Advertising and Madison Avenue

Last winter, the 141-year-old advertising agency J. Walter Thompson held a funeral. On February 28, employees in Paris lit a bonfire, burning material used in previous advertising campaigns. In Tokyo, a mock sea burial was held for the company's founder, Commodore Walter Thompson. At this point, the advertising company with an annual turnover of $1.3 billion was reborn and renamed JWT. Advertising agencies are dead! Are advertising agencies really going to say goodbye forever?

JWT is a product of the times. For nearly 30 years, Madison Avenue has been plagued by an industry downturn that has forced advertisers to give up lucrative commissions for placing commercials and print ads for their clients. A 2004 study by the Association of National Advertisers found that only 10% of advertisers currently rely entirely on commission. Instead, they plan and execute large-scale advertising campaigns for clients, charging either a fixed fee or an hourly rate. Advertising companies' profit margins are thus reduced. WPP Group, the $10 billion-a-year parent company of JWT in London, aims for an operating margin of 20% but has hovered around 14% in recent years.

Of course, these brutal cost pressures are accompanied by the rise of non-traditional media, which has become the main driving force behind the growth of the advertising industry with an annual turnover of US$279 billion. . This year, advertisers nationwide plan to spend $7.9 billion on the Internet, up 15% from 2004. (It accounts for the vast majority of advertisers’ spending on non-traditional media, which also includes video games and soft ads.) There’s no doubt that ad industry visionaries are hard at work figuring out how to carve up a slice of the pie, and that means more than just heavy advertising. Reshaping the 30-second TV commercial also means reinventing the advertising company itself. They came up with a variety of plans, some highly creative, others hollow and impractical. However, these plans are beautifully written, and no wonder, since they were written by people who made their living through propaganda. So which strategies actually work? Please be your judge.

Ogilvy covers all aspects Ogilvy advertising agency (Ogilvy) has an annual turnover of US$752 million and has clients such as American Express, IBM, Cisco and Yahoo. The company sees OgilvyOne, its 33-year-old subsidiary specializing in direct marketing and interactive behaviors, as the centerpiece of a "360 degrees" strategy to meet all customer needs. In order to promote the development of American Express's small business network, Ogilvy has organized internal debate meetings for American Express since 2002; designed a new brand image; planned direct mail, TV and Internet advertising; and featured its products in the reality TV show " In the script for The Restaurant; training phone operators; testing one-to-one advertising models for different types of customers, such as doctors buying equipment.

Ogilvy liked OgilvyOne so much that it promoted its president, Carla Hendra, to run the flagship business in New York City alongside Ogilvy President Bill Gray. In the past, Ogilvy has supported each division to maintain its own brand and independence from each other, but by the end of this year, the company will integrate these divisions so that they can work more closely together.

Company point of view: Hendra said that after adopting the new model, “the account managers who have been trained and trained by us over a long period of time will be able to select talents from various professions and form a team so that they can work for the best interests of creative people. Idea Service”.

Feasibility investigation: Transforming an advertising company into a talent pool in various fields including direct marketing, soft advertising, and advertising creativity requires a high price. Few customers enjoy total marketing as much as American Express (and few have as much money).

Talk to the streets KTG Group (Kaplan Thaler Group) is a subsidiary of Publicis, a company with an annual turnover of $4.6 billion. Two years ago, KTG created a division dedicated to guerrilla marketing—KTG Buzz. The division was founded to find non-traditional ways to "inject ideas into pop culture," said KTG chief marketing officer Robin Koval, who co-authored "Blockbuster: How to Survive in a Noisy World." Bang: Getting Your Message Heard in a Noisy World. Conservatives might object that guerrilla marketing is no different than having employees walk around the streets holding signs that say, "Go get Joey's Sandwich." But KTG is having none of it. mind. In a promotion for Aflac, KTG invited the U.S. synchronized swimming team to perform in a pool outside talk show host David Letterman's theater. In addition, after learning that tourists would watch "The Today Show" through the studio windows at Rockefeller Center, KTG began marketing its sales to these visitors. Another success story: KTG wrote a Clairol (Herbal Essences) ad into the script for Warner Bros.' (WB) TV series "What I Like About You," which aired in February.

Company perspective: In-program advertising is a remarkable innovation in the field of 30-second ads. Kovo said proudly that "TiVo digital video recorders can't do anything about the Clairol shampoo commercials inserted into the TV."

Feasibility test: Guerrilla marketing is a good way to build brand awareness, but it cannot effectively tell the story behind the product, and there is no need to hire an advertising agency to do soft advertising for you. Hollywood talent houses such as William Morris and Endeavor have launched their own soft advertising divisions and work directly with Fortune 500 advertisers, while sports agencies are busy plugging clients into TV games. The agents are ferocious and the advertisers are eloquent. Of course, what they compete for is our money.

What is an advertising agency? Arnell Group is a New York-based subsidiary of Omnicom, which has an annual turnover of US$9.2 billion. Peter Arnell, chairman and CEO of Arnell Group, said: "Advertising The word “corporate” needs a real facelift. “In fact, many advertising agencies are starting to do this to themselves. Arnel, an architect and industrial designer, said advertisers must find ways to "embed advertising and branding into products." He hired industrial engineers and designers to integrate his advertising agency with product and store design. Last fall, Swedish home appliance manufacturer Electrolux asked Arnel Group to help design and market a series of new home appliance products, including blenders and toasters.

Company point of view: Arnel Group currently represents Con Edison, Almay and Cuervo in advertising. Arnel describes his company as a "brand thinking and consumer experience marketing company. It is good at branding." , strategy and communication program integration”.

Feasibility test: To be honest, the "brand thinking" mentioned by Anel really makes us scratch our heads.

The whole world is one screen. Today's advertising uses various screens to convey commercial messages. From computer screens, to the large screens in Times Square and surrounding shops, to the small screens on game consoles and mobile phones, they are almost everywhere. That's the theory at McKinney & Silver, an ad agency affiliated with Havas Group. The company is located in Durham, North Carolina, and has 200 employees. In the past, advertising agencies followed many principles to great effect when creating TV commercials, such as combining irresistible imagery with music and slogans, and these principles still hold true today. When promoting the Audi A3, McKinney & Silver created a complex virtual reality game script consisting of 10,000 web pages, as company president and CEO Brad Brinegar described it. The game is "a cross between The Bourne Identity and The Da Vinci Code." The challenge for the user is to find out who stole the Audi car from within the game. Instead of directing viewers to car dealers, TV ads pointed them to advertising campaigns on the Internet.

Company View: "We're still in the adolescence of interactive advertising, and interactive advertising today is what television was 50 years ago," Bringar said. (He wasn't referring to Super Bowl XXXVIII. The flamboyant galloping horse in the goofy Budweiser ad)

Feasibility test: Who says people don’t get as turned off by ads on computers and mobile phones as they do ads on movie screens? Media Planners' Revenge For many years, media planning and page buying companies have always played the role of lowly statisticians. They are responsible for finding placements for advertisements designed by celebrity planners, but they can only earn a small commission after working hard for a long time. But as the number of media outlets grew and the ability to track the response to advertising campaigns in real time grew, media planners suddenly became more popular. [For details, see Fortune's article "Nightmare on Madison Avenue." ] Starcom is a fast-growing division of Publicis Groupe Media that helps clients buy and compare interactive, mobile and gaming ads, said PGM boss Rishad Tobaccowala: "Seven years ago , people only mention media in the last five minutes of their speech. The opposite is true today. “Some full-service advertising agencies used to think that media (buyers) and advertising agencies are equal partners. Media buying was outsourced to other companies, which are now rediscovering the value of the business.

Company view: IPG is a division of $2.7 billion Deutsch Inc., said Linda Sawyer, managing partner and chief operating officer. Given that the media market is complex and changing, and new things emerge every day, we have to do all the planning and buying tasks ourselves. ”

Feasibility test: Smart young people will come up with the next one. Accepting a pittance from an ad agency for a thrilling "Where's the Beef" commercial? Do they really enjoy the thrill of tinkering with spreadsheets and recording Internet hits?

Forget about hiring experts in interactive games and database management and creating a one-stop shop, says Chuck Porter, founder of the fast-growing independent advertising agency Crispin Porter. The advertising industry still thrives on creativity, he said: "Worrying about how to deliver a message is a complete waste of time.

The skills required in this new area of ??brand communication are actually very simple: intelligence, talent, imagination and passion. "Porter is very traditional, and he has no complaints as he watches his company's reputation and profits rise and fall with the fortunes of his clients.

Crispin Porter charges a fee and receives bonuses based on the effectiveness of its advertising. Modernista So did the company, where the 80-person Boston agency, which has tripled in size in two years, created a "Our Home" campaign for TIAA-CREF that drew a positive response.

Company perspective: "We are not an executive agency, we are an advertising agency that creates fresh, vibrant business ideas," said Clift Jones, president of Modernista. ”

Feasibility test: The bonus we are talking about here is more like a tip. If you do a good job, you can charge an extra tip of 10% more than the original charge.

If the customer is inclined What about promoting itself? Internet phone service provider Skype has 40 million users worldwide without advertising. ” created a $500,000 multimedia advertising campaign, the largest ever for a children’s book. As Random House’s vice president of marketing. Daisy Kline told the Wall Street Journal: “We felt we didn’t need the Madison Avenue experience. ”

Conglomerates launch products without looking at Madison Avenue, startups grow into multinational corporations without advertising, and Google and Yahoo’s click-through rates exceed the ratings of the Big Three TV stations , and broadband is still in its infancy. This is indeed scary, but there is a bright side. The total investment in advertising in the United States will be rewarded by capital.