total Ad $ Value
641
Source: Schiekofer, The Media Marketplace. New York: Mediacom
$17.1
$157.6
$10.8%
Source: TNS Media Intelligence, The Industry Forecast, AdWatch
2005
644
644
106
• Cable Channels advertise themselves on
other channels
• Initially, broadcast networks were
reluctant to run ads for shows featuring
programming from rival networks, or to
pay rivals for advertising time.
• But promotions that provide time and
date are typically rejected by rival
networks.
Steinberg, Brian, “NBC Drops Promo from Rival TNT; Network Stops Running Ads that May Have Given
Viewers the Idea to Switch,” New York, NY, The Wall Street Journal, Oct. 26, 2004. pg. B.6.
•The top advertisers in
most countries are cell
phone companies
645
TV Network Promotion
• Cross plugs (promo for the next
show), and multiple spots (promo
f shows
for
h
scheduled
h d l d sequentially)
ti ll )
are promo.
• Prime time ads for the following
day’s programs
646
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P,
2006
Aside from TV networks
themselves, who else are
the biggest advertisers?
Top Advertisers Among Media
Companies by Country: 2006. ($
In Millions)
Tanzania
Amount Spent in Country
1
2
4
8
Celtel International
Vodacom
MIC Tanzania
TZ Telcom Corp
5.1
3.5
3
5
1.6
1
OTT Tunisia
Tunisie Telecom
6
5
Tunisia
1
2
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age.
649649
November 19, 2007.
Top Advertisers Among Media
Companies by Country: 2006. ($
Spent in
Pakistan
In Millions) Amount
Country
2
Pakistan Telecommunications
11
3
Pakistan Mobile Communications
11
5
6
8
Telenor
Jang Group
Warid Telecom
8
7
5
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer.
Advertising Age.
650650
November 19, 2007.
107
Top Advertisers Among Media
Companies by Country: 2006. ($
Spent in
In Millions) Amount
Finland
Country
1
2
9
Elisa
TeliaSonera
DNA Finland
20.5
17.3
99
9.9
Vivendi
France Telecom
Canal + Group
389
295.4
186.5
Magti GSM
3.4
France
1
4
10
Georgia
2
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer.
Advertising Age.
651651
November 19, 2007.
Top Advertisers Among Media
Companies: 2006. ($ In Millions)
Rank
Name
Global Spending
U.S. Spending
7
8
14
15
18
27
38
41
AT&T
Time Warner
Verizon
Walt Disney
Sony
News
Vodafone
Microsoft
NA
2136
NA
1755
1620
1104
813
769
2341
1838
1837
1438
1117
871
0
447
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age.
654654
November 19, 2007.
Top Advertisers Among Media
Companies by Country: 2006. ($
Spent in
Portugal
In Millions) Amount
Country
1
3
Portugal Telecom
Vodafone
173
122
9
Optimus
Telecomunicacoes
79
10
Cofidis
71
Vimpel Communications
50
Deutsche Telecom
132
Russia
7
Slovak Republic
1
Source: 21st2Annual Global Marketers:
Ad Spending by Marketer.
Advertising
Age.
FranceGlobal
Telecom
78
652652
November 19, 2007.
Top Advertisers Among Media Companies
by Country: 2006. ($ In Millions)
Vodafone
Wataniya Telecom
Amount Spent in
Country
7
6
Nawras Telecom
Mobile telecom
Omantel
4
3
2
Q-Tel
6
Kuwait
5
6
Oman
3
4
8
Qatar
2
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age.
653653
November 19, 2007.
656
108
Ad Agency Services
• Marketing Services: Conduct
research and compose a media
plan to ultimately execute the
advertising program.
660
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
Ad Agency Services
• Creative Services: Creates and
executes the advertisements
themselves.
• Copywriters conceive the
creative ideas and then the art
department produces the
corresponding advertisements.
Advertising
A
Agencies
i
658
661
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
Ad Agency Services
Agency Organization
• Account Services: Planning,
creating, and producing
advertisements.
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
659
662
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
109
*
Advertising Agencies
• Nearly 14,000 agencies exist on
the Standard Directory of
Advertising Agencies
• But 500 firms accounting for
almost half the business.
666
663
http://www.darrenherman.com/2008/05/04/2007-ad-agency-rankings-released/
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
*
World’s Top Ad Agencies 2007
664
Johnson, Bradley. “2007 Agency Profiles Yearbook” Advertising Age. 30 April 2007. Last accessed on 3 July 2007 at
http://adage.com/images/random/agencyprofilesyearbook07.pdf
667
*
Top Advertising Agencies (2008)
• 10 U.S. agencies handle
nearly 30% of the total
advertising volume.
volume
• 18 of the top 25 US agencies
are headquartered in New
York.
665
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Net Income in 2008
1. Omnicom Group Inc.
2. WPP Group PLC
$ 1 Billion
$805.8 Million
3. Publicis Groupe SA $654.1 Million
DataMonitor. “Advertising in the United States.” New York, DataMonitor. November 2009.
668
110
Alternatively, Some
Companies Have In-House
Ad Agencies
• Calvin Klein
• Radio Shack
• Benetton
http://www.students.bucknell.edu/like/Foundation/Calvin%20Klein%20Logo.jpg
http://www.garneriachamber.com/assets/images/Logo_RadioShack.gif
669
Agency Compensation
• Commissions usually 15% of billing
• This Incentivizes agencies to
recommend high media expenditures to
increase commissions
• Creates disincentive to use noncommissionable marketing such sales
promotions through discounts
670
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Negotiated Commissions
• Can be a different rate, e.g., 10%
• Or cost-plus agreement.
• Or incentive-based compensation
673
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
“Superagencies”
• Provide clients with integrated
marketing communications services
worldwide.
• Consolidation: major agencies
• If Interpublic bills 15% and
its revenues are $8 billion it
places
l
advertising
d ti i off about
b t
$50 billion.
671
674
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
111
Global Marketing
Language Problems
• Economies of scale
• Abilities to exploit good ideas on a
worldwide basis
• Maintain
M i t i a consistent
i t t international
i t
ti l
brand and/or company image
• Simplification of coordination and
control
675
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Problems with Global
Marketing
Language Problems
• Marketing a standardized
product the same way all over
the
h world
ld can turn off
ff
consumers, alienate employees,
and blind a company to
diversities in customer needs.
676
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Effectiveness of
Advertising can be
difficult in crosscultural context
• Swedish maker of
vacuum cleaner
Electrolux came
up with the slogan
“Nothing sucks
like an
Electrolux.”
679
677
http://www.davidecolavini.it/ita/images/ele
ctrolux.jpg
112
• These interactive agencies often
implement search engine
marketing
k ti to
t attract
tt t customers
t
for its clients. The largest SEM
vendor is Google AdWords.
• Most firms prefer the fullservice agency;
g y; approximately
pp
y
75% of all companies employ
this type of agency.
681
Horsky, Sharon. "The Changing Architecture of Advertising Agencies." Marketing Science 25 (2006): 367-383.
684
Moran, Mike, and Bill Hunt. Search Engine Marketing, Inc.: Driving Search Traffic to Your Company's Web Site. Indianapolis: Prentice
Hall Technical Reference, 2005.
*
Example: Razorfish
• But there is a growing
popularity, especially among
l
large
advertisers,
d ti
off unbundling
b dli
the traditional tasks of the fullservice agency.
682
• Interactive ad agency Razorfish
was bought by Microsoft in 2007
and sold to Publicis in 2009.
Vranica, Suzanne and Steel, Emily. “Publicis to Buy Razorfish.” The Wall Street Journal, August 10, 2009.
685
Horsky, Sharon. "The Changing Architecture of Advertising Agencies." Marketing Science 25 (2006): 367-383.
Other Examples:
Interactive Ad
Agencies
683
113
Advertising a Film
• The last stage of the marketing
campaign is the “drive”- mostly
in the two weeks preceding
opening weekend.
687
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
690
690690
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• The search for the “hook”
VI.2.
Advertising:
g the
Budget
688
• Until the mid-1980s, film
marketing was mostly publicitydriven ”
driven.
• But today film promotion relies
primarily on expensive television
ads
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
689
689689
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• elaborate testing of the most promising
images through interviews, focus
groups, and even test screening
Epstein, Edward Jay, “The Big Picture, The New Logic of Money
and Power 691
in
691691
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• With the “hook” found, the ad
agency designs television
commercials
commercials.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
692
692692
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
114
• When a film seems doomed the
distributor may decide to “triage”
the movie by cutting the advertising
budget and reducing the number of
screens on which it will open.
Film Marketing Cost
• Can rise to $50-$75 million.
• Warner Bros. in 2002 with The
Adventures of Pluto Nash.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
693
693693
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• Studios spend heavily on
newspaper advertisements
before an opening
opening.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
696696
696
• Of the 25 major studio movies of
in 2005, advertising averaged
28% of the box office gross.
• Sequels had a significantly
smaller percentage,
percentage 11.3%.
11 3%
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
694
694694
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
• Advertising to identifiable
groups can be done on cable
television channels
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
695
695695
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
697697
697
Advertising Budgets
• A film’s advertising budget used to
cost about half of its production
costs
• But this keeps increasing
698698
115
• National saturation release used
to prevent unfavorable word of
mouth
• In 1998, for the opening
week,
k Godzilla
G d ill increased
i
d
its advertising budget to
$50 million and opened the film
on a record 7,363 screens.
• Does not include the expenses
associated with premieres,
publicity events, and personal
appearances of stars
stars.
• or, promotion on own TV
channels
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=100
699699
2464344
• Short, intensive bursts of TV
advertising
• &10-20 Mil
• Requires for the film to open
nationally
• 2,000
2 000 screens and more.
more
• heavy cost of prints of the film (2,000
@ 1,300: another $3 million).
• And increasing the density of
exhibitors requires shrinking of the
geographic span of each theater.
700700
700
o/arch/gifs/gozilla.jpg
Budgets for Book Promotion
• A typical overall marketing
budget for a general trade
publisher about 20% of
revenues
703703
703
Budgets for Book Promotion
• Enlarge market share.
• Massage the ego of a valuable
director, star, or producer.
• Seeking awards and Oscar
nominations.
701701
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.
702
Cambridge: Harvard University Press, 2000
702702
http://bz.berlin1.de/kin
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
Why Over-spending?
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
•
• For smaller, educational or
academic publishers will lower
the marketing budget , between
6-10% of revenue.
701
704704
704
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
116
Budgets for Book Promotion
• Specific promotional budgets
are often based on a percentage
of a book’s anticipated revenue
705705
705
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
• Access to an artist’s future
earnings raises media company’s
incentive to promote the artist's
first album, film, as book
Finding Nemo
• More than $20
million on TV ads
alone
• Biggest single-title
single title
video marketing
campaign of the
year.
708708
http://www.hollywoodreporter.com/hr/search/article display.jsp?vnu content id=1000603668
Thomas K. Arnold, By the numbers
Promoting
Theater
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.
Cambridge: Harvard University Press, 2000
706706
709709
709
http://www.kennesaw.edu/images/arts/theater.
if
Theater Promotion
• IN music, in fact, a larger part
of promotion costs are
recoupable from the artist’s
royalties.
y
707707
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.
Cambridge: Harvard University Press, 2000
• Placement and frequency
(repetition) of advertisement
constitute
i
the
h two essential
i l
considerations in theater
promotion.
Langley, Stephen. Theatre Management in America. New York:710710
Drama Book
Specialists, 1990.
710
117
Theater Promotion
http://www.otcn
et.org/2003/ima
ges/NY-Timeslogo.jpg
• A few focal points for theatrical
advertising include: a star
performer,
f
associated
i d celebrity,
l bi
a well-known production title
and venue, quotes and awards.
Langley, Stephen. Theatre Management in America. New York:711711
Drama Book
Specialists, 1990.
NYTimes Advertising
•Inclusion in the thumbnail
Theater Directory ads known as
the ABCs.
•many readers mistakenly
assume that the ABCs are free
listings, but actually they cost a
minimum of $2,000/wk
711
714714
714
Off-Broadway productions pay
the same per-line rates as
Broadway shows. Theaters 199
seats or smaller receive
di
discounts
off 4% to 15%
712712
712
• Advertising ~¼ of a production’s
operating costs and of preopening expenses.
• For a major Broadway shows,
~$1
$1 mil
mil.
http://www.best-ofbroadway.org/images/broadwa
y.jpg
http://www.teehonya.ok.ru/pics/river_cd.jpg
713713
713
715715
715
In contrast, independent Film
Marketing
• Independent films marketing cost are
$150,000 - $3 mil.
• To open an independent film actively
budget rarely under $1 million.
• Many independent films do not even
cost $1 million to make and will not
generate $1 million at the box office.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
716716
716
118
“Promoting Films” Film
Release
“Grassroots Films-The Human Experience-Solidarity” Grassroots Films. Last accessed on 25 June 2008 at
http://victorialabecki.wordpress.com/2007/04/01/grassroots-films-the-human-experience/
717717
717
• Quarter page in The New
York Times costs
approximately $20,000
$20 000 for
just one day.
718718
718
• Ads also in:
•The Village Voice
Time Out New York
•Time
•The New York Observer
•Newsday
•New York Post
719719
720720
720
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
721721
721
• Instead of spending money on
advertising , Independent film
producers count more on PR.
• Increased appearances of the cast on
talk shows
shows, public events,
events press,
press and
movie premieres.
Film Advertising
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
• A five city run – New York, Los
Angeles, Boston, San Francisco,
Chicago, and Dallas for oneweek, could reach $500,000
newspaper ads and $350,000
$350 000 in
trailers and prints. Total of
$850,000, with no TV.
Film Advertising
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
• Because the most dedicated
“specialty film” audiences live in
New York and Los Angeles, these
towns are considered “make or
break” markets for any indie release
• But they are also the two most
expensive media markets.
719
722722
722
Martin, Reed. “Indie Film Marketing”. Filmmaker Magazine. July 23, 2003.
119
Other Techniques
• Premieres generates media coverage
• Awards
William Adams, Charles Lubbers. “Promotion of Theatrical723723
Movies,”
Kansas State University
723
724
• Film Promotion
• Poster-related costs of a five-city platform
release to $45,000.
• “Out-of-house”
Out-of-house publicists add another
$20,000 to $40,000
• 10-15 agencies around the country
typically are also hired for regional
publicity.
725725
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
727727
727
Independents: Film
Advertising
Independents (cont.)
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
726
• Press screenings
• Press junkets
• Public appearance tours by
actors
• Film festival premieres
• Trailers and film prints can
add up to $250,000 of the
“P&A” (prints and
advertising) budget.
724724
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin
2004
726726
Independents: Publicity Costs
Film Advertising
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
• Grand total is now $950,000
still without a TV ad buy.
725
• Have to spend around
$500,000 on TV advertising
in opening 5 cities
cities.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
728728
728
120
Independents: Promotion
Expenses
• Premiere party $10,000-$20,000.
• Hotel rooms and airfare for
actors on publicity
bli i tours $40,000
$
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
729729
• Special screenings and web
marketing.
• One film had 400 word-of-mouth
screenings.
•Cost $800 per screening, can
add $320,000 to the marketing
budget.
730730
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
732
732732
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
729
Independents: Film Promotion
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
• Studios generally budget to
foreign marketing only a
fraction of the amount they
budget for the United States
and Canada.
Gone in 60 Seconds.
• For North America, Disney spent
$42 million on advertising and
publicity for that film.
• For the rest of the world, it spent
a combined $25 million.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
733
733733
Hollywood,” New York: E.J.E. Publications, Ltd., Inc.,
2005
730
Independent Film Marketing
• Some independent film makers
are now handling their own
marketing distribution and DVD
marketing,
sales
Tozzi, John. “Indie Filmmakers hit their target.” BusinessWeek. 5 June 2008. Last accessed on 1
July 2008 at
731
http://www.businessweek.com/smallbiz/content/jun2008/sb2008065_226261.htm?chan=search
731731
•
•
•
•
•
•
•
•
•
$6.5 million for Japan
$3.1 million for Germany
$2.5 million for Britain
$1.4 million for France
$1.1 million for Australia
$1 million for Spain
$ .9 million for Italy
$ .8 million for Taiwan
$6 million in 60 other markets
Epstein, Edward Jay, “The Big Picture, The New Logic of Money
and Power 734
in
734734
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
121
Approaches To Determine
Advertising Budget
1.
2.
3.
4
4.
5.
6.
7.
8.
Resources available
Percentage of Sales
Competitive parity
Objectives/tasks
Quantitative Models
Marginal Analysis
Return on Investment
Value of Customer
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
738
Lamb, Hair, McDaniel. Marketing , Annotated instructor’s Edition, third Edition Pages 518-520
VI.3. How Much
p
on
to Spend
Advertising?
1. Resources
Available
736
Ad Spending
• Over-spending can evaporate
profits
• Under-spending
d
di can weaken
k a
film.
• Problems
•In a good year large amounts
of money could be wasted; in
a bad year,
year the low
advertising budget could
guarantee a further low year
for sales.
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
737737
737
740
122
2. Percentage of Sales
Example:
• Medaverse is a start-up company
that will make its first game for
the best-selling Nintendo’s Wii
• With only six employees and a
tight budget, Medaverse will not
be able to spend too much on
advertising
Hall, Kenji. “Opening up the Wii”. BusinessWeek. 17 April 2008.
Last accessed on 11 June 2008 at
741
http://www.businessweek.com/magazine/content/08_17/b4081070887317.htm?chan=searc
• Most important advertisingrelated decision for small to midsized companies if whether to
buyy access to the ABCs.
742742
742
• Based on an internal rule, such
as
•Percent of Sales
Budget = x% × Previous/forecast year’s
sales
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
744
Percentage of Sales
• Advantages: financially safe
• But letting the level of sales
determine advertising dollars
reverses the cause-and-effect
relationship
l ti hi between
b t
advertising
d ti i
and sales.
• Also, it treats advertising as an
expense associated with making a
sale rather than an investment.
745
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Problems
• Difficult to forecast sales
• How to determine x% value
• Budget becomes a consequent of
sales (rather then a determinant)
• Maybe % should be higher when
sales are low
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
746
123
Example for Advertising Ratio
of Industry
• Household audio and video equip.
• % of sale: 3.2%
• % off margin:10.7%
i 10 7%
• % of Annual growth: 6.9%
Source: Schonfeld & Associates, Inc.
747
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Problems with parity
• Getting information about
competitor’s spending
•Assuming competitors have
the same advertising
opportunities
•Ignore creativity and media
effectiveness
http://www.marketingcharts.com
3. Competitive Parity
750
751751
Competitive Parity
• Compare with industry
• Advertising expenditures to
matchh those
h
off competitors
i
• Companies often subscribe to
services such as Competitive
M di R
Media
Reporting,
ti which
hi h
estimates the top 1000
companies’ advertising in 10
media and in total.
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
749
752
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
124
Competitive Parity
4. Meeting Objectives
• Smaller companies often use a
clipping service, which clips
competitors’
tit ’ ads
d from
f
local
l l print
i t
media, allowing the company to
work backward to determine the
cumulative costs of the ads.
753
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
For example:
• TW Cable and Direct TV battle for
subscribers.
• TW Cable’s reputation is already
established with its customers, while
satellite’ss reputation is developing
satellite
developing.
• Direct TV must focus on expanding
its customers.
• TW Cable can focus on maintaining
impression on its service.
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
754
• Consider the firm’s
communications objectives
andd then
th budget
b d t what
h t is
i
deemed necessary at attain
these goals.
756
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Setting Objectives
• Most critical step in the
promotional planning process: set
realistic objectives.
• Budgeting and media strategies
and tactics evolve from these
objectives
• To be effective, objectives must
be realistic and attainable.
757
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Advertising objectives should be
stated in terms of concrete and
measurable communications tasks,
specify a target audience, indicate
a benchmark starting point and the
degree of change sought, and
specify a time period for
accomplishing the objective(s).
758
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
125
Setting Objectives: Example
• Time Period: Six Months
• Objective 1: Create awareness among
90% of target audience
• Objective 2: Create interest in the brand
among 70% of target audience.
• Objective 3: Create positive feelings
about the brand among 40% and
preference among 25% of the target
audience, etc.
1. Establish desired target.
– Assume potential target
market of 50 mil
– Estimate target audience
share= 8%
– Audience of 4 mil desired
759
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• T-Mobile decides to focus on TV
and newspaper advertisement.
• It allocates $500,000 for its
p g
campaign
• The result is 10-fold increase in
the number of subscribers in a 6
month period
762
1. Estimate number of advertising
impressions that are needed to
persuade each 1% of target
population
– E.g.,
E g assume that each 1 TV
advertising exposure of
target population persuades
2% of target audience.
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
Lamb, Hair, McDaniel. Marketing , Annotated instructor’s Edition, third Edition Pages 518-520
760
763
(Cont.)
Example for
Objectives: Promotion
of a New Film
761
• 2 advertising exposures to
get 4%, etc
• That means, for an 8 %
yield, 4 exposures of target
population of 50 mil are
required
• 50 mil = 17% of US pop.
764
126
• It might be more profitable to
do only minimal TV
advertising, get only 2% of
target population,
population but at a
small cost.
1. Determine numbers of Gross
Rating Points that need to be
bought
bought.
•
4 exposures × 17 % of US
pop. = 68 GRP
765
(Cont.)
1. Determine the needed
advertising budget
• E.g.
g 1 GRP nationally/HH
y
size
• = per capita CPM ×target pop
1000
• $13 × 50, 000 = $650, 000
• 68 GRP =$44.2 mil
766
768
• Company would have to
reduce budget to point where
marginal expenditure =
marginal revenue
• Depends on productivity of
advertising
769
Would That Advertising
Expenditure Be Worth It?
• 4 mil audiences × $5.00 box office share
of distributor
• expected revenues : = $20mil.
• This is less than the cost advertising of
the campaign, which is $44.2 mil.
• Therefore, revenues from after-markets
would have to be the substantial to
overcome the gap, (consider also added
distribution and promotional expenses).
767
127
5. Quantitative Model
Approach
• Use research data to estimate
parameters in the models
• Quantitative models to estimate
consumer behavior.
• Sophisticated versions of the objective
and task approach
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
• While these models could
potentially change the way
companies will allocate their
advertising dollars, most are
theoretical and make a lot of
assumptions.
• They cannot be applied easily in
real world situations
771
774
http://ideas.repec.org/p/wpa/wuwpio/0511008.html
• Statistical techniques such as
multiple regression analysis to
determine the relative contribution
of the advertising budget to sales.
772
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Some examples of these
models:
• Butters (1977)
• Deneckere and Peck (1995)
• Burdett,
B d Shi,
Shi andd Wright
Wi h
(2001)
• Bataille, Julien (2005) Model
• Most models assume that a
company’s advertising attracts
customers probabilistically
775
http://ideas.repec.org/p/wpa/wuwpio/0511008.html
• Models also typically assume that
consumers choose only one of
the companies based on the ads
viewed, and at only the
advertised price.
price
773
http://ideas.repec.org/p/wpa/wuwpio/0511008.html
776
http://ideas.repec.org/p/wpa/wuwpio/0511008.html
128
• The Marketing Engineering (ME)
approach relies on the design and
construction of decision models in
the form of marketing
g management
g
support systems (MMSS)
Lilien, L.Gary, Rangaswamy, Arvind. “Marketing Decision Support Models. The
Marketing Engineering approach.” The Handbook of Marketing Research: Uses, Misuses
, and Future. 2004. Last accessed on 18 June 2008 at
http://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig 777
=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
• Linear model: Y = a + bX
• X is an independent variable
(e.g. advertising)
• Y iis a ddependent
d variable
i bl
(e.g. sales)
• a and b are constants
Lilien, L.Gary, Rangaswamy, Arvind. “Marketing Decision Support Models. The
Marketing Engineering approach.” The Handbook of Marketing Research: Uses, Misuses
, and Future. 2004. Last accessed on 18 June 2008 at
http://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig
780
=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
• Marketing Engineering captures
marketing problems in wellspecified models and it improves
decisions
decisions.
Lilien, L.Gary, Rangaswamy, Arvind. “Marketing Decision Support Models. The
Marketing Engineering approach.” The Handbook of Marketing Research: Uses, Misuses
, and Future. 2004. Last accessed on 18 June 2008 at
http://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig
778
=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
Lilien, L.Gary, Rangaswamy, Arvind. “Marketing Decision Support Models. The
Marketing Engineering approach.” The Handbook of Marketing Research: Uses, Misuses
, and Future. 2004. Last accessed on 18 June 2008 at
http://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig
=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
781
• Some commonly used market
response models are:
• Linear
Li
model
d l
• Calibration
779
129
6. Marginal Analysis
Approach
• advertising's marginal
contribution to profit
(
(marginal
i l revenue - marginal
i l
advertising cost)
• Problems
• hard to isolate other influences
on sales
• In the table above:
• Optimal advertising expenditure
calculated by comparing the
marginal revenue (4th column)
with marginal cost (2nd column)
• Advertising add to profit until a
budget level of $65,000 is
reached
783
Marginal Analysis For
Advertising Budget
Advertising
Expenditure
($)
Marginal
costs
($)
Net
Revenue
($)
Marginal
Revenue
($)
Total
Profit
($)
Marginal
Profit
($)
45,000
5000
40,000
+10,000
-5000
+5000
50,000
5000
55,000
+15,000
+5000
+10,000
55,000
5000
77,000
+22,000
+22,000
+17,000
60,000
5000
88,000
+11,000
+28,000
+6000
65,000
5000
95,000
+7000
+30,000
+2000
70,000
5000
98,000
+3000
+28,000
-2000
786
Weaknesses
1. Assumption that sales are a
direct measure of advertising
and promotions efforts.
2. Assumption that sales are
determined solely by
advertising and promotion.
784
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
787
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Marginal Analysis
• Firm would continue to spend
advertising/promotional dollars
as long as the marginal revenues
created by these expenditures
exceeded the incremental
advertising/promotional costs.
785
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Weak sales could be caused
by other variables, such as the
economy, product
d t quality,
lit or
pricing.
• Effects of advertising can
occur over a long time.
788
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
130
7. Return on Investment (ROI)
Approach
• Consumers do not respond
immediately
• Advertising may create a
favorable predispositions
toward the brand.
• Expands impact of advertising into future,
to calculate Net Present Value, and ROI
• Advertising and promotions are considered
investments, like plant and equipment.
789
792
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Valuing Customers
• In 1999 AT&T paid almost $4,200 per
subscriber to buy the cable companies
with TCI and MediaOne.
• In
I 1999 Deutsche
D t h Telekom
Tl k
spentt
$6,000 per customer to buy Britain’s
One 2 One mobile wireless company.
• Easiest to gauge results:
direct-response advertising
• Direct
Di t mailing
ili
http://www.gonuts4free.com/finall/pda/images/logo_deutsche_telecom.gif
790
793
“Lifetime Value” of a Customer
• The LV of a customer is the
present value of all futures profits
that a company can potentially
generate
t from
f
customer.
t
• Similar to DCF, with one
difference: customer retention or
loyalty is incorporated.
794
131
Lifetime Value of a Customer
LV = (Annual gross margin per
customer)/(1+discount rateretention rate) minus acquisition
cost
LV= M ·
R
1+I-R
– AC
Therefore maximum investment
in customer acquisition is
M· R
1+I–R
• Higher with retention rate R,
R
higher margin M (and growth
rate g)
• With lower discount rate (e.g.,
lower risk)
795
798
Figure 1-9 Customer Life
Expectancy and Retention
Measuring Lifetime Value
LV : Lifetime Value
M = Margin
I = Discount Rate
R = Retention Rate
AC = Acquisition Cost
796
Roger Best, Market-Based Management
799
Figure 1-10
Customer Lifetime Value
Margin Multiple
• Can Assume Constant Margins
R/(1+I-R)
• Or can Assume growth in Margins
R/(1+I-R(1+g))
where g = Growth rate
797
Roger Best, Market-Based Management
800
132
Calculation of Sales and
Marketing Expenses
(per new subscriber)
Commissions
Handset Subsidy
Advertising
$175
$75
$175
Other
$10
Total Subscriber Acquisition Cost
$435
Average Life (months)
Amortized Monthly Subscriber Acquisition Cost
Deloitte & Touche, “The PCS / Wireless Marketplace”
• Customers must be not only
gained but also retained
• Need reward their loyalty.
30 mo (2.5 years)
$15
801801
801
Value of Customer
ƒBut traditional Customer Lifetime
Value (CLV) model may
underestimate
d
ti t the
th value
l off new
acquired customers because it
excludes the network effects, for
example,
word-of-mouth.
Villanueva,
Julian, Yoo,Shijin,
& Hanssense, Dominique M. “The Impact of
802
Marketing-InducedVersus Word-of-Mouth Customer Acquisition on Customer Equity
Growth”. Journal of Marketing Research 45 (Feb, 2008), p48-59.
Ed Finegold, Nothing Left to Analyze but the Customers Themselves,
804804 Billing
World and OSS Today, October 2006
• Marketing spend all of their
promotional dollars just to win the
customer
• Follow-on
F ll
promotions
ti
andd loyalty
l lt
tactics, are often viewed as wasted
money
805805 Billing
Ed Finegold, Nothing Left to Analyze but the Customers Themselves,
World and OSS Today, October 2006
• Yet, customer churn is a main cost
element and revenue loss
803
Ed Finegold, Nothing Left to Analyze but the Customers Themselves,
806806 Billing
World and OSS Today, October 2006
133
Marketing Radio Loyalty
• Radio Stations’ directors of
promotion have three
di i
distinguishable
i h bl aims:
i
1. Instituting activities that
bring in new listeners to
station (acquisition)
807807
807
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.
Using Social media to
create brand loyalty
Customers do not have
relationships only with the
organization but also with the
human face of the organization
– people who work for the
organization
810
http://customersrock.net/2008/09/21/using-social-media-for-customer-loyalty-part1/
Marketing Radio Loyalty
2. Encouraging long periods of
continued listening
(maintenance)
3. Listeners must return at
various times in the day
(recycling)
808808
808
811
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.
• One promotion method is
creating contests and on-air
games that can achieve audience
acquisition, maintenance, or
recycling.
809809
VI.5. Media
Mix
http://www.cctvstuff.c
o.uk/images/radio-cd200 jpg
200.jpg
http://edu.kde.org/contr
ib/graphics/renaud/tv.jp
g
http://www.kreysler.com/projects/billboards/marineworld2a.jpg
http://clear.msu.edu:16080/
dennie/clipart/magazine.gif
809
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.
812
http://tubes.ominix.com/art/office/newspaper-07.png
134
Example: Choice of
Magazines for Aerobic
Exercise Ads
• The preceding section dealt
with determining the overall
promotion
ti budget.
b d t
816
Magazines Purchased by People
who do Aerobics
*
Next question:
• How to allocate that budget
• among promotional activities
• among media (TV vs.
vs radio vs
vs.
print vs. web, etc)
• within each medium
•e.g., which radio station, rock
station vs. C&W station.
814
A. Allocation of
Advertising
Within a Medium
Total
Circulation
Aerobatics
Users
%
Redbook
10533
1074
10.2
Road & Track
3838
133
3.5
Rolling Stone
6154
496
81
8.1
Scien. Amer.
1835
137
7.5
Self
2957
594
20.1
Ses. St. Mag.
3606
444
12.3
Seventeen
3532
259
7.3
Shape
1664
252
15.1
817
• Shape, Self, and Vanity Fair magazines
seem good selections for aerobics ads,
whereas Road and Track, Sports Afield,
or Sports Illustrated would achieve less
desired exposure.
http://www.booksamillion.com/mag/covers/0/05/281/0052814.jpg
http://www.amagarea.com/imgB/HWPET.jpg
815
818
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
135
• Another factor is regional
choice.
-Some regions generate
stronger national buzz.
Case Discussion: Fly & Sky
Film distributors advertise in
newspapers (2007)
New York papers, $274 mil,
LA papers, $127 mil
Goal:
The idea of exclusiveness is to
provide greater customer value,
increase loyalty and attract new
members
823
Fly & Sky
ƒ Place ads for Fly & Sky in the
complimentary seatback
magazines
i
off major
j airlines,
i li
such as American Airlines and
Continental.
824
136
Fly & Sky
Advertising Media
• Fly & Sky can be promoted by cross
marketing in different Condé Nast
publications
p
• Fly & Sky can also be promoted
through the Condé Nast website and
Fly & Sky’s homepage
• Outdoor/indoor display
-Limited information
-To reinforce image
825
828
(http://search.corbis.com/default.asp?i=11027651&vID=1&rID=101)
Billboards
B. Allocation
among media:
Media Mix
Demand for Ad Space
Different media vary in
effectiveness based upon
•Length
e gt and
a d quality
qua ty of
o exposure,
e posu e,
•sensory involvement,
•interactivity and ease of
response.
Billboards
827
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
137
• Magazine advertising
•Targeted
•Creative
•Good
G d iinformation
f
i
vehicle
•But time lag
Magazine Customization
http://pobox.upenn.edu/~davidtoc/images/ck.furlong1.html
• 1970s: “Selective binding” permits
creation of multiple editions of an
issue
• Farm Journal has thousands of
individualized versions
• for time-sensitive information: electronic
newsletters is a better vehicle
http://www.absolutad.org/cities/paris.jpg
831
• TV Networks will advertise
shows in magazines that they
feel have a strong readership
among its core viewers.
834834
834
Newspaper
advertising
•Geographic
t
targeting
ti
•Broad reach
•High cost
832
http://www.islandnet.com/~iblack/newsads.html
835
Newspaper Advertising Prices High:
Market Structure:
• Over 90% of US papers are the only daily
paper published in their markets
• % of US cities with only one daily newspaper
in circulation:
• Magazines benefit from
their highly targeted
audience,
di
which
hi h
increases their appeal to
target marketers
833833
833
•
•
•
•
•
1888: 39%
1910: 43%
1940: 87%
1981: 98%
1990: 99%
836
138
• Classified ads made up 60 to 70%
of online advertising for
newspapers.
• But Websites, such as Craigslists,
post a huge
pos
uge threat.
ea .
• Also, Shoppers (or “pennysavers”) and free-distribution
newspapers
Newspaper Ads
837837
Bosman, Julie. “Online Newspaper Ads Gaining Ground On Print.” The New York Times. 6, Jun. 2006
<http://www.nytimes.com/2006/06/06/business/media/06adco.html>
http://www.naa.org/advertising/pdf/athena60.pdf
Newspaper Ads
840
Newspapers Ads
• Leaves local business ads as main
economic base
• But these,, too,, are eroding
g with
growth of national retail chains
which have “permanent sales”
(Home Depot), or use national TV
and cable rather than local papers
841
838838
http://www.naa.org/advertising/pdf/athena60.pdf
Industry-wide Ad Campaign
Newspaper Advertising:
Declining Market
• Loss of national ads: national
advertising declined from 25% in
1980 to less than 8% of 2009
newspaper revenue.
839
• The Newspaper Association of
America started a $50 million ad
campaign to remind advertisers that
newspapers
p p are still the dominant
source for consumer information “(5
times more than any other medium)”
“More Than 700 Newspapers Create Historic Media Roadblock as Newspaper 842
Industry Launches $50 Million Trade Campaign.” PR Newswire US, 20, Mar. 2006
139
• Promotion ad says, “Every day
we try to print something that
people on the right and the left
can actually agree on. We call it
advertising.’”
‘advertising
Elliot, Stuart. “Working to Sell Advertisers on Newspapers and Magazines.” The New
York Times. 15, Feb. 2006
<http://www.nytimes.com/2006/02/15/business/media/15adco.html?ex=1149739200&e
n=57b13135437d4560&ei=5070>
843
• Campaign trying to show ads in
newspapers, unlike those in
other media, are “a destination,
not a distraction.“”
Elliot, Stuart. “Working to Sell Advertisers on Newspapers and Magazines.” The New
York Times. 15, Feb. 2006
<http://www.nytimes.com/2006/02/15/business/media/15adco.html?ex=1149739200&e
n=57b13135437d4560&ei=5070>
Radio
advertising
• Audience and
ggeographic
g p
selectivity
• Mobility
• Divided attention
• Localism
844
• Campaign concentrating on fact
that consumers try to avoid
advertising in other mediums
(subscription radio, TiVo
commercials to avoid ads on
TV, etc.), yet asserts that readers
welcome ads in newspapers.
845
Elliot, Stuart. “Working to Sell Advertisers on Newspapers and Magazines.” The New York Times. 15, Feb. 2006
<http://www.nytimes.com/2006/02/15/business/media/15adco.html?ex=1149739200&en=57b13135437d4560&ei=5070>
http://www.old-time.com/werus.html
847
• Radio spots and magazines are
cheaper than TV
• Magazines can be an affordable
alternative to television for films
with smaller budgets.
848848
http://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
Thomas K. Arnold, By the numbers
140
*
• TV audiences have come to
expect quality commercials.
• The cost of producing a good
TV commercial:
•average 30-second TV
commercial production costs
are over $300,000
http://www.imediaconnection.com/content/4698.asp
*
30 Second Adverts
TV advertising
–National
and local
reach
•Effective
persuasion
•High cost
• The price of a 30 second
advert is dependant on the
time that it airs and during
what televised program.
http://www.usatvads.com/
850
*
853
*
TV Advertising Sub-markets
• Network primetime:delivers to a
range of audiences
• Network daytime: delivers to a
relatively
l ti l pure audience
di
off
women under 50.
• Network news: delivers to a 25-54
group and 55+ men and women.
Blumenthal, Howard and Oliver Goodenough. “This Business of Television.” New York
Billboard. 1991. Pages 417- 423
30 Second Adverts
• As of Fall 2009, NBC’s
Sunday Night Football was
the most expensive program,
commanding close to
$340,000 for a 30 second
spot.
http://adage.com/article?article_id=139923
854
141
*
TV Advertisements (2009)
TV Network
Average Price
for 30 Second
Slot during
Prime Time
ABC
$126,476
CBS
$111,840
http://adage.com/article?article_id=139923#sun
NBC
$90,714
855
FOX
$111 529
858
*
TV Advertisement
C. Optimal Advertising
Mix
• The highest priced advert on
primetime is Monday Night
American Idol,
Idol which costs
up to $700,000 for a 30
second ad.
http://tvbythenumbers.com/2007/09/30/30-second-ad-cost-for-broadcast-primetime-shows/962
859
856
*
30 Second TV Advertisement (2009)
Show
Cost (30 second ad)
Network
Sunday Night Football
$339,000
NBC
Grey’s Anatomy
$240,462
ABC
Desperate Housewives
$228,851
ABC
Two and a Half Men
$226 635
$226,635
CBS
Family Guy
$214,750
FOX
The Simpsons
$201,920
FOX
CSI
$198,647
CBS
The Big Bang Theory
$191,900
CBS
The Office
$191,236
NBC
House
$183,298
FOX
http://adage.com/article?article_id=139923#mon
857
Estimate of Advertising
Allocations among Media for
Feature Film Releases
Forrester Research (2007)
860
142
*
Advertising Formats
Advertising Mix
http://www.marketingcharts.com
861
864
• This assumes no interaction
among advertising vehicles, and
no overlap of target segments
• If these assumptions do not hold,
th the
then
th calculation
l l ti is
i more
complex and requires crosselasticities of productivity of
different media.
Studios Media Mix
862862
• A simple answer using the
preceding graph would be
• $C on radio
di spend
e d
•$B on TV spend
•$A on billboards spend
[revise]
862
865
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P,
2005
*
Advertising Productivity of Media (Schemati
Radio
Audience
size,
revenues
TV
Billboards
A
B C
• Furthermore, this is not a
marginal analysis
• A, B, and C an incremental
dollar spent results in less
than a dollar incremental in
revenue.
$ Advertisement Spend
863
866
[revise for magazine]
143
Effectiveness of Media
Absolute and relative
advertisement productivities
will vary according to:
• Product and its attractiveness
• Fit of the medium with target
audience
• Effectiveness of ad
867
• The 3-D cube of advertising
value shows average CPMs for
different media which explained
b three
by
h factors:
f
•targetability,
•sensory intensity,
•interactivity.
870
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
The Cube of Advertising Value
Source: “Theatrical Market Statistics:2007.” Motion Picture Association of America. Last accessed on 14 Mar.
2008 at
htt //
/2007 US Th t i l M k t St ti ti R
t df
30
(%)
Film Advertising Mix in Different Media
25
Newspaper
Network TV
Spot TV
Internet/Online
Trailers
Other Media
Other Non-Media
20
15
10
5
871
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
• Shifting ad dollars from print
publications to their online versions
• Studios purchase big blocks of
online advertisement space
long-term
term
• Fox Searchlight has a long
contract with the New York Times
Online in which they for the same
space with rotating ads.
0
2001
2003
2005(Year)2007
Source: “Theatrical Market Statistics:2007.” Motion Picture Association of America. Last accessed on 14 Mar. 2008 at
http://www.mpaa.org/2007-US-Theatrical-Market-Statistics-Report.pdf.
872
872872
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344
144
• Miramax, whose movies target
an older, more affluent audience
and uses newspapers more than
other studios.
• Sony
Son allocated a small share
(11.5%) in 2005 of marketing
budget to newspapers.
Optimizing Models of
Advertising Budgets
• One can model an optimal
advertising budget
•Optimal size of budget
•Optimal allocation among
media
873
873873
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344
Reach versus Frequency
• Trade-off of reach and frequency
• Must decide whether to have the
message be
b seen or heard
h d bby
more people (reach) or by fewer
people more often (frequency).
876
Computers in Media
Planning
• Advanced planning models have been
around since at least 1963.
• Limited success.
success
• Programs based on linear
programming, simulation, and iteration
have been adopted
874
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Optimal Advertising Mix
• Requires
•Information about the
g
audiences of each advertising
vehicle
•Complex model to optimize
exposure to target audience
875
877
Advertising Reach and Frequency
Models
•Examples of media mix models:
• ADplus
–Nielsen SAVIE
• Adware
(formerly
• IMS
AdExpress)
• Media Control –Tapscan
T
by Control G
–Telmar
Software
–TVscan
• Media
Management –TV Conquest
Plus
878
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
145
*
*
Media Mix Modeling
Media Mix Modeling
Media Mix modeling was invented
by a database marketing company
in 2005
2005.
Originally Media Mix optimization
was only used by a few industries
(pharmaceuticals financial
(pharmaceuticals,
services) but now it is becoming
more widespread.
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
879
*
882
*
*
Media Mix Modeling
Drawing on databases, it
mathematically forecasts the most
effective advertising schedules
(and hence, most effective
advertising budgets)
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
880
Nielsen Savie
• Windows-driven system
• The system allows Nielsen clients to
identify specific cable TV systems
that reach their target demographics
• Contains a schedule maker for
building a spot media plan.
Stern,Christopher. Nielsen gets SAVIE.1993.
http://findarticles.com/p/articles/mi_hb5053/is_199304/ai_n18361348/
883
*
Media Mix Modeling
Nielsen Savie
Media Mix Models plan advertising
campaigns across a range of
media
media.
Multiple schedules can be created
for combinations of mixed media.
SAVIE – Strategic Audience
Value Identification and
Evaluation
Integrates ratings, geographic,
demographic and product-usage
information on local cable
http://www.telmar.com/ZA/?page_id=418
881
Moss Linda. Multichannel News “A.C. Nielsen buys AdExpress 884
Jan
1993
146
Nielsen Savie
A C Nielsen purchased the
spot cable software system
f
from
AdExpress
AdE
iin 1993
Identifies spot cable
opportunities
Moss Linda. Multichannel News “A.C. Nielsen buys AdExpress 885
Jan
1993
*
*
888
Tapscan
End-to-end cross media
platform that streamlines
media buying and selling
Eliminates paper based
processes and cuts the time
needed to buy and sell
advertising
886
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=428599
http://www.bentley.edu/cmt/documents/tapscan.pdf
889
Tapscan
Software tool used by media
planners (ad agencies) to decide
the placement of their client
client’ss
radio commercials
Research, Plan, Buy and Post
radio campaigns
http://www.bentley.edu/cmt/documents/tapscan.pdf
887
http://www.bentley.edu/cmt/documents/tapscan.pdf
890
147
*
*
Tapscan
Telmar Webplanner Interface
Evaluates cost and radio
station data to provide
information for improvement
in efficiency and
effectiveness
http://www.bentley.edu/cmt/documents/tapscan.pdf
http://www.telmar.com/US/?page_id=1080
891
894
*
Advertising Reach and
Frequency Models
Telmar Scheduling
• The Telmar program computes
various media mixes for TV and
radio
di at diff
different TRPs.
892
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
*
*
• Bass diffusion model is
appropriate for forecasting sales of
an innovation for which no closely
competing alternatives exist in the
marketplace
• Bass model attempts to predict
how many consumers will
eventually adopt the new product
and when will they adopt
Telmar Webplanner
Evaluate individual web
campaigns
View media expenditures by
Website type
Review individual site R/F as
well as by type or genre and
total schedule
895
Source: http://www.telmar.com/ZA/?page_id=418
893
148
Life Cycle
• For media products and
high-technology products,
lif
life-cycles
l can be
b short
h andd
intense
897
900
Implications of Product
Cycle for Marketing
Management
• Different strategies for each
phase
901
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Product life cycles
IX.4. Marketing
and the Product
Life Cycle
Introduction
Growth
Maturity
Decline
Sales
Time
899
Lamb, Hair, McDaniel, “Marketing,” Cincinnati, Ohio: South-Western College Publishing. 1996.
149
In the early stage, (#1),
Introduction to Customers are
“Innovators”
• Fundamentally committed to new
technology or style
Introductory Phase
• Market leadership strategy:
• give away product to build market
share loyalty (Google
share,
(Google, AOL)
-Technology as toys
-Style as creativity
• Often no money
but influence
903
906
http://www.iccwbo.org/home/news_archives/2002/images/thinking%20man_b.jpg
Stage 1. Introductory Phase
• Sales Ç
• Profits negative
• Few competitors
• Costs high
• Price high
904
• James O. Peckham estimated that the
average share of advertising to sales
ratio necessary to launch a new
product successfully is approximately
1.5-2.0.
• This means that a new entry should be
spending at approximately twice the
desired market share
907
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
In the Introductory Phase:
• Marketing costs high
•High dealer margins to
obtain
bt i di
distribution
t ib ti
•High advertising costs
•educational effort required
905
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
150
As the product takes off,
customers are “Early Adopters”
(Stage #2 Growth)
• Have influence
because they often
have money
The product is itemized for
mass market. “Early Majority”
(Stage #3 Maturity)
• Make the bulk of purchases
• Adopt technology only
when proven, style
only when established
909
912
Geoffrey A. Moore, Inside the Tornado, 1995, HarperBusiness, New York, page 16
http://direct.motorola.com/HelloMoto/assets/images/countryselect_circle_woman.gif
http://www jrn columbia edu/admissions/visiting/grand central station jpg
2. Growth Phase
Sales Ç
Profits Ç
Competitors Ç
Marketing Strategies: Shift from
generating primary demand to aggressive
brand specific advertising.
• Distribution key to establishing position
• Example: Mobile Wireless ca. 2002
•
•
•
•
3. Maturity Phase
• Slow growth
• Profits stable, decreasing
• Consolidation
C
lid i beginning
b i i
• Distinction segments
• Prices stabilize, decline
910
913
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Maturity Phase
• Market saturation, longest phase
of life cycle
• Stylistic
y
rather than functional
modifications
• Heavy consumer promotion to
maintain market share
914
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
151
The product peaks and
declines. Last to join are the
“Late Majority” (Stage #4,
Decline))
Maturity Phase
• Dealer margins shrink,
promotion to dealers to
p
retain loyalty
• Example: Mobile Wireless
post 2004
915
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
918
Geoffrey A. Moore, Inside the Tornado, 1995, HarperBusiness, New York, page 17
• Marketing strategies to sustain maturity
phase:
• Promotion of more frequent use of
product
• Find new uses for product
• Pricing
P i i below
b l market
k price
i
• New distribution channels to reach
new markets
• Adding elements to product mix
• Raise network effects
916
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
• Pessimistic about product’s value
• But so along because they don’t
want to lose out
• At that stage
4. Decline Phase
• Long-run drop in sales
• Profits decline
• Marketing Strategies: Niche
marketing targets narrow
segments of market.
Non-essential marketing
dropped
• Example: AOL
919
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
• Some stages are “profit taking”
brands, or “under-spenders”
• Others are “investment brands”,
those whose share of advertisers
is above their market share,
“over-spenders.”
920
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
152
For details see
Appendix K:
Marketing and
the Product Life
Cycle
• What would be the product
stages for “Fly & Sky”
M
Magazine?
i ?
• How might “Fly and Sky’s”
marketing change over its
life-cycle?
924
922
Case Discussion: Condé
Nast
• How does the promotional
message
g for “Flyy & Sky”
y
change as the product
matures?
923
153
Promotion
to
Advertisers
• Account executive salaries are
usually commission based. The
flat rate before commission is
called draw.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
930
Sales Staff
Steps in Promotion of a
Media Outlet to Advertisers
• A Sales Manager supervises the sales
team and reports to a general manager.
• The individual sales person is called
an Account Executive and their job is
to persuade prospects (prospective
clients) to buy advertising spots or
space.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
Ad Sales Process Participants
Advertiser/Ad
Agency
Media Outlet
Sales
Media Director Ad
Di
Director
Media Buyer/
Media
Coordinator
Ad Sales
Representative
929
http://marketing.about.com/od/exploremarketingcareers/l/bladvsalesdir.htm
931
• Reps have various branches in
major outlets and advertising
centers (National reps: >3 major
outlets, Regional: 3 or less).
• Radio and Cable reps receive about
15% commission on revenue. TV
ranges from 7% to 15%.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
932
154
Local Stations’ Ad Sales
• National advertisers would have to
dealing with thousands of account
executives for each station. This is
t costly.
too
tl
• Instead, stations with contract with
advertising representatives (reps).
• FReps
are independent firms.
Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
Brokerage
• Brokers, 3rd party companies, buy
big number of TV spots at
discounted prices from stations and
resell them individually for profit
profit.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
1. Spread the word
•
Marketing the media outlet to
create awareness
934
• Promotion of advertisement in
cable channels is placed in
trade
d magazines,
i
suchh as
Advertising Age
Source: Behind-the Scenes as TV Guide Channel Prepares for Upfront,
Media Village 2005
936
2. Developing a Prospects
Database
• Identify the media buyer- the
person who makes the buying
decision for advertising
purposes-for each potential
advertiser
• Large companies use ad
agencies
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a Nutshell”.
MagazineLaunch.com. 14 February 2005. <http://www.magazinelaunch.com/article/articles/49/1/The937937
Advertising-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
Developing a Prospects
Database
• Rent mailing list (Dun &
Bradstreet, etc.)
• Yellow pages
• Google
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a Nutshell”. MagazineLaunch.com. 14
938938
February 2005. <http://www.magazinelaunch.com/article/articles/49/1/The-Advertising-Sales-Process-for-MagazinePublishers...in-a-Nutshell>
155
3. Making contact
Preparing a Proposal
• Send-out letter introducing the
media product and its audience.
Samples may be attached.
• Follow-up on request for
appointment
• Must send a complete media kit.
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a Nutshell”. MagazineLaunch.com. 14
939939
February 2005. <http://www.magazinelaunch.com/article/articles/49/1/The-Advertising-Sales-Process-for-MagazinePublishers...in-a-Nutshell>
4. Preparing a Proposal
• Define the advertising product
to be sold
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a
Nutshell”. MagazineLaunch.com. 14 February 2005.
<http://www.magazinelaunch.com/article/articles/49/1/The-Advertising-SalesProcess-for-Magazine-Publishers...in-a-Nutshell>
942942
Research
• Proposal must coincide with potential
customer’s advertising goals
• Includes ad size and frequency
suggestions based on prospect
prospect’ss
budget and needs
• Includes price of the ad based on the
rate card and possibly special offers
for the client
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a Nutshell”. MagazineLaunch.com.
14 February 2005.
940940
<http://www.magazinelaunch.com/article/articles/49/1/The-Advertising-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
• Magazines must be able to show
that ad dollars are effective
Source: Media management : a casebook approach / Stephen Lacy et al.,
L. Earlbaum Associates, Publishers, 1993.
943
Types of Newspaper Ads
• Cable channels, such as TimeWarner’s channel The Cartoon
Network create advertisement
Network,
packages that they sell to advertisers
• These packages include events,
promotions, online, on-air activity,
marketing and production
Source: Advertisers toon into kids TV networks, B&T Weekly 2005
941
• Business Card Ad
• Coupon Ad
• Sale Ad
• Spotlight Ad
• Information Ad
944944
http://retail.about.com/od/marketingsalespromotion/a/effective_ads.htm
156
Advertising Page Layout
With Ad Sizes
Advertising Rate Cards
945
948948
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_8.htm
Advertising Rate Cards
• A rate card is a document
provided by the media company
featuring the organization
organization'ss rate
for advertising.
946946
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
Newspapers Advertising
Products
• Sold by Column-inch
• Quantity discounts
• Classified for consumer market
• Zoned part-run: printed on a page and included
in editions slated for a particular area
• Preprints or inserts: advertising that is printed
separately and inserted in a newspaper
949
Advertising Rate Cards
• It may also detail any deadlines,
demographics, policies,
additional fees and artwork
requirements.
947947
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
• At standard rates, a black-andwhite full-page ad costs
$132,678 (Sunday $148,680) in
the New York Times, whose
circulation is 1.13 million.
950
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
157
• Cost per black-and-white
column inch for Sunday costs
$1,180 for the New York Times
and $1,050 for the Los Angeles
Times.
• It may a take a year to sell an ad
to an advertiser may take up to
one year dependent
951
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
Calculating Display Ad
Rates Per Column Inch
952952
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_7.htm
• The account executive then
follows through servicing the
account to follow up on the
contract.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
955
5. Closing the Sale
• Can be done via the phone/email
as soon as the advertisers sends a
positive response such as an
“insertion order”-a purchase order
specifying ad size, issues where
the ads will run, and price of the ad
Woodard, Cheryl. “Advertising Sales Process for Magazine Publishers…in a Nutshell”.
MagazineLaunch.com. 14 February 2005. <http://www.magazinelaunch.com/article/articles/49/1/The953953
Advertising-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
158
Selling Time on Local
TV
TV Ad Services offered to
Advertisers by Station
•
•
•
•
•
•
•
Sponsorship of program
Local ads
National ads
Time Block
Voice-overs and logos
Spot Buying of commercial slot
Upfront Buying
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 416, 1998 960
Local TV Time Sales
• Local TV stations have to ‘sell’
themselves to local merchants
and advertising companies.
• They have either an in-house or
contract sales team.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
958
• Magazine audiences are
appealing because specialized
publications deliver readerships
that are tightly focused by
demographic.
961
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
Who advertises on local
stations?
•Local advertisers
•National advertisers seeking
targeted geographic markets
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 424, 1998 959
159
• Google brokers online ads
• tries to establish itself as a
middleman for purchasing TV
spots.
Selling Ad Space Online
966
Selling Ad Space Online
Google AdSense:
Company: Mediabids.com
• Advertisers’ auctions- bid
provided by publications
• Ad Space offers
• Sends-out RFP to
publications for advertiser’s
http://www.mediabids.com/about_us/pub/aboutus.jsp
• Google’s media ad program
also for radio and TV market
($68 billion local TV ad
market).
964
David Kaplan, Google’s Local Media Ad Program Raises Revenue For Print, Radio 967
Can TV Be Far Behind?, Mar 2007
http://www.paidcontent.org/entry/419-googles-local-media-ad-program-raises-revenue-for-print-radio-can-tv-be/
Selling Ad Space Online
Actual deals
Advertiser’s Auction:
• Advertiser posts ad budget
• Publisher makes an offer
(bid)
• Winner is selected at the
auction’s close
• Bidders are notified of results
• Google promised a minimum of
$900 million in advertising
revenue by advertisers to News
Corp websites and other media
Corp.
properties sites (primarily
MySpace) for using Google
search technology.
965
Wall Street Journal, March 2007 @
968
http://proquest.umi.com/pqdweb?index=4&did=1229585181&SrchMode=1&sid=3&Fmt=4&VInst=PROD&VType=PQD&RQT=309&VName=
PQD&TS=1173992239&clientId=15403
160
Google AdSense
• Google changes how TV
commercials are sold and
delivered to viewers, challenging
th traditional
the
t diti l TV andd advertising
d ti i
powers by selling to advertisers
ads across all media.
969
• Google’s Print Ads program has
produced big ad revenues for
newspapers.
• 50 major
j newspapers in
i U.S.
US
(Gannett, Tribune, NYT, Wash
Post) and over 100 local
newspapers involved.
972972
David Kaplan, Google’s Local Media Ad Program Raises Revenue
For Print, Radio Can TV Be Far Behind? Mar 2007
eMedia Exchange: Reverse
Auction
• eBay allows cable networks
to confidentially bid on
advertising spend by agencies
970
http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003381510
eMedia Exchange
• Buyer submits budget for
packages of time they want to buy
• Sellers would bid on a reverseauction process
• Only the buyer would know who
all the bidders are; sellers will be
informed of who the winner is
Bulk Advertising
vs. Spot Advertising
971
http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003381510
161
• TV network inventory can be sold
using two methods:
• 1- upfront: to get the best spots,
agencies buy specific spots at
specific program times
times.
• 2- scatter: agencies buy the
‘remains’ from upfront selling.
They often get reduced prices.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”.
Perspectives on Radio and Television. University of Florida 4th Ed
975
This paved the way for
Upfront Buying:
Networks offer advertisers time
slots (called avails) at a
discount months before the
season begins.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998 976
Timeline-Upfront Buying
• Networks usually begin
selling primetime avails in
May
ay for
o following
o ow g seaso
season..
• Buying for Saturday morning
children’s programming can
be as early as March.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998 977
• The buying season for
network daytime slots starts
in early summer.
• Upfront buying season for
Network News begins in
summer.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998 978
Figures-Upfront Buying
Networks sell approx. 65 – 75
% of prime-time avails upfront
at a 15% discount.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998 979
• Network & advertiser
negotiate on Cost Per
Thousand households or
viewers (CPM)
• Network/Advertiser negotiate
on list of shows, dates and
expected ratings
980
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421-422, 1998
162
•Advertiser commits to time.
As a rule commitment is flexible
The larger the commitment, the
greater amount of flexibility in the
deal. (i.e. Option to cancel up to
25% of order for first quarter)
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998 981
Newspaper “Open Rate”
Advertising
• Newspapers offer an open rate
without discounts. This is the rate
that you would be charged for
running a single, one-time
advertisement. This is referred to
as the non-contract rate.
982982
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_5.htm
Open Rate vs. Bulk-Space
Contracts
• A discount offered by a
newspaper for an advertising
commitment to a certain number
of ads within a specified time
period, is called a Bulk Space
Contract.
983983
http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_5.htm
Promoting Cable Channels
to Advertisers
• Around 35% of all cable channel
advertisements are pre-sold in the
upfronts
• Cable channels have sales executives
that try to convince advertisers to
advertise in their channels
Source: Stakes rising in Cable TV's sports battle, Advertising Age 1998;
Upfront Preview, Cable World 2005
984
Promoting Cable Channels
to Advertisers
• First, the big cable channel
companies, such as MTV or NBC
will close deals in the upfront
• Afterwards smaller channels, such
as Court TV or the weather
channel try to sell their ad space
985
Source: Cable Clicks in Upfront, Broadcasting & Cable 2004
Cons of Upfront Buying
Networks
Loss of revenue due to 15%
discount
Make goods if audience is not
Make-goods
delivered
Agencies/Advertisers
Make-Goods may put their ads
on the wrong programs
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998
163
Pros of Upfront Buying
Networks:
• Money is on the books early
Agencies/Advertisers:
g
• Upfront buy assures best
possible time slots
• 15% discount
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998 987
Advertising on Network
Sports Programs
• Sponsorship vs. Spot Buying
• Exclusivity within product
categories is primary concern
of advertisers
http://www.tal.org/~milang/mis
cpics/sponsor.jpg
990
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998
Upfront Buying
Structure-Sports Events
• Ad agencies register their
clients’ budgets with network
• And register request for a
package of shows for each of
their clients
• Many sports programs are sold
on a series basis – an advertiser
has a spot in some or all of the
games in a season.
• Strip Sponsor – advertiser with 1
or more spots in each game.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998 988
• Network responds with
proposal including:
-Number of slots
-Programs
-Air Dates
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998 989
991
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423-424, 1998
Sports Events
• Contracts negotiated far in
advance of broadcast
• Contracts run for more than one
year
• Selling starts soon after rights to
sports events are bought
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998
164
Costs of Spots during
Sports Events:
Weekend Bowling: $20,000
NFL Broadcast: > $500,000
Super Bowl: > $2 million
http://images.google.c
om/images?hl=en&lr=
&q=Super+Bowl
http://images.google.com/i
mages?hl=en&lr=&q=NFL
993
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 424, 1998
Be prepared
Multiple Ads on Cable TV
• Cable TV may associate with an
interconnect. Advertisers then
place an ad on multiple cable
channels together.
• Cable ads are generally multichannel.
994
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”. Perspectives on Radio and
Television. University of Florida 4th Ed
• Learn about what the customer sells
• Identify the retailer’s customer base
• Determine the customer’s
marketing
k i strategy
• Find out how the business is
performing
• Research the customer’s
competitors
997997
http://www.naa.org/advertising/pdf/retail.pdf
Promotion to
Retailers and
Intermediaries
995
165
Book Publishers Target
Retailers and Bulk Buyers
B2B Marketing
• B2B marketing strategies are
different from B2C strategies in
a number of essential ways.
• For example, B2B marketing
uses personal relationships and
connections as a primary selling
tool.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business
Marketing, 2007.
999
• Presence at trade shows
• Visits to:
Book fairs
•Book
•Book stores
•Retail chains
•Libraries
•School districts
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
10021002
1002
The Sales Rep
• This is not common in B2C
because the marketing
executives
ti
do
d nott have
h
a
personal relationship with the
large consumer base.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing, 2007.
1000
• B2B marketing also uses
personal selling tactics for this
reason.
• This would not be feasible in
B2C marketing because there
are too many people that are
being attracted to the product.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing,1001
2007.
• Reps cover geographic areas that
range from part of Manhattan to a
whole state.
• The reps are the publishers sales
and marketing liaisons with the
retail and super stores.
Greco, Albert N. “Market Practices and Procedure”. The Book Publishing Industry.
1003
10031003
Chapter 7: p 173-215. Viacom Publishing, 1997.
• In the mid 1990s, a book rep’s
median income was in the low to
mid $30000+bonus+benefits.
• The reps receive training and
uunderstand
de s a d thee of
o thee titles
es they
ey will
w
promote, and attend a National Sales
Conference.
Greco, Albert N. “Market Practices and Procedure”. The Book Publishing Industry.
10041004
Chapter 7: p 173-215. Viacom Publishing, 1997.
166
Sales force of book publisher
• There are scale economies for a
sales rep to cover several books
from a publisher’s list in a
session with a retailer
• but a large list reduces
effectiveness.
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.
10051005
Cambridge: Harvard University Press, 2000
• Publishers: often passive
•Too many titles, will push only
a few
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.
10061006
Cambridge: Harvard University Press, 2000
College publishing has high profit
margins
• College texts are the most profitable
line in the book publishing industry
• Price insensitivity:
• cost of textbooks is typically small
relative to tuition
• Textbook publishers typically issue
new editions every few years
10071007
• Marketing costs are a major
expense, generally representing 25%
of an el
el-hi
hi publisher revenues
1005
Books Promotion
•
Textbooks
1007
10081008
1008
• 22 states use the state
adoption method
• buying all books at the same
time according to a schedule
• Concentrate on price
10091009
1009
• Print reviews and promotions have
limited influence: airplay on
broadcast media is the key.
• Record companies focus on
promotion to broadcasters.
• Music companies call radio stations
and encourage to play promotional
copies
• 12,000 commercial radio stations in
US
10101010
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 24
1010
167
• Strong incentive for broadcasters
to “sell” airplay to record
companies:
- “payola” results is a bribe paid
in order to influence
infl ence a
gatekeeper’s choice
10111011
1011
Consumer Electronics
Marketing
• Part of marketing campaign is
to train retail sales people, so
that
h these
h
kknow products
d
and
d
can explain features to
customers
10141014
1014
Source: Toshiba Kicks Of! HD DVD Promo Tour, Twice 2006
Consumer Electronics In-Store
Marketing
• In-store info had greatest
influence on final purchasing
d ii
decisions
for
f consumer
electronics (Decision Analyst)
“Who Needs Friends? Study finds P-O-P stronger influence than word-ofmouth,” P-O-P Times Dec. 2005: 78.
1012
Consumer Electronics
Marketing
• B2B marketing also tends to
focus on more complex
products and systems
systems.
• B2C strategies are usually
simplistic and easier for the
general public to understand.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing, 2007.
1015
Corporate Promotions
• Trying to influence retail
sales people of big stores, so
that
h these
h
recommendd
products of company that
trained them
10131013
1013
168
*
*
Examples of Corporate
Promotions:
Advantages: Corporate
Events
No competitor distraction
Easier to convince an
existing customer to come
for the event
-Corporate Events
ade shows
s ows
-Trade
-Corporate Gifts
-Corporate Blogging
http://directmag.com/b2b/marketing_event_marketing_direct/
*
*
Corporate Events : Checklist
Trade Shows
Taking advantage of an event
Increase visibility
Trade Show pop up displays
Trade Show Banners
Inexpensive in comparison to face
to face marketing
Key customers ?
Key Media for publicity?
Follow-Ups?
http://specialevents.com/mag/meetings_making_sale_corporate/, Feb 1, 2010 1018
*
1020
*
Advantages: Corporate
Events
Shaped to meet the needs of
audiences
Focused selling time
Customers have time to
reveal their business
problems.
http://directmag.com/b2b/marketing_event_marketing_direct/
1021
http://www.yousaytoo.com/diverse-methods-in-marketing-your-business/206902
Trade Shows
1019
110 million people attend
4,000
,
trade shows in the US
and Canada
Opportunity to meet and talk
to many high-value
http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
prospects
1022
169
*
*
Trade Shows : Statistics
Corporate Gifts
Attendee spends 9.2 Hours at
a 2-3 day
y trade show
86% new contacts
77% will remember company
http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
1023
Brand Recognition
Brand visibility
Transported to places –
increasing visibility
http://ezinearticles.com/?Using-Conference-Folders-As-the-PromotionalProduct-of-Choice&id=3458850
1026
*
Trade Shows : Statistics
Parameter
Trade Show
Field (Sales Call)
Cost per lead ($)
212
308
Cost per sale ($)
705
1140
Sales
Costs are lower in a trade show !
http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
*
*
1024
Variables Affecting Trade
Shows
What is Sales?
The sales process is everything
that you do to close the sale
and get a signed agreement or
contract
http://marketing.about.com/cs/advertising/a/mrktingvssales.htm
1025
Assessing Trade Show Functions and Performance: An Exploratory Study, by Roger
A. Kerin and William L. Cron
170
The Main Function of a Sales
Department
Attract and retain customers
Increase the sales volume per period of time
Find appropriate persons/agencies to carry out
the sales activities
Help marketing department in meeting the
forecasted sales volume
Sales people training and motivation
http://wiki.answers.com/Q/What_is_the_functions_of_sales_department
Sales As a Part of
Marketing
Marketing
Inbound
Market Research
Outbound
Sales
Advertising and
Promotions
PR
http://www.managementhelp.org/mrktng/mrktng.htm
http://www.better-sales-and-selling.com/image-files/salesprocessmodel.jpg
Sales Channels
Sales channels are the means by
which selling organizations reach
their marketplace and audience.
They are used as bridge between
the product or service offering and
the segments of customers
Marone, Mark; Lunsford, Seleste. Strategies That Win Sales : Best Practices of the World's
Leading Organizations.Chicago, IL, USA: Dearborn Trade, A Kaplan Professional Company,
2005. p 18.http://site.ebrary.com/lib/columbia/Doc?id=10070408&ppg=41Copyright © 2005.
Dearborn Trade, A Kaplan Professional Company.
Sales Channels
Firms use multi-channel sales organization to
reduce cost or meet customer expectations
Sales Channels:
Field sales force. Face-to-face sales professionals
who build customer relationships
Inside sales force. Telephone-based sales
professionals who conduct business over the
telephone
http://edu-action.com/blog/wp-content/uploads/2009/10/sales-process.jpg
Marone, Mark; Lunsford, Seleste. Strategies That Win Sales : Best Practices of the World's
Leading Organizations.Chicago, IL, USA: Dearborn Trade, A Kaplan Professional Company,
2005. p 18.http://site.ebrary.com/lib/columbia/Doc?id=10070408&ppg=41Copyright ©1034
2005.
Dearborn Trade, A Kaplan Professional Company.
171
Sales Channels
Telemarketing groups. Outbound
telesales professionals typically
assigned to transactional sales or
prospecting activities
Indirect sales force. Third parties, such
as distributors, resellers, retailers, and
agents, used to reach end customers
and increase market coverage
Marone, Mark; Lunsford, Seleste. Strategies That Win Sales : Best Practices of the World's
Telemarketing
Sales
1035
Leading Organizations.Chicago, IL, USA: Dearborn Trade, A Kaplan Professional Company,
2005. p 18.http://site.ebrary.com/lib/columbia/Doc?id=10070408&ppg=41Copyright © 2005.
Sales Channels
E-commerce. System that allows
customers use the Web to make
p
purchases
Inbound call centers. Centers staffed
by service representatives who upsell or cross-sell customers
Marone, Mark; Lunsford, Seleste. Strategies That Win Sales : Best Practices of the World's
Leading Organizations.Chicago, IL, USA: Dearborn Trade, A Kaplan Professional Company,
1036
2005. p 18.http://site.ebrary.com/lib/columbia/Doc?id=10070408&ppg=41Copyright © 2005.
Dearborn Trade A Kaplan Professional Company
When to use Telemarketing
• When additional specific data
from customers are necessary for a
sale
• When a list of target customers is
available
• When approaching current clients
about service changes or upgrades
Disadvantages of
Telemarketing
The conventional
subordination of sales
(tactical and down-market)
down market)
to marketing (strategic and
clever) is coming to an end
• Inaccurate and incomplete
lists
• Time constraints
• Legal restrictions
Sissors, Jack, et al. Advertising Media Planning. New York: McGraw Hill, 2002, p.
245
172
Contracted Telemarketing
Campaigns
• Contracted telemarketing (vs. Inhouse)
• Allows short-term commitment
• Avoids HR expenses
• Minimal time resource usage for
company
Drawbacks to Contracted
Telemarketing
• Less control over message and
its delivery as unauthorized
• Image problems from
unprofessional as contacts
• Higher cost for extended
campaigns
• Single telemarketer can reach 30-50
prospects per hour
• A fairly low success rate is acceptable
• 3-8% is generally profitable
• Success rates increase with quality of
leads
1044
Industry
• 5,000 Telemarketing bureaus in
the US, employing over 340,000
workers
• Plus, ad-hoc efforts
• Outsourcing is a growing trend
1045
“Telemarketing: Five Industry Centres,” Issues in Labor Statistics. December 2006.
Frequent use of Telemarketing
by media
Only Limited Use of
Telemarketing by Media
•
•
•
•
•Film and TV programs
•Music
M i
•Consumer Electronics
Telecom
Internet
Cable
Local Newspapers
1043
173
Telemarketing of Service
Long Distance
• Once done primarily by
contracted firms
• Problems with unauthorized
service transfer (Slamming) led to
companies taking over their own
telemarketing departments
• Slamming hurt companies’
reputations
1047
Omaha is the Center of US
Telemarketing Why Omaha?
• Telephone bandwidth is cheap in
Omaha
• Omaha is the center of communications
for the US military, and
• the government built massive trunk
lines around the area
Why Omaha? (cont)
• Cost of living and relatively
labor cheap
• English spoken with neutral
accent
• Central time zone allows for
calling to all areas of the country
Regulation
• Regulation is increasing
• State and national “Do not call”
list
1050
http://i.cnn.net/cnn/2004/LA
W/02/17/do.not.call.ap/story.
do.not.call.jpg
Telemarketing Service Buying
• The rate is more commonly in the
range of $25 to $60 per hour, but
can decreased to $10 per hour for
discount priced offshore
discount-priced
companies
1051
http://www.buyerzone.com/marketing/telemarketing/buyers_guide8.html
Telemarketing Service Buying
• Commissions range from 1% 10% of revenues generated.
• Companies
p
that do not offer
commissions to TSRs pay a
higher base hourly charge.
1052
http://www.buyerzone.com/marketing/telemarketing/buyers_guide8.html
174
Telemarketers
• Generally young
• Often taken as a second job
• Many
y ppeople
p dislike the work and
quit
i within
i hi two weeks
k
• Those who stay will usually miss
more work than average
employees
• Quality management is necessary
Major Offshore Locations for
Telemarketing
1) China
2) India
3) Philippines
4) Mexico
5) Jamaica
1056
Top 10 Call Center
Companies (2006)
1. Teletech
2. Convergys
3 ClientLogic
3.
Cli tL i
4. 24/7 Customer
5. PeopleSupport
6. vCustomer
7. eTelecare
8.
8 OKS Group
G
9. TelAssist
10. Stream Int’l
http://www.theblackbookofoutsourcing.com/top10callcenters.html
1054
Teletech
• Teletech has 40,000 employees in
its US offices and more than 85
call centers in over 15 countries.
Its sales in 2006 were $1.21B, an
11.5% growth from 2005.
• Teletech main headquarters in
Englewood, CO
1057
VII. The Impact
of Information
Technologies on
Marketing
1058
175
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecasting
g
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
VII.1. Customized
Advertising
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
1062
Individualization
The Impact of New
Information Technologies
• Customization
• Ubiquity
• Immediacy
• Interactivity
• Telemarketing
• New Tools (Internet)
• Tracking of Product (RFID)
1060
For details see
Appendix E:
New Information
Technologies
1061
• “Mass customization”; “1:1
marketing”
• Direct relationship with the
customer
• Leads to the end of mass
advertising?
1063
Differentiating TV Technology
• Special feeder channels for ads
• Digital TV could become a combination
of program channels plus a dozen
advertising feeder channels.
• Supported by software which decides
which ad to play to the specific
household.
1064
176
*
Example: BSkyB Introduces
Smart TV by 2011
Each TV Set will be sent specific
ads based on owner’s age, sex,
usage, lifestyle habits
Match the seller with the perfect
customer
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=tr
ue&risb=21_T8577074912&format=GNBFI&sort=RELEVANCE&startDocNo=1&re
sultsUrlKey=29_T8577074915&cisb=22_T8577074914&treeMax=true&treeWidth=0
1065
&csi=334988&docNo=1
• Levels of targeted advertising
can be on different levels,
depending on
• Leads to shift in production
strategy: from generic mass
products to tailoring products for
particular customers.
• Impact:
I
t
•higher prices
•Higher sales
•Higher cost
1068
• Product “customization”
strategy is also a price
discrimination strategy
•area
•demographics
•personal
1066
Zone Targeting
•Fine-tuned geography by
neighborhood
•But advertising community
generally seeks individual
household targeting rather than
geographic targeting
1067
1069
• Companies must find ways to
protect their customers’ privacy
while implementing one-to-one
marketing.
Steinbock, Dan. “Consumer Marketing on the Web”. The Birth of Internet
Marketing Communications.
1070
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
177
*
Internet as a Marketing Tool
Personal Targeting
• Amazon.com suggests books
to the customer based on
previous purchases
• How do online advertisers
know what to advertise to
eachh internet
i t
t user??
-Cookies help them track
user activity.
http://www.cluteinstitute-onlinejournals.com/PDFs/839.pdf
1071
Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”
(www.scottish-enterprise.com/ebusiness)
1074
*
Online Targeting
Local Targeting
• online marketing provides the
ability to track, measure, and
t target
to
t
t marketing
k ti
campaigns.
• A pay-per-click model that
allows specificity of location
• Yahoo! Local Sponsored
Search allows advertisers to
target by state, city or
neighborhood
1072
Personal Targeting
1075
Dynamic Advertising
• Dynamic advertising in sporting
events (e.g. soccer stadiums) has
been around for some time
• Signs and billboard are often
electronic and can be changed
remotely
• Addressable commercials
are targeted to individuals
within households,
households using
methods of estimating who
within each household is
actually present in the room
1073
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
http://www.businessweek.com/magazine/content/06_12/b3976463.htm
Palmer, Shelly. Television Disrupted: Emerging Advertising Technologies
National Association of Broadcasters, Focal Press 2006
1076
178
Dynamic Advertising
Addressable Dynamic Ads
• Television audience may be exposed
to other banners than the audience in
the stadium
• Broadcaster superimpose banners
over existing graphics in the stadium
Palmer, Shelly. Television Disrupted: Emerging Advertising Technologies
National Association of Broadcasters, Focal Press 2006
1077
Addressable Dynamic Ads
• A more recent technology makes it
possible to customize the
advertisement during delivery
• The advertisement can be
personalized according to
preferences, location, behavior and
interests of the viewer
Palmer, Shelly. Television Disrupted: Emerging Advertising Technologies
National Association of Broadcasters, Focal Press 2006
1078
Addressable Dynamic Ads
• Dynamic addressable ads are
temporarily the most powerful tool
available to advertisers
• Addressable ads can be addressed to
a certain set-top box, computer,
person, household, town, region,
time zone, etc.
Palmer, Shelly. Television Disrupted: Emerging Advertising Technologies
National Association of Broadcasters, Focal Press 2006
1079
• Dynamic ads are not necessarily
addressable ads and vice versa,
however, combining the two
concepts can create a powerful
instrument
• Advertisers are enabled to deliver
relevant advertising content
Palmer, Shelly. Television Disrupted: Emerging Advertising Technologies
National Association of Broadcasters, Focal Press 2006
1080
Behavioral Targeting
• Using a profile of prior behavior
on the part of the viewer to
determine which ad to show
during a given visit.
http://en.wikipedia.org/wiki/Ad_serving#Ad_targeting_and_optimization
1081
Behavioral Targeting
• Behavioral targeting is the most
effective form of targeting available.
It allows re-targeting to the most
desirable audience,
audience which is based on
the idea that users’ actions suggest
what type of advertising they might
be receptive to.
http://64.233.169.104/search?q=cache:f2KAxn7yJwJ:www.clickz.com/showPage.html%3Fpage%3D3330751+aQua
ntive+behavioural+targeting&hl=en&ct=clnk&cd=2&gl=us
1082
179
Geo-Targeting
Behavioral Targeting
• Reaches customers whose Web-surfing
patterns and behavior indicate a potential
receptiveness to customized offerings for
advertiser’s
d ti ’ products
d t andd services
i
• IP addresses make it possible to follow
the behavior of customers surfing the
web
there are many Geo-IP solutions
providers that sell licenses, and there
are API’s that automatically detect an
end user’s city, country or region.
While this option is relatively
inexpensive, it does require some level
of monitoring and resource time on
behalf of the website owner.
New Thought Processes for Dealing with a Volatile Market , accessed 3/11/09
Link:http://www.ecsuite.com/articles/global-markets.php
NTT DoCoMo uses Behavioral
Targeting Technology
• Targeted Ad Strategy – Sent Ads
to Financial Times online users
whose web-surfing profile
matched mobile operator’s target
audience profile
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLin
kInd=true&risb=21_T8576845446&format=GNBFI&sort=RELEVANCE&sta
rtDocNo=1&resultsUrlKey=29_T8576845452&cisb=22_T8576845451&tree
1084
Max=true&treeWidth=0&csi=138620&docNo=3
NTT DoCoMo (Cont.)
• Results of targeted advertising:
9 Brand awareness "lift" of 41%
9 Online ad awareness went up by
193%
9 Brand recall increased by 178%
1085
Interactive Advertising
Viewers can press the red button
on an interactive commercial
they are watching to view
additional information and
content about the product they
are interested in
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=tr
ue&risb=21_T8576316651&format=GNBFI&sort=RELEVANCE&startDocNo=1&r
1087
esultsUrlKey=29_T8576316654&cisb=22_T8576316653&treeMax=true&treeWidth
0& i 244777&d N 8
Google AdSense and TV
• In a few years, with customized
TV advertising Google can
control which ads the television
viewers will watch and tailor
them ads according to the tastes
of the consumers.
Raju Shanbhag, Google tests targeted TV ads, TMCnet, March 2007
http://ipcommunications.tmcnet.com/news/2007/03/13/269109.htm
1088
180
• Marketing is often inefficient because it
is difficult to account for results.
• With interactive TV ads, one can
link ad expenditures to results.
Marketer can know whether an
individual received a
communication and how he
responded.
•Most direct mail has
CPM of ~$500
1089
*
Example: Multi-Channel Cable TV
• Viewers can click on an
interactive commercial they are
watching to view additional
information and content about
the product they are interested in
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=
21_T8576316651&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_
1090
T8576316654&cisb=22_T8576316653&treeMax=true&treeWidth=0&csi=244777&docNo=8
• List brokers
• rent mailing lists compiled from
many sources
10931093
1093
Mailing Lists for Magazines
Targeting:
Direct Mail
• Best lists are of those people
who have subscribed to similar
magazines
1094
10941094
Source: James Kobak, "Testing a New Magazine Through Direct Mail," How to Start a Magazine,
M. Evans and
Company, Inc.: New York.
181
Direct Marketing for Books
• For general (“trade”) books, target
readers cannot be easily identified
• Scholarly and professional books
readers can be easily identified and
eac ed in specialized
spec a ed publications
pub cat o s and
a d
reached
mailing lists
• Textbooks, too, have easily identified
audiences
•
For details see
Appendix F:
Ad
Advertising
ii
Targeting
1095
10951095
Source: Caves, Richard E. Creative Industries: Contracts Between Art
and Commerce.
Cambridge: Harvard University Press, 2000
1098
Direct Mail Testing for
Magazines
• “Dry” test - no product actually
published, recipients get only offer
to subscribe to another magazine
• Gives good indication of reaction
to basic concept of magazine
Source: James Kobak, "Testing a New Magazine Through Direct Mail," How to Start a Magazine, M. Evans and
10961096
Company, Inc.: New York.
• Good performance: 2% of magazine
mailings result in subscriptions
• i.e. a mailing to 100,000 potential
subscribers will cost about $50,000,
result in 2,000 subscribers, ($25/sub)
$
• Renewals cost less than $1Acquisition
cost $19
• Cost 8-10 But renewal rate only 30%.
10971097
1097
1099
For details see
Appendix G:
Telemarketing
1100
182
Next-Generation Internet
Marketing
• Virtual Reality
•e.g. Test “drive” a car
online, try on coat.
(http://www.altavista.com/query?mmdo=3&stq=12&nbq=12&stype=simage&what=web&q=porshe)
1101
1. Ads on the Internet
The Internet As
Marketing Tool
http://www.guardianfinance.com/image/internetg
oble.jpg
1104
• Banner Ads
• E-mail ads
• Keyword ads
• Interstitials (Pop-up ads)
• Rich-Media ads
• Sponsored links
1102
1105
The Internet as a Marketing
Tool – Multiple Dimensions
• 1. Ads on the Internet
• 2. New types of uses (targeting,
content))
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting Websites
Interactive Advertising Bureau, “IAB Advertising Revenue Report 2007.” May 2008
1106
183
Podcasting to Promote
Theater
• To capture the younger, techfriendly fan base, Al Pacino
utilized a series of video
podcasts to promote his leading
role in Oscar Wilde’s Salome.
Ascher-Walsh, Rebecca. "Pacino Turns Podcaster as Theaters Boost Web Promos."
1110
11101110
Wall Street Journal 6 May 2006, Eastern ed., sec. P: 2.
• 1. Ads on the Internet
• 2. New types of uses (targeting,
content)
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting
• 7. Websites
aQuantive
• Microsoft owns aQuantive and its Atlas
Division, DoubleClick’s competitor.
• In 2007, Microsoft bought
g aQuantive
Q
for $6 billion for behavioral targeting
marketing purpose.
Shabelman, David. “CGEN Digital chooses Focus Media”, TheDeal.com, December
11, 2007.
http://64.233.169.104/search?q=cache:DVB3W0_CRi4J:www.clickz.com/showPage.
1109
html%3Fpage%3D3627102+mobile+advertiser&hl=en&ct=clnk&cd=13&gl=us
Podcasts to Promote
Theater
• The edgy musical, Rent created
ppodcasts and video clips
p for cell
phone users, and adverted on
the web at MySpace.com.
Ascher-Walsh, Rebecca. "Pacino Turns Podcaster as Theaters Boost Web Promos."
1111
11111111
Wall Street Journal 6 May 2006, Eastern ed., sec. P: 2.
TV Networks use Podcasting
• TV review podcasts like “24 The
Podcast” help in the marketing of a
show
• Allow a show’s viewers to
• Stay up to date with an episodes they
may have missed
• Express feelings about the season
thus far
• Pitch show to potential viewers
1112
http://en.wikipedia.org/wiki/Podcasting
184
Advertising on “Second Life”
• Many companies
• Sony Music provides samples
and retail service for artist’s
songs and videos
• Users can purchase Adidas
sneakers in Second Life
“New Virtual Game Provides Prime Exposure For Corporate Advertising By
Expanding the Capabilities Of The Online Social-Networking Model,” Bulldog
Reporter’s Daily Dog, October 20, 2006, Vol. 1:1, October 20, 2006. p. 3 1113
• Mobile marketing is another
tactic, in which the company
offers
ff free
f ttexts
t andd other
th
incentives so long as the user
agrees to receive a certain
amount of advertisements.
De Mooij, Marieke, Global Marketing and Advertising: Understanding Cultural Paradoxes,
1114
2010.
• Book Author’s or Artist’s
website
• Example: Random House
made excerpts of novels by
Toni Morrison
Morrison, Calvin Trillin,
Trillin
and many others available
online
• “Insight” search program
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
11151115
Book Publisher’s Websites
• Search program that allows
consumers to search and
sample various titles
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
11161116
• Example: Harper Collins
launched its “Browse Inside”
widget program
• Excerpts from novels by
Michael Crichton and Sidney
Poitier among others
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
11171117
• This program also permits fans
and authors to embed sample
pages of their favorite books
directly onto social networking
sites and blogs
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
11181118
185
Music Videos as promotion tools
• Reduced need for tours
• But, tough to get videos placed
on music video channels
• The Internet created new
possibilities for music promotion
artist’s websites: YouTube
11191119
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 26
• Differs from traditional
advertising in that it gives realtime results about effectiveness
• Most advertisers pay sites
based on a click-through
payback system.
1119
1122
http://www.marketingterms.com/dictionary/banner_ad/
Online Market Research
• The Internet is also an
inexpensive, fast-turnaround
medium for conducting marketing
research
Source: www.harrispollonline.com
The Internet as a Marketing
Tool
• 1. Ads on the Internet
• 2. New types of uses (targeting,
content)
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting
• 7. Websites
186
The Internet as a Marketing
Tool
• 1. Ads on the Internet
• 2. New types of uses (targeting,
content)
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting
• 7. Websites
• Fox, ABC, and UPN play
previews on their websites
• ABC shows free episodes of
“Lost,” one its most popular
sho s
shows
• Links to all of their programs
• Cast biographies
• Synopsis of past episodes
1128
4. Relationship Building
• rather than bombarding users
with all sorts of advertisements,
p
to establish a “relationship”
with the user so as to more
accurately put forth promotions
Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”
(www.scottish-enterprise.com/ebusiness)
The Internet as a Marketing
Tool
• An example is how
amazon.com suggests books to
the customer based on previous
purchases
Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”
(www.scottish-enterprise.com/ebusiness)
• 1. Ads on the Internet
• 2. New types of uses (targeting,
content)
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting
• 7. Websites
187
DoubleClick
• DoubleClick was bought by
Google for $3.1 billion in 2007.
• Google gains greater portion on
display advertising market.
http://64.233.169.104/search?q=cache:6r9vu8a6eMJ:www.businessweek.com/technology/content/apr2007/tc
20070414_675511.htm%3Fcampaign_id%3Drss_daily+google+doubl
eclick&hl=en&ct=clnk&cd=1&gl=us
• Google sells “keywords” to
advertisers for anywhere from a
ppennyy to $100 a word.
• Those are the terms people type
into query boxes when they are
searching.
1131
Getting Advertising on
Websites
• In the past bloggers and other
small Web publishers had few
options to attract advertisers.
advertisers
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAY
http://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
Internet advertising
• For most every words
searched, Google pops up a
number of “sponsored
sponsored links”
links
(paid advertisements) next
to/above the search results.
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAY
http://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
Internet advertising
• The main possibility was to sell
ads for mostly of non-related
p
products.
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAY
http://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
• Google converted search
queries into “highly targeted
advertising” opportunities for
the “long tail” of products
that appeal to a wide range of
tastes.
1136
http://www.totalcontentandmedia.com/View.aspx?ID=2165&t=5
188
Google AdSense
• Lets web site publishers provide
Google search to their site users and
to earn money by displaying Google
ads on the search results pages
pages.
• Pay-per-click and pay-perimpression (on your content pages)
advertising.
Google AdSense
• Prices fluctuate
• For instance, in the days leading up
to Mother's Day, prices for
keywords
y
such as "Mother's Day"
y
and "flowers" are likely to increase.
1140
Google AdSense
• Businesses fight for the top
positions on the first page of
Google's results.
• The cost of individual
AdWords is never made
public (tough many of the
most expensive involve US
lawyers and financial
services).
1141
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
Google AdSense
• The place where an advertisement
appears depends on how much a
business is willing to pay and how
much the ad has to do with the
specific search.
Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06
Google AdSense
• Tops of the list are $69.16 for
“school loan consolidation”
and “abdominal
mesothelioma”.
1142
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06
189
Google AdSense
• Advertisers also specify whether
they want their ad to appear only
on Google, or on one of Google's
partner websites,
websites blogs.
blogs
Google AdSense: click fraud
• According to a study by
MarketingExperiments.com,
30% of clicks on Google and
its partner sites could be fake.
1146
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
Google AdSense
• Providing these ads to its partners is a
big business for Google generating
over half of its total revenues.
• Web sites host Google's
Google s ads and then
split the ad revenue with Google if
someone clicks on the sponsored
link.
1144
Google AdSense
• 99% of Google’s revenues
comes from advertising sales.
• Aroundd 50% off them
h comes
from Google-run advertising
on other companies' Web
sites.
Eric Auchard, Google lets Web sites sign up advertisers directly, Reuters
1147
http://www.signonsandiego.com/news/business/20051118-1343-media-google-advertising.html
Google AdSense
Google AdSense: click fraud
• The problem is big for Google
because scammers either use
software that automatically clicks
on ads or employ cheap workers
overseas to click on ads manually
or create networks of spam Web
sites and blogs.
• Frees content creators from
having to deal with actual
advertisers
advertisers.
1145
1148
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
190
Selling Ad Space Online
Google AdSense
• Advertisers know exactly which
ad did the customer clicked on,
what the ad looked like
like, what the
text/content was, where it was
displayed, how much it cost and
how much the customer spent.
1149
Advertiser’s Auction:
• Advertiser posts ad budget
• Publisher makes an offer (bid)
• Winner is selected at the
auction’s close
• Bidders are notified
11521152
Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06
Google AdWords
Google AdSense: future
• Businesses create ads and
choose keywords related to the
company, and
d the
h ads
d may
appear when people search on
Google using those words.
• The Print Ads program allows
advertisers to pick specific
newspapers and specific
sections within these that the
newspapers are opening up for
this.
“Google AdWords.” Google. Last accessed on 9 July 2007 at http://adwords.google.com
1150
11531153
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online
Auctions, Nov 06
http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
Google AdSense: future
• Newspapers are able to reject
ads that don’t meet their
standards of taste and can
g
determine ppricing.
• Google keeps about 20% of
revenue for Internet ads it
places.
http://www.steverenner.com/wp-content/uploads/2008/08/online-ads.jpg
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online
Auctions, Nov 06
11541154
http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
191
Google AdSense
• Google Print Ads can
undermine the leading role
longg by
y media-buying
y g
agencies: it offers advertisers
the possibility to deal directly
with print publishers.
6. Promoting Websites:
SEARCH ENGINE
MARKETING
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online Auctions, Nov 06
11551155
http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
SEARCH ENGINE MARKETING
• Websites try to get a high traffic volume.
• A major way to do so is to end up high
on the search results, because most users
click on the top-most options
• Search engine marketing, or SEM, is a
form of Internet marketing that seeks to
promote websites by increasing their
visibility in search engine result pages.
http://en.wikipedia.org/wiki/Search_engine_marketing
The Internet as a Marketing
Tool
• 1. Ads on the Internet
• 2. New types of users (targeting,
content)
• 3. Online market research
• 4. “Relationship building”
• 5. Placing ads
• 6. Promoting
• 7. Websites
Danaher, Peter J. Modeling Page Views Across Multiple Websites With An Application
1160
to Internet Reach and Frequency Prediction. 2007.
192
SEO
Search Engine
Optimization (SEO)
11611161
• Search engine optimization
takes into account page titles,
meta tags,
tags key words and
phrases that precede the
“body” of a web page in the
source code.
1161
• Websites often resort to
professional search engine
optimizers, who perform a
similar role to that of a
Public Relations agency
11621162
11641164
• By the same token, web
programmers and publishers
specifically include these tags and
keywords, because they know
Google and other search engines
are designed to look for them
1162
11651165
SEARCH ENGINE OPTIMIZATION
• SEO considers how search
algorithms work and what people
search for.
g can be
• Internet marketingg strategies
much more effective, depending on
the site operators goals. A
successful internet marketing
campaign may drive organic traffic
to web pages.
http://www.seoinc.com/
11631163
For details see
Appendix H:
The Internet as a
Marketing Tool
1166
193
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecastingg
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
1167
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
CONCLUSION
Self-Regulation of
Advertising and
Marketing Practices
http://www.aiap.org/aiap/advertising.jpg
1168
Eli M. Noam, Entertainment Law and Media Regulation
VIII.
Regulation of
Marketing
1169
1171
Self-Regulation
• Self-regulation by
advertisers and agencies
• Self-regulation by trade
associations
• Self-regulation by
businesses
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
194
The NAD/NARB
• The council has two operating arms,
the National Advertising Division of
the Council of Better Business
Bureaus and the National
Advertising Review Board.
• The NAD/NARB has become the
advertising industry’s primary selfregulatory mechanism.
• Product promotion can
easily over-promise
• Even a conscientious
marketer will face moral
dilemmas
1176
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Marketing Essentials, Kotler, Phillip 1984.
• Many media outlets,
advertisers, and advertising
agencies check and review
the ads before airing or
publication
bli ti tto ensure th
thatt
they are not deceptive or
offensive
Eli M. Noam, Entertainment Law and Media Regulation
The NARB is composed of 85
advertising professionals and
prominent
i t public-interest
bli i t
t
members.
1174
Eli M. Noam, Entertainment Law and Media Regulation
Examples for Self-Regulation
of Promotions
• NAB - National Association of
Broadcasters
• MPAAMPAA Motion Pictures Assoc
Assoc. of
America
• (NARC) National Advertising review
Council
• Reviews complaints from
consumers and consumer
groups local BBBs
groups,
BBBs, and
competitors.
http://www.dc.bbb.org/images/main_center.gif
1175
1178
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
195
The NAD/NARB
• If the NAD and the advertiser fail to
resolve the controversy, either can
appeal to a five person panel from
the National Advertising Review
B d
Board.
1179
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
The NAD/NARB
• In 1996, of the 96 NAD investigations, 16 ad
claims were substantiated, 5 were referred to
the government, and 75 were modified or
discontinued
1182
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
The NAD/NARB
Children’s Advertising Review Unit
• If the NARB panel agrees with the
NAD and rules against the
advertiser, the advertiser must
discontinue the advertising.
• If the advertiser refuses to comply,
the NARB refers the matter to the
appropriate government agency
and indicates the fact in its public
record.
1180
• CARU reviews advertising in all
media directed to children under 12
years old as well as online privacy
practices involvingg children under 13
p
years of age, to ensure they comply
with its guidelines on information
collection and the federal Children’s
Online Privacy Protection Act.
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
http://www.us.bbb.org/WWWRoot/SitePage.aspx?site=113&id=24783
d03-2c4b-4b0e-b46f-5fb29117b7c6
The NAD/NARB
• The NARB has no power to
order an advertiser to modify or
stop running an ad and no
sanctions it can impose.
impose
• But advertisers who participate
in an NAD investigation and
NARB appeal rarely refuse to
abide by the panel’s decision.
1181
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
1184
196
VIII.2.
Government
Regulation of
Marketing
Practices
• On the U.S. federal level, the
Federal Trade Commission in
charge of complaints of unfair
competition and false
advertisement.
• Similar consumer protection
agencies exist in most countries,
and in lower levels of government
in the US and many countries
Eli M. Noam, Entertainment Law and Media Regulation
1186
Additional US Regulatory
Agencies involved in the
Marketing Practices
•
•
•
•
The Federal Communications Commission
The U.S.
U S Postal Service
Bureau of Alcohol, Tobacco, and Firearms
State Attorney General and consumer
protection agencies.
• Similarly, in other countries
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Federal Regulation of
Advertising
• Since 1938 the FTC has the
power to issue cease-and-desist
orders and levy fines on
violators.
• May require corrective
advertising
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
FTC Regulation of Other
Promotional Areas
•
•
•
•
Contests and Sweepstakes
Premiums
Trade Allowances
Direct Marketing
1187
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Consent and cease-and-desist
orders
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
197
• Damages for false advertising
• 3x damages if prove actual
harm
• Profits from the offending ad
• Attorneys’ fees
Eli M. Noam, Entertainment Law and Media Regulation
1191
Affirmative Disclosure
• Under its affirmative disclosure
requirement, the FTC may require
advertisers to include certain types
of information in their ads so
consumers will be aware of all the
consequences, conditions, and
limitations associated with the use
of a product or service.
1192
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Affirmative Disclosure
• Fuel mileage claims in car ads
• Cigarette ads must contain a
warning
i about
b
the
h health
h l h risks
ik
associated with smoking.
• Specificity on country of origin
claims.
1193
George E. Belch & Michael A. Belch,
“Advertising and Promotion: An Integrated Marketing
Eli M. Noam, Entertainment Law and Media Regulation
Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
FTC Requirements for Internet
Ads, including on Internet
• Disclosures must be clear and
conspicuous
• Understandable to the intended
audience
• Volume and cadence, and visual
disclosures, must be of sufficient
duration
1194
Eli M. Noam, Entertainment Law and Media Regulation
Advertising
Substantiation Requirement
• Advertisers must have a
reasonable basis for ad
claims.
• Advertiser must possess
substantiation of claim before
dissemination.
1195
Eli M. Noam, Entertainment Law and Media Regulation
Types of False Advertisement
• Misrepresentation
• Bait and switch
• advertise product with no
intention of selling, then
switch to higher priced item
• False price comparison
Eli M. Noam, Entertainment Law and Media Regulation
1196
198
Deception
a material representation or
omission that is likely to
mislead a reasonable consumer
Eli M. Noam, Entertainment Law and Media Regulation
• FTC considers whether the
entire ad is likely to mislead
consumers acting reasonably
• Not necessary for
f the
h add
actually to deceive
1197
• Since 2009: Must provide only
product results that consumers
can typically expect, not just the
“best” results
• To avoid legal problem,
media advertisers, and
agencies must all check the
ads. They all can be held
responsible,
ibl including
i l di the
th
media outlet, if it should
have known, or if it acted
negligently.
Eli M. Noam, Entertainment Law and Media Regulation
“Puffery” Permitted
• Exaggerated
boasting and
subjective
j
claims upon
which no
reasonable
buyer would
rely
The Lanham Act
• U.S. district court fined Jartran a
record $20 million in punitive
damages on top of the $20 million
awarded to U-Haul International
to compensate for losses resulting
from ads comparing the
company’s prices and equipment
that were ruled deceptive.
“Joe Isuzu”
Eli M. Noam, Entertainment Law and Media Regulation
1199
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
199
The Lanham Act
• Wilkinson Sword and its
advertising agency were found
guilty of false advertising and
ordered to pay $953,000 in
d
damages
to the
h Gillette
Gill
C
Co.
• Suing competitors for false claims
was made even easier with
passage of the Trademark Law
Revision Act of 1998.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications
Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
For details see
Appendix I:
R
Regulation
l ti off
Advertising
Practices
1206
Advertising Aimed at
Children
• Premise: Children cannot easily
distinguish between
programming and advertising and
are easily
il influenced
i fl
d
• 1978-1989 FTC tries, mostly
unsuccessfully, to limit
advertising aimed at children
Ramsey, William A. “Rethinking Regulation of Advertising Aimed at Children.”
Federal Communications Law Journal 58:2. (April, 2006). 367-398.
Advertising Aimed at
Children
• Children’s Television Act (CTA)
•FCC to establish standards
g
g amount of children’s
regarding
programming to air
•Limit of 10.5 (weekday) and 12
(weekend) min/hr of ads during
children’s programming
Ramsey, William A. “Rethinking Regulation of Advertising Aimed at Children.”
Federal Communications Law Journal 58:2. (April, 2006). 367-398.
X. Analyzing
Marketing
Performance
1208
200
Tools of Analyzing
Marketing Performance
1.
2
2.
3.
4.
1.Precampaign Tools
Advertising Analysis
Sales Analysis
Marketing Cost Analysis
Marketing Audit
• A. Focus Groups
• B. Theatre Testing
• C.
C Over
Over-the-air
the air recall study
1209
Precampaign Tools
1. Advertising
Analysis
• A. Focus Groups: After
geodemographic / psychographic
research, a group of people are
recruited to participate in a screening
of the ad. Advertisers can get useful
information through observing the
participants.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
Testing TV Ad Effectiveness
• There are a few tools that can be
used to measure the effectiveness
of TV ads in advance,, duringg a
marketing campaign, and
afterwards.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
Precampaign Tools (cont’d)
• C. Over-the-air recall Study:
• To qualify, participants should’ve
seen the ad at home (i.e.
(i e naturally).
naturally)
The study measures how much the
participants recall of the ad.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
201
Precampaign Tools (cont’d)
• Most popular scoring schemes for recall
tests:
• 1- Burke Score developed by Burke
Marketing Research
Research, Inc.
Inc
• 2- Gallup Proven Commercial
Registration (PCR) score by Gallup &
Robinson.
*
2. Tools During Campaign
• A. The Test Market approach
• B. Measuring Results
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
• Advantage of theatre and recall
testing:
• They don’t require complete
production of the ad. Advertisers
usually produce a cheap
(<$5000) animated version of the
ad and use it for the test.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
*
Precampaign Tools (cont’d)
• A more complicated form of in-lab
testing includes phyosiometric
research
Tools during campaign
• A. The Test Market approach:
After the ad production is
complete,
p , the advertiser can test
variations of the ad (length of ad,
creative elements, etc.) in at least
2 “matched” markets.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
B. Measuring Results
• To measure the results of the Test
Market studies or the regular “full
launch campaign”, two methods can
be used:
1- pre/post attitude and awareness
2- market audit
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
202
Tools During Campaign (cont’d)
• 1- Pre/Post A&A: Measures the
attitude towards and the awareness of
the advertised product before and
after ad has been released by using a
simple random sample of about 200
people.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
*
Elements of Pre/post Attitude Study
• a- Willingness to purchase
product
y
• b- Purchase activityy or history
of purchases
• c- Market Audit: Compare sales
data before, during, and after ad
campaign.
• Elements of pre/post attitude
study:
1- Willingness to purchase
product
22- Purchase activity or history
of purchases (product
participant buys most often, or
bought most recently, etc)
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
• Awareness Change: Results from pre and
post awareness tests are filled into a table.
Degree of increased awareness measures
the effectiveness of the ad campaign.
• In attitudinal change measurement, it is
i
important
t t to
t select
l t the
th right
i ht attitudes
ttit d to
t be
b
measured and the right scale of
measurement.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
• Elements of pre/post awareness
study:
1- Awareness of brand
2- Awareness of ad
3- Several types of recall
(descriptive, name-only, media
channel, etc.)
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
Tools During & After Campaign
• 2- Market Audit: Compare
sales data before, during, and
after ad campaign.
campaign
Poltrack, David. “Measuring Television Advertising Effectiveness” Television
Marketing
203
• Sales volume analysis
• Rate of the growth for the
industry.
•Competition
•Competition.
•Sales analysis by territory
and product line.
IX.2. Sales
Analysis
1227
1230
*
2. Sales Analysis
• Measuring and evaluating
actual sales in relation to
sales goals
1231
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
Methods of Sales Analysis
• Evaluate the firm’s success in
the marketplace.
•Sales volume
•Market share
1229
• 2.1 Sales Variance
Analysis
• 2.2 Micro-sales Analysis
• 2.3 Market Share
Analysis
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1232
204
2.1 Sales Variance
Analysis
2.1 Sales Variance Analysis
• Example:
•Nearly 2/3 of sales variance
i due
is
d to
t failure
f il
to
t achieve
hi
volume target
• Measures relative
contributions of different
factors to gap in sales
performance
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1233
N
Sales Variance Analysis
2.2 Micro-Sales Analysis
• Example:
•Forecasted sales: 4000
units @ $1 each = $4000
•Actual sales: 3000 units @
$.80 each = $2400
•Total Sales Variance =
$1600 = 40% of expected
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
2.1 Sales Variance Analysis
• Example:
• Looks at specific products,
territories, etc which failed to
reach expected share of sales
N
• Example:
• Expected sales =4000 units
•1500 in region 1, 500 in region 2,
2000 in region 3
• Actual sales =3000 units
•1400 in region 1, 525 in region 2,
1075 in region 3
• Tot Variance = $1000 + $600 = $1600
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
2.2 Micro-Sales Analysis
• Variance due to price decline:
(($1.00-$.80)(3000)=
)(
) $600 = 37.5%
• Variance due to volume decline:
($1.00)(4000-3000)= $1000 = 62.5%
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
205
2.2 Micro-Sales Analysis
• Example:
•Territory 1: 7% short of
expected
t d
•Territory 2: 5% surplus
•Territory 3: 46% short
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
2.3 Market Share Analysis.
•
Break down the data into territory,
customer type, product category.
Netflix needs to determine which movies
are more popular and where to decrease
wait
it time
ti andd improve
i
customer
t
satisfaction.
- Netflix needs to find out how many
customers will want to watch films
download to their computers and
television sets to guarantee good service
2.2 Market Share Analysis
• Tracks performance of
company relative to
competitors
p
•Overall Market Share –
sales expressed as a
percentage of total industry
sales
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
For more details
see Appendix
ppe d J:
Sales Analysis
1243
2.3 Market Share Analysis
• Served Market Share – sales
expressed as a percentage of
industryy sales in served market
• Relative market share – sales as
a percentage of combined sales
of leading competitors
N
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1244
206
3.1 Cost Monitoring Ratios
IX.3. Marketing
C Analysis
Cost
A l i
1245
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1248
3.2 Sales-Force Efficiency
Cost Analysis
• Marketing expenses can be
broken down, depending on the
company, i.e.:
• Sales
S l force
f
expense, P
Promotion
ti
expense, Advertising expense,
Market research , Sales
Administration expense, etc.
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
• Marketing Expense to sales
ratio can be broken down into
components:
•Sales-force to sales,
advertising to sales, market
research to sales, etc.
1246
Marketing Cost Analysis
•Measure the efficiency of the
firm’s marketing mix.
•Advertising
Advertising costs
costs.
•Test market expenses.
•Sale force expenses.
1247
• Indicators include:
• Avg. cost per sales cost (Time and
money)
• Avg. revenue per call
• #New customers per period
• #Lost customers per period
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1249
3.3 Advertising Efficiency
• Indicators include:
• Avg. cost per thousand target
buyers reached (by media
category and media vehicle
• Consumer opinion on ad
• #Inquiries generated by ad, cost
per inquiry
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1250
207
3.4 Sales Promotion Efficiency
• Indicators include:
• Percentage sales sold on deal
• Display cost per dollar
• %Coupons rec’d
• #Inquiries resulting from
demonstration
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New
Jersey. Prentice Hall 1988.
1251
1254
IX.4. Marketing
Audit
1252
Marketing Audit
Comprehensive review of the
organization’s marketing activities:
• orientation.
• Planning.
• Target market strategies.
• Distribution decision.
• Product Strategies.
• Promotion Strategies
• Pricing Strategies.
1253
X Outlook
X.
1256
208
OUTLINE: Section A: Marketing
Media Products
I.
MARKETING OF MEDIA I.
•
•
•
Structure and
Organization
Products and Services
The Attention Budget
•
II.
II. MARKET ANALYSIS
ƒ
ƒ
Forecasting
g
Positioning
III. BRAND CREATION
•
•
Design
Diversification
III.
Viral Marketing
•
•
Budget
ROI
IV.
Self-Regulation
Government Regulation
MARKETING
PERFORMANCE
•
•
•
VI. ADVERTISING
Internet as a Marketing Tool
REGULATION OF
MARKETING
•
•
IV. PRICING
V. PROMOTION
•
NEW INFORMATION
TECHNOLOGIES
Sales analysis
Marketing Cost Analysis
Marketing and the product life
cycle
Issues Covered
• Relationship Creation
• PR programs
• Product Design Issues
•Integration of marketing and
product design
CONCLUSION
1260
Analytical Tools Covered
Issues Covered
• Diffusion Models
• Conjoint Analysis
• Sales analysis
• Marketing cost analysis
• Promotion mix
•[ ]
• Strategic marketing
• Product Design
• Customization
• Pricing
• Competitor Analysis
• Legal marketing issues
Issues Covered
• Customization
•Consumer generated
information
•Group collaboration
•Dynamic pricing
•Privacy
1261
Issues Covered
• Pricing
-Market-based v. Cost-based v.
Value-based
-Penetration v. premium
-Flat-rate
1259
1262
209
Differentiate Product
• Branding
• Expensive
• Originality/Quality
• Expensive, difficult
• Customization
• Move out of industrial-style mass
media to individualization
• Expensive, difficult
1266
The End of Media Scarcity
• When food ceased to be scarce
• Change of consumption mix to
better quality
• Somewhat higher consumption
• The same is true for
information
1264
The End of Media Scarcity
• Media Strategies to deal with
abundance of information
• Reduce supply?
¾Impossible
• Lower cost? But everyone will do
so, too.
• Differentiate the product
1265
Media Marketing:
Adding Up?
• Greatly expanded marketing effort
• Greatly expanded cost
• New marketing technologies
• New products
1267
•Marketing activities will be
more important, more complex,
more expensive, and requiring
more creativity than ever.
1268
210
Requirements for Media
Marketing
• Improve product
• Refine techniques of getting
attention
i
• Refine individualization/
customerization
• Better links with behavioral sciences
1269
End of
Lecture
1271
211