1
Marketing of MediaMedia
Products
1© Eli M. Noam, March 27, 2010
I. WHAT’S DIFFERENT ABOUT MARKETING OF MEDIA1. Marketing: GeneralA Basic T pes of MarketingA. Basic Types of Marketing
(1) Strategic Marketing(2) Tactical Marketing
2. Marketing: Structure & Organization
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Organization A. Chief Marketing Officer (CMO)
2
3. How Does The Marketing Of Media Products And Services Differ from Marketing of Other Products?A F d t l E i Ch t i ti fA. Fundamental Economic Characteristics of Media (1) Strong and divergent economies of scale
(2) High uncertainty and instability(3) P bli d h t i ti
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(3) Public good characteristics(4) The Attention Budget
A. Strategies to Increase Overall AttentionII. 1st STEP IN MARKETING THE MEDIA PRODUCT: MARKET ANALYSISANALYSIS1. Demand Analysis2. How Do Firms Forecast Demand for New Products?New Products?3. Product Positioning Requires Competitor Analysis
3
A. Competitive Leverage Analysis Tool 4. Product Positioning
A. Optimal PositioningB Market Niche PositioningB. Market Niche Positioning
1. Brand Centered View2. Product Design3. Product Innovation
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3. Product Innovation4. Product Diversification5. The marketing Plan III. BRAND CREATION
5. The Creation of “Lock-ins” of CustomersIV. PRICING
1 How a media firm sets prices1. How a media firm sets pricesV. PROMOTIONA. Word of mouthB. Publicity and Public RelationsB. Publicity and Public Relations C. Using the Star PowerD. Influencing the InfluencersE. Marketing to Business
4
VI. ADVERTISING1. Advertising Agencies
A. Ad Agency Services2. Strategy3. Advertising: the Budget4. How Much to Spend on Advertising?5 Estimating ROI of Advertising:
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5. Estimating ROI of Advertising: Customer Value Modeling6. Media Mix
VII. THE IMPACT OF NEW INFORMATION TECHNOLOGIES1. Customized Advertisingg2. Telemarketing3. Internet as a Marketing ToolsVIII.REGULATION OF
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MARKETING1. Self-Regulation of
Advertising
5
2. Government Regulation of Advertising
IX. ANALYZING MARKETING PERFORMANCE1 S l A l i1. Sales Analysis 2. Marketing Cost Analysis
3. Marketing Audit4 Marketing and the Product4. Marketing and the Product Life Cycle
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I. MARKETING OF TELEVISION TIME TO ADVERTISERS1 Ad S i ff d1. TV Ad Services offered to
Advertisers2. Promoting Cable Channels to AdvertisersAdvertisers3. New ways to sell or buy cable ads
II. CROSS-MEDIA PROMOTIONS OF MEDIA PRODUCTS
1. Major Dimensions of Cross-Media M k tiMarketing
A. of Own ProductsB. for Advertising Client
III. MARKETING OF NEWSPAPER AD SPACE
1. Newspaper Advertising Products2. Newspaper Ads
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IV. SELLING MAGAZINE ADS1. Magazine Industry
V. SELLING ONLINE ADS1. Internet Advertising
A. Search Engine Marketing(1) Google AdSense
VI. ADVERTISING IN VIDEO GAMES
1. In-game ads campaign2. Def Jam by EA
X. CONCLUSION1. How marketing is different
for Media?2. Media marketing: Adding up?3. Requirements for Media
Marketing
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APPENDICESAppendix A: Marketing OrganizationAppendix B: Viral Marketing Appendix C: Public Relations and PublicityAppendix D: The Pricing of Advertisement Appendix E: New Information TechnologiesAppendix F: Advertising TargetingAppendix G: TelemarketingAppendix H: The Internet as a MarketingAppendix H: The Internet as a Marketing
ToolAppendix I: Regulation of Advertising
PracticesAppendix J: Sales Analysis
APPENDICES (cont..)Appendix K: Marketing and the Product Life
CycleAppendix L: Release SequencingA di M P i FilAppendix M: Promoting FilmAppendix N: Promoting NewspaperAppendix O: Promoting MagazinesAppendix P: Promoting Books Appendix Q: Promoting TelecomAppendix Q: Promoting TelecomAppendix R: Music PromotionAppendix S: Promoting DVDs Appendix T: Promoting Consumer Electronics
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APPENDICES (cont..)Appendix U: Promoting Software, Websites,
BlogsAppendix V: TV Advertising SalesAppendix V: TV Advertising SalesAppendix W: Selling Online AdsAppendix X: Advertising in New MediaAppendix Y: Mobile Advertising
di j k i i iAppendix Z: Major Marketing Practices in Media Industries
APPENDICES (cont..)Appendix AA: Case Discussion- Condé Nast Fly & Sky Appendix BB: Product InnovationAppendix BB: Product InnovationAppendix CC: Product DiversificationAppendix DD: Promotional Strategy
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OUTLINE: MARKETING OF MEDIA PRODUCTS
I. WHAT’S DIFFERENT ABOUT MARKETING OF MEDIA?
I. IMPACT OF NEW INFORMATION TECHNOLOGIES
II. MARKET ANALYSISIII. PRODUCT DESIGN
• Positioning• Brands and Lock-in
IV. PRICING STRATEGIESV. PROMOTION
• Customized Advertising• Internet
II. MARKETING OF MEDIA
• To Audiences• To Advertisers
III REGULATION OFSTRATEGIESVI. ADVERTISING
• Budget• Ad• Media Mix• Cross-Promotion
III. REGULATION OF MARKETING
IV. ANALYSING MARKETING PERFORMANCE
V. CONCLUSIONS
Start of Lecture
30
12
HR Tech Finance
Accounting
Resources:
The Media Value Chain
Accounting of
Performance
Strategy
IP Creation Pricing
DistributionValue
Creation:Production Marketing
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Environment: Info. Environment Demand
Law & Regulation
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
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I. Introduction
33
• For several years, the sky was the limit for the information sector. • Information became cheap globalInformation became cheap, global, and plentiful. Information products became faster, smaller, and cheaper. • Information industries became
34
convergent, competitive, and innovative.
14
35http://tech.nscdiscovery.org/newtech/jimmys_stuff/course_materials/PhotoShop_Course/11.%20Clouds.jpg
1990s Were the“Golden Age” for Media and
Information SectorInformation Sector• More electronic information• More users
36
• More innovation (faster, cheaper, more functionality)
15
But after 2002, and again after 2008
37(Standard and Poor’s in Alleman, 2002)UUUJU
•The Internet crash•The dotcom bubble
We experienced:*
•The telecom crisis•The music bust•The newspaper death-rattle
38
•The e-publishing stagnation
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•The PC sales dropTh i l i
We experienced:*
•The wireless saturation•The advertising recession.•The semi-conductor slump•The printing and paper decline•The printing and paper decline•The IT venture capital slump
•In this situation, how do information firms respond?•This is a challenge for strategists•This is a challenge for strategists and technology creators.•And it is, in particular, the h ll di k
40
challenge to media marketers, to keep media companies afloat
17
• It is therefore not surprising that the role of marketers in media has expanded.
41
Marketing has always been important:Old H ll d i “Th• Old Hollywood saying: “There are no bad movies, only bad marketing campaigns.”
42
• True?
18
Distinguish the 2 Meanings of “Media Marketing”
1. Marketing of general products, using media2 Marketing of media products
43
2. Marketing of media productsthemselves
We ill foc s on theWe will focus on the second meaning, the marketing of media.
44
a et g o ed a.
19
In marketing of media, there g ,are two product dimensions.
1.Marketing of media to audiencesaudiences
2.Marketing of media to advertisers
• This will be the topic of this chapter on “Marketing of Media Products”
• Closely related are chapters on• “Pricing of Information Products”• “Demand Estimation of Media”
46
Demand Estimation of Media• “Distribution Networks”• “Strategy”
20
47
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
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Section A: Marketing
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in Media
I.1. Marketing g-
G l50
General
22
•No common agreement on term. Some very fancy definitions ButSome very fancy definitions. But the nutshell is:Marketing: the process of
k f f ’
51
creating a market for a firm’s products
Distinguish k i f“Marketing” from
“Distribution”
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Distinguish “Marketing” from “Distribution”
Of f d i h h h• Often confused with each other• Marketing is the creation of a
market for the product
53
• Distribution is the delivery of the product to that market
Firms can do both functions, or neither, or one or the other
24
•Example for “marketing but
*
•Example for marketing but no distribution”: many magazines subcontract distribution to specialists but
55
distribution to specialists, but do the marketing themselves
•Example for “distribution but no marketing”: retail
*
but no marketing : retail book chains for most of their book titles.
il bili li l f- availability very little for marketing
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•Example for both marketing and distribution: many newspapers do both marketingnewspapers do both marketing and distribution- they run their own trucks to
57
wholesale or retailers- and they market that product to audience and advertisers
•Example for “neither” marketing nor distribution:marketing nor distribution: Most independent film productions neither market nor distribute
58
distribute.
26
Marketing vs. Sales
Marketing is the strategic andMarketing is the strategic and planning function
Sales function executes most of
59
the strategy
Kates, Amy and Jay Galbraith. Designing your organization. San Francisco: Jossey-Bass (2007): 63.
Marketing goes historically back to the earliest markets
when a seller tried to generatewhen a seller tried to generate sales
27
Early Markets
61http://www.lonelyplanet.com/travel-blog/tip-article/wordpress uploads/2009/11/Bati-camel-market.jpg
• Advertising existed already in antiquity: Greece, Rome, Egypt.
• By the 1600s, advertisements ere reg larl printed inwere regularly printed in
newspapers.
62Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
28
Ads from Ancient Rome
63Source: http://www.finerareprints.com/classical/bartoli/3526.jpg
Imperial Baths in Rome, circa 89 A.D.
Ads for media –16th Century
Buy thisBuy this Luther Bible
64Sources: http://www.ritchies.net/Luther's%20German%20Bible.jpg
Advertisement for Martin Luther’s German Bible circa 1534
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Medieval Store Front Signs
65Source: http://farm1.static.flickr.com/157/350902504_34c46ee042.jpg?v=0
30
Basic Types of M k tiMarketing
•Strategic Marketing
68
•Tactical Marketing
31
“Strategic” Marketing
• Set promotion strategiesp g• Set promotion budget• Set evaluation programs for
d ti i bli l ti hi
69
advertising, public relationships programs, and promotions efforts
“Strategic” Marketing• Identify possible markets.• Assess major social and lifestyle
d
*
trends• Define new products & services for
the markets.• Define target share-of-market.
70
Define target share of market.• Define competitive threats.• Evaluate marketing technologies
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales Forecasting Techniques.Chicago:NTC Business Books,2000
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“Tactical” Marketing• Test and implement strategic plan.
E t k ti l
*
• Execute marketing plan:•ads, leads, mailers, trades shows, brochures, follow-up system.
• Select of media in which message
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Select of media in which message is delivered.
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales Forecasting Techniques.Chicago:NTC Business Books,2000
In contrast“Tactical” Marketing
• Refine product lines• Update needs of served markets• Refine pricing
72
e e p c g
SOURCE:-Crosby, John V. Cycles,Trends and Turning Points:Marketing & Sales Forecasting Techniques.Chicago:NTC Business Books,2000
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74
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I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
I.2. The Marketing gFunction:
Structure &76
Structure & Organization
35
A. Chief Marketing Officer (CMO)
78
36
• manages and coordinates marketing operation.
Chief Marketing Officer
• must justify budget allocations with results and business cases, and prove value
• integrate marketing decisions and
80
g gactivities with the business strategy
• promote a return-on-investment mind-set for marketing initiative
http://www.cmomagazine.com/sponsors/Unica-WP_P&R072004.pdf
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i• Average CMO tenure is 22.9 months, in contrast to the 53.8 months of the average CEO.
81http://www.boozallen.com/home/publications/article/659394
82Stair, Lila B./Stair, Leslie (2002). Careers in Marketing. McGraw-Hill Trade
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Marketing Structure #1: Geography- Oriented
• In the past, marketing was often organized by geography• (“California; East Coast;
83
• ( California; East Coast; Asia”)
Peppers, Don and Martha Rogers. The One to One Future. New York, Doubleday. 1993. Pages 174-207
Marketing Structure #2: Product-Oriented
• Later marketing departmentsLater, marketing departments became composed of brand managers who were focused on a product’s successon a product s success
• Often led to a matrix structure, geography plus product line
39
85
C. Homburg, J.P. Workman Jr., O. Jensen, “ Fundamental Changes in Marketing Organization: The Movement Toward a Customer-Focused Organizational Structure” Journal of the Academy of Marketing Science, (October 1, 2000)
Marketing Structure #3: Customer-Oriented
• Increasingly, marketers focus onIncreasingly, marketers focus on customer relationships or types of customers
• Establish account managers as
86
gsingle point of contact with major accounts, selling the entire range of products and services
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Example for Customer-Oriented: IBM’s Customer Marketing
Structure • IBM’s “relationship managers” track
large, individual clients.• Know the share of each customer’s
b i IBM i i d h h
87
business IBM is getting and how much additional business is possible with each client.
Peppers, Don and Martha Rogers. The One to One Future. New York, Doubleday. 1993. Pages 174-207.
Sales Function within an Organization
88Schwartz, Matthew. Fundamentals of Sales Management for newly appointed sales manager. AMACOM 2006.
41
Example: The Marketing Team for Apple’s iPod
89http://www.myipodplus.com/iPodPlus%20Plan.pdf
The marketing team for Apple’s iPod
1) Sr VP Marketing: Involved1) Sr VP Marketing: Involved with all aspects of marketing; has knowledge and experience in both the technical and
90
in both the technical and marketing areas (“talks both languages”)
http://www.myipodplus.com/iPodPlus%20Plan.pdf
42
The marketing team for Apple’s iPod
2) VP P d M k i2) VP Product Marketing: Supervises individual product teams that define, develop, and l h d f
91
launch new product; focuses on product’s featureshttp://www.myipodplus.com/iPodPlus%20Plan.pdf
The marketing team for Apple’s iPod
3) VP Marketing3) VP Marketing Communications: In charge of promotions and public relations; directs ads and product packaging
92
directs ads and product packaging (benefit-oriented statements)
http://www.myipodplus.com/iPodPlus%20Plan.pdf
43
The marketing team for Apple’s iPod
4) VP Strategic Marketing:4) VP Strategic Marketing: Employs consultants and research firms; responsible for research and development of product;
93
and development of product; focuses on product’s benefits
http://www.myipodplus.com/iPodPlus%20Plan.pdf
The marketing team for Apple’s iPod
5) VP Technical Marketing:5) VP Technical Marketing: Involved in news products, product roadmap, and rollout stages; involved with engineers
94
stages; involved with engineers
http://www.myipodplus.com/iPodPlus%20Plan.pdf
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P id f S l d M k i
Book Publishing Sales Operations
President of Sales and Marketing
Vice Vice Vice Vice
95
President, Retail
PresidentWholesale
PresidentJobbers
President,“OtherSales”
Organizational Level of Sales Function
96Simintiras, Antonis, John Ford, and Earl Honeycutt. Sales management: a global perspective. Routledge 2003.
45
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.”
Biemans, W., Brencic, M., Malshe, A. Marketing – Sales Interface Configurations in B2B Firms, 2009. 97
• However, it does not always , ywork out so well
98
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• “Marketing people talk to … business end-users, while salespeople typically spend their time with distributors and purchasing agents Marketers deal withpurchasing agents. Marketers deal with market segments and specific product groups. Sales, however, sees the world account by account.”
Biemans, W., Brencic, M., Malshe, A. Marketing – Sales Interface Configurations in B2B Firms, 2009.
99
For details see Appendix A: Marketing
100
gOrganization
47
101
Case Discussion: C dé NCondé Nast
102
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Case Discussion• We’ll follow throughout this• We ll follow throughout this
chapter Condé Nast’s marketing of a new magazine project “Fly & Sky”
103
y• a hypothetical magazine, but a real media company
Parent Company:Advance Publications
• Privately held• Si Newhouse and sons Si Jr. and
Donald• $15 bil personal net worth
104
estimated by Forbes• 2006: $6 bil revenues,
• Employees 29,200
49
Samuel I. Newhouse, Jr.
Donald E. Newhouse
105
http://images.forbes.com/media/lists/10/2002/7EWB.jpg
http://images.forbes.com/media/lists/10/2002/LOKT.jpg
Case Discussion: Condé NastAdvance Publications has a wide di ifi ti f didiversification of media
• Newspapers• Cable channels and distribution
M i
106
• Magazines
50
• Newspapers:• Cable TV (87 systems, 2 mil ( y ,
HH, VOD)• 12 TV stations
40 Cit b i j l
107
• 40 City business journals• Parade Magazine
•22 mil
Advance acquired 2 Major Magazine Groups
• Condé Nast (acquired in 1959)• Condé Nast (acquired in 1959)•Founded in 1909
• Fairchild (acquired in 1991)
108
•Founded in 1892• Consolidated them in 2005
51
Condé Nast Magazines• Allure• Architectural
• Concierge• Cookie
Digest• Beauty Biz• Beauty Report• Bon Appetit
• Details• Domino• DNR
El t B id
109
Bon Appetit• Brides• Cargo• Children’s Business
• Elegant Bride• Epicurious• Footwear News
Condé Nast Magazines• Men’s Vogue• Modern Bride
• Glamour• Gourmet Modern Bride
• New Yorker• Self• Supermarket News
T V
Gourmet• GQ• House & Garden• HFN
I F
110
• Teen Vogue• Traveler• Vanity Fair
• In Furniture• Jane• Lucky
52
Condé Nast Magazines• Vitals• Vogue• Women’s Wear
Daily• W
111
• Wired• World of Interiors
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
53
The Magazine Market• Magazines are one of the least
concentrated segments of the information industry
• Low entry barriers• But magazine companies have multiple
titl
113
titles• Magazines are inncreasingly specialized• Magazines Moving fastest into e-
publishing
• Advance is very strong in women’s titles
Product Line Diversification
titles• But wants to strengthen men’s
lines:GQ
–Golf Digest
114
• GQ• Hemmings Motor News• Details
–Golf World–Cargo–DNR
54
Case Discussion: Condé Nast• CN is now considering the launch of a
start-up magazine “Fly & Sky”start-up magazine Fly & Sky• Focus: aviation. • Target: men 25-55• Goals: duplicate success of Advance
115
• Goals: duplicate success of Advance Publication’s sister magazine Hemmings Motor News
• Goal: strengthen male oriented titles
Hemmings Motor News
M thl• Monthly• 800 pages• “bible” of car collectors
G id l
116
• Guides, almanacs• Website –w/classifieds• Bennington, VT, since 1954
55
• Hemmings Notes News• 210,000 subscribers, plus 50,000 at
newsstands ($6/copy)• Also car related magazines• Also car-related magazines• “Muscle Machines”• “Classic Car”• “Sport and Exotic Car”
117
• “Collectible Vehicle Value Guide”
• Special Interest Autos”• “T-shirts car memorabilia”
Hemmings Motor News
118“Hemmings Motor News” Hemmings Motor News: Auto Classifieds. Last accessed on 25 June 2008 athttp://www.hemmings.com/subscribe/current_issue.html?publication=HMN
56
Hemmings Muscle Machines
119“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
• Classifieds ads
Hemmings Website
Classifieds ads• product directories• Car clubs
120
• Parts locator• Customer service
57
Conde Nast aims to create i il i fa similar magazine for
aviation enthusiasts as “Hemmings” is for car
121
enthusiasts.
Question:
Wh t k ti ff t h ld• What marketing efforts should Condé Nast undertake to make the planned magazine “Fly & Sk ” i ?
122
Sky” magazine a success?
58
I.3 How Does the Marketing of Media
Products and Services Differ from Regular
124
Marketing of Other Products?
59
Marketing of Media Products & Services
• Many similarities to general marketing• But some special aspects
125
• But some special aspects
Fundamental Economic Characteristics of Media
1. High fixed costs, low marginal costs2. Convergence of production3. Divergence in cost trends in value chain4 A l i4. Accelerating returns5. Excess supp6. Network effects7. Non-normal distribution of demand8. Price deflation9 Intangibles
•126
9. Intangibles 10. Public goods11. Non-maximizers of profit12. Role of Government
60
Special Aspects of Media Marketing
• Low or zero marginal cost and• Low or zero marginal cost and high fixed cost means that customers cannot be charged a price that covers full cost.
127
p• Excess supply and competition
then lead to price deflation down to marginal cost.
• Media products are therefore ft i th thoften given away rather than
sold to identifiable users (broadcasting, free and online newspapers website
128
newspapers, website information).
61
• Often simultaneous “dual” marketing:• Content pitched to audiences for their attention
• Audiences pitched to advertisers
129
• Special complicating factor: some media industries are in secular decline.
• Daily circulation of American newspapers dropped 2.5 percent, to 45.5 million, in
130
p2005/6.
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>130
62
• From 1950-2000 penetration in US declined from 38% to 24% of the population24% of the population
• Circulation increased 19%, but population up 70%
131
• Another consequence: • To maintain price level aboveTo maintain price level above competitive level: oligopoly
• This means much less price competition, and more non-price competition such as marketing
132
competition, such as marketing efforts
63
Special Aspects of Media Marketing
• Low marginal costs and high fixed• Low marginal costs and high fixed cost also mean:• Strong economics of scale• This creates incentives for
133
This creates incentives for investment in marketing ahead or market
• Creates numerous new
Changing Distribution Technology
distribution channels• Creates fragmentation of
markets
134
markets
64
The Long Tail• Content moving away from g y
mass audience• This “long tail” arises from
distribution, especially
135
internet • Thin audiences
Chris Anderson. “The Long Tail.” Wired Magazine Issue 12.10 (2004)
• “If we release twenty-eight films, we need to create twenty-eight different audiences, twenty-eight different marketing campaigns.”
136Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
65
• In 1965, 80% of women
*
aged 18 to 34 could be effectively reached with three TV ads.
137
• By 2000, 97 ads were needed.
Aris, Annet, “Value-Creating Management of Media Companies”, McKinsey & Company, Inc., Chapter 8, 2003
http://www.bizjar.com/images/main/aram_tv.jpg
Especially high Uncertainty and Instability of DemandU ft d t• Users often do not know, or articulate, or communicate well their preferences for content.
• Many products are i d
138
"Experience goods” which are hard to sample in advance by consumers.
http://ia.imdb.com/media/imdb/01/I/14/72/70m.jpg
66
• Skewed distribution of success
Non-Normal Distribution of Demand
• Top five products across all media segments can generate between one-and two-thirds of revenues, although
139
they represent just 1 to 2 percent of the total number of products released.
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 th b t ll li t h th tthe bestsellers lists, reach the top of audience rankings, or win a platinum disc.
140
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
67
• In TV, only about a quarter of new shows survive beyond their d b t h i th iddebut season, whereas in the mid-1980s, about a third managed at least a second season (US
t k TV i ti )
141
network TV, prime-time).
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003http://tell.fll.purdue.edu/JapanProj/FLClipart/Nouns/Things/TV.gif
• Commercial lifespan of a media product is time-sensitive.
• Some minimum scale for efficiently promoting and exhibiting a new film,
• Limit on the number of films that
142Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.Cambridge: Harvard University Press, 2000
can be pitched in the market at one time
68
• Often short product cycle, short marketing window (for films often only 1-2 weeks)
*
films often only 1 2 weeks)
143
• Another consequence: Attempts at customer “lock-in”
• Many sales are for long-term subscription arrangements
bl TV• cable TV• telecom, wireless• ISPs• Magazines
144
• DVD Services• book clubs
69
Special Aspects of Media Marketing: Intangible Products
• Hard to prevent piracy• Can’t compete with “free”
145
• Because of increasingly easy piracy, media companies’ price levels are collapsing
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
146
•DVD players depends on supply of DVD (discs) which depends on number of other DVD player buyers.
70
Special Aspects of Media Marketing: Network Effects
• Often fad-driven • Often hit-driven
147http://users.rcn.com/copley.ma.ultranet/StereoNE/3D%20audence%20LIFE%20500h.JPG
• For these and other reasons, marketing is particularly important in the media and information field.
148
• And particularly difficult
71
• But perhaps the most significant special aspect of marketing of media to audiences: a huge
149
excess supply
I.4 The Attention Budgetg
150
http://www.appraisal-smart.com/multi%20tasking.jpg
72
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 different magazines• 500 full time simultaneous TV channels• Millions of online sites
151
Millions of online sites• Tens of thousands of new songs• 400 new theatrical films• Plus already existing content, aggregated
over decades and centuries
Special Aspects of Media Marketing
• Competing for consumer’s p gtime/attention budget, not only money budget
152http://www.shkaminski.com/Classes/images/Attention.gif
http://www.shkaminski.com/Classes/images/Attention.gif
73
Abundance- Magazines
153http://www.winterhouse.com/vancouver/10-magazine-rack.jpg
Abundance- Books
154http://www.glcc.org/ThingsToDo/pics/bookstore.jpg
74
Abundance- TV
155http://www.september11news.com/Oct7thLondonCanBushTV7.jpg
Abundance- Advertising
156
Source: http://www.signindustry.com/led/articles/2002-07-30-LBledBillboards.php3
75
•The more efficient the
*
distribution technology, the greater this overabundance, (even without the rapid increase in
157
content production).
• In 1960, the mass media supplied to an average American household was about 3 million words per day p y(including unwatched TV, unread papers, unlistened radio, etc.)
• By 1980, this figure had increased
158
y , gby 267% to 11 million words.
• By 2000, risen to 75 million words
76
• Estimate of the annual growth rates of business information is 12% 8% f i tifi12%; 8% for scientific information; and 5% for entertainment.
159
• All growth numbers are accelerating.
77
The Information Processing Capacity
• Communications process consistsCommunications process consists of three major and interactive stages: • Production of information
161
Production of information• Distribution • Consumption
• These three elements have to exist in some relation to each other.
• In the past the three stages of• In the past, the three stages of information grew slowly and more or less in tandem.
• More recently the parallel trends
162
• More recently, the parallel trends diverged. This has serious implications.
78
• The real problem is not production of information, andproduction of information, and certainly not distribution, but rather its consumptions.
163
• The fast-growing content production and the hugely p g ygrowing distribution, meet attention that is hardly growing
164
79
Human Capacity
165http://www.biawa.org/images/humanbrain gif
Limits to Human Information Handling and Processing
Classic st d fo nd an•Classic study found an average person cannot deal well with more than seven pieces of information in their
166
pieces of information in their mind at a single time (Miller, 1956)
80
• other research has shown that a person will on average have difficulty integrating y g ginformation if facts arrive faster than one every three minutes, in a sustained way.
167
, y(Dennis, 1996)
http://sprott.physics.wisc.edu/fractals/collect/2000/time%2520out.jpg
• sustainable reading speeds which include comprehension of the information and its absorption, are about 50 bits/secabout 50 bits/sec.
• speed of speaking and of listening comprehension are somewhat slower and universal.
168
• Universality of these ceilings indicates that the constraints are in coding and decoding them mentally.
81
Human Processing Capacity •Single-peaked curve (Taylor, 1984)1984).
•With both light and heavy loads, processing is low.
169
• Boredom and information overload create low/processing cognitive rate.
Processing
C bilitCapability
Boredom
Overload
170
Information Load
Overload
82
171
A. Strategies to Gain Attention
172http://creative.gettyimages.com/source/classes/FrameSet.aspx?&UQR=nfoagi&pk=4&source=front&lightboxView=1&txtSearch=attention&selImageType=7&chkLicensed=on&chkRoyaltyFree=on
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1. Pay for Attention• Consumers could be paid directly for
reading advertisement or providingreading advertisement or providing their demographics• Money, campaigns, as discounts• But most efforts to structure such a
system have failed for now
173
system have failed for now• Consumers can be “paid” by
entertainment content provided for free
• Provide entertainment content• Dotcom company CyberGold was
such an attemptit paid money and coupons to- it paid money and coupons to
consumers to watch online ads
174
84
2. Add Time Allocation • (spend more time on informational activities)
3 I tt ti ti3. Increase attention time• Coffee, pharmaceutical entrances
175
4. Multi-tasking
85
5. Change the Way Information Gets
177
Presentedhttp://www.ramshacklegames.com/users/harley/images/btv.jpg
• Shift to a dense form of presentation with more visual and symbolic information• Television advertisements are an
exampleexample.• Eyes can get visual information at a
broadband megabit rate. • Written information gets absorbed at the
much slower rate of about 300
178
words/min., or 200 bits per second• Ears are even slower about 200
words/min. or about 150 bits per second.
86
• In consequence, there is a great future potential for media that can provide parallel information p ptracks.•Pictures•Text
179
•Text•Sound•Even smell, taste, touch.
http://www.thespiderawards.com/AwardsPass/WINNERS-NOMINEES/PRO-advertising/images/The-Five-Senses.jpg
6. Information ScreeningThe compression of information
• editing down of masses of ed t g dow o asses ofacts
• “The Value-Added is the Information Subtracted”
180
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87
7. Increase Marketing Effort to Gain AttentionEffort to Gain Attention For One’s Content and Usage
181
g
88
To Sum Up:• The most fundamental problem for media
marketing: the rising competition for attention
*
attention• There is:• Increased creation and production and
distribution of information
184
• But only slow growth of overall attention
• This leads to rising costs of seeking attention for media products
89
• So we have a cost inflation for media products and pservices• And a cost inflation for
di k timedia marketing
Together, these two trends create the fundamental problem for mediamarketing: The Price/Cost Squeeze•This is the squeeze in which media firms find themselves
186
90
•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 advertising•But even here, a much greater competition lowers unit prices for advertising
187
lowers unit prices for advertising
91
*
189
The “4 P’s” of Marketing
P d t• Product• positioning• Pricing
190
g• Promotion
92
We’ll discuss first the “product” and its design
III.2 Product D iDesign
http://www.directshopper.de/image/zoom/app/apple-powerbook-g-4-667-mhz-dvi-combo-m-.jpg
ttp://comparestoreprices.co.uk/images/unbranded/t/unbranded-the-lord-of-the-rings--the-two-towers-poster.jpg
192
93
• Media firms must determine right portfolio mix between “Mass Market” and “niche content ”Market” and “niche content.”
Eli M. Noam, Production 193193
One observation from the earlier Chapter “Production”:
d t ti f
*
product creation moves from a one-way process into an interactive process of product d i k t d
194
designers, marketers, and consumers
94
Trend: Increasing Integration of Marketing and Product Design
• Emergence of “MTS-circles” (marketing-technical-sales) meetings
• Engineers and designers accompany
195
sales and marketing people on their customer visits
• Study marketing surveys
• Customer surveys
External Analyses
y• Focus groups• Demographic analysis http://www.medigent.com/assets/Images/subpages/photos/management.jpg
Eli M. Noam, Production 196
analysis• Feedback to related projects
196
95
• The film Fatal Attraction was test-screened for four different endings.
197Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
“TV franchise formats such as Big Brother and Pop Idol were designed, tested, and produced for extended international cross-media revenue from the start.”
198
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
96
• TV blockbuster formats such as Big Brother and Pop Idol were designed, tested, and produced for g pextended international cross-media revenue from the start.
Eli M. Noam, Production 199Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003 http://us.ent4.yimg.com/tv.yahoo.com/images
/he/photo/tv_pix/cbs/big_brother_3_photos/daniellelisa.jpg 199
Who Wants to be a Millionaire?
Eli M. Noam, Production 200http://www.cnn.com/interactive/entertainment/0201/reality.tv.gal/10.millionaire.jpg
200
97
American Idol
Eli M. Noam, Production 201http://www.fox.com/idol2/showinfo/images/show_info_photo.jpg
201
Survivor
Eli M. Noam, Production 202http://money.cnn.com/2001/03/14/companies/ncaa_cbs/survivor.jpg 202
98
di i d t d “t t
Content Design*
•media companies adopted “test tube” design products, picking performers for
203Aris, Annet, “Value-Creating Management of Media Companies: Chapter 4”, McKinsey & Company, Inc., 2003
•boy and girl bands•reality-show heroeshttp://www.trifectaly.com/heidiblog/nsync.jpg
External Design• A nicely designed DVD
provides incentives to buy the movie rather than downloading a pirate copy.
204204Consumers Vs Marketing - The DVD War http://www1.epinions.com/content_4286750852
99
• A new type of marketing-oriented editor. Concept of “The Total Newspaper,”. N i d di h i
*
- Newspapers tried to coordinate their editorial and business departments in order to create an attractive “product”.
205
Dennis Derrick, “Media Management in the Age of Giants,” Iowa State Press
• Many journalists find that y jintegrating marketing into the editorial side is bad for newspapers and magazines’ quality and credibility
206
q y y
206206
100
• Fine line between pushing e e betwee pus ginnovation too far for consumer acceptance, and of being a “me-too” product
207
being a me too product.
• Media companies are sensitive on how much marketing should
Sensitivity*
influence editorial functions (“product design”)
• For newspapers, separation of
208
business and editorial • If quality declines, credibility of
brand declines
101
P d t D l tProduct Development As a Key Factor
209
Product Innovation• Gets out of commodification
• Enables higher price
*
• Enables spin-offs and sequels• But
• higher risk
210
• Development cost• Consumer acceptance
102
“Originality”
•Making a product “cool”
*
Making a product cool
= not cool = cool
211Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Source: www.sonystyle.com Source: www.apple.com/itunes
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
212
p• Having to learning new genres,
character relations, and functions prevents many consumers from choosing a product
103
• A media firm needs must create a transparent selection process p p• Not just based on the personal
judgments, but reflect perspectives of the company as a whole, in a structured and transparent approach. ( ti t fi i l t t
Eli M. Noam, Production 213
(e.g. creative aspects, financial target of ROI.)
213
• This may mean including y gadvertisers and market research perspectives – a sensitive subject.
Eli M. Noam, Production 214214
104
• But danger: the more structured the process is, the higher the risk of stifling creativity.g y
Eli M. Noam, Production 215
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
http://raga.ouvaton.org/action/materiel/outils/danger/att%20danger.gif
215
•Peter Chernin, President of News Corp.: “All the benefits of size whetherAll the benefits of size, whether it’s leverage, synergy or scope,
are fundamentally the enemies of creativity ”
Eli M. Noam, Production 216
creativity.
216
105
(7) Statistical Tools for Product Selection?
Eli M. Noam, Production 217217
MOVIEMOD• MOVIEMOD model produces
f t f b ffi fforecasts of box-office performance, and offers diagnostic insights into the drivers of box-office performance, including marketing strategies.
Eli M. Noam, Production 218
• The models do not work well.
Erasmus Universiteit Rotterdam, December 1997 218
106
How can one analyze the design of a product?design of a product?
Conjoint Analysis is one approachpp
107
• Conjoint analysis decomposes customer’s preferences forcustomer’s preferences for products and services into the “utilities” associated with each level of each attribute of the
221
productLilien, L.Gary. Rangaswamy, Arvind. Bruyn De, Arvind. “Conjoint Analysis: Marketing Engineering.” Decision Pro. Last accessed on 11 June 2008 at http://www.mktgeng.com/downloadfiles/technotes/TN09%20-%20Conjoint%20Analysis%20Technical%20Note.pdf
Trade-off Analysis – Conjoint Analysis
• Disaggregate a product into the gg g pvalue given for each attribute by consumers.
222Thomas T. Nagle & Reed K. Holden, “The Strategy and Tactics of Pricing: A Guide to Profitable Decision Making,” Second Edition 1995
108
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
223
quality• But it’s rival Matsushita (Panasonic)
promoted its greater play length – few tapes to buy, rent and load.
Cooper, Lee, G., “Strategic Marketing Planning for Radically New Products,” Journal of Marketing Vol.64 Jan. 2000(in Lyons, 1976, p110).
• This approach did not work for the Betamax
*
for the Betamax• missed importance to consumer of full-feature length of pla o er the
224
length of play, over the picture quality.
Cooper, Lee, G., “Strategic Marketing Planning for Radically New Products,” Journal of Marketing Vol.64 Jan. 2000
109
• A conjoint analysis based on consumer surveys may have
*
provided Sony with a different product strategy.
• There are computer packages (i.e. ACATM, Adaptive Conjoint Analysis) thatConjoint Analysis) that generate an optimal set of trade-off questions and i t t lt
226
interprets results.
110
227
228
111
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
The “4 P’s” of Marketing
• Product• Positioning• Pricing
P ti
230
• Promotion
112
II. 1. Demand AnalysisAnalysis
231
http://www.sunways-direct.com/magnifying%20glass.JPG
Positioning to DifferentiateThe way one wants
t t i
*
customers to perceive, think, and feel about one’s brand versus one’s
titi
232
competition.
113
• For positioning of product, p g p ,need to understand one’s market.
Understanding One’s Customers
*
234
114
For details on Market Analysis, see the Chapter “DemandChapter Demand
Measurement for Media”
Th f ll i l f
235
• The following are only a few points
• The challenge for media companies is to predict consumerpredict consumer preferences
• Which customer Preferences
236
Preferences themselves do not yet know
Lamb, Hair, Mc Daniel, Marketing, 1996, South-Western College Publishing, Cincinnati, Ohio, page 330http://creative.gettyimages.com/source/classes/FrameSet.aspx?&UQR=nfoagi&pk=4&source=front&lightboxView=1&txtSearch=attention&selImageType=7&chkLicensed=on&chkRoyaltyFree=on
115
Demand Forecasting Methods
1. Test marketing2. Expert surveysp y3. Retailer surveys4. Historical analogy5. Surveys/sampling6. Focus groups7. Psycho-physiological tests
237
8. Automated sample metering9. releasing of sales10. Lab experiments11. Econometric and conjoint estimations
• Its first job of content marketing is to identify themarketing is to identify the composition of the content’s most likely audience, based on an analysis of the story,
238
y y,genre, and style.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005238238
116
• For film, for example, they can also learn a great deal about the makeup of the audience bymakeup of the audience by conducting exit polls, (like those in elections), to evaluate socio-demographics of audiences.g p
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
• From those data, marketing departments can determine the effective of other targetedeffective of other targeted television and campaign advertising succeeded.
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
117
• If the people who show up at the theater demographically match the group the studio targeted in their advertising campaign the film hasadvertising campaign, the film has high “marketability,” the advertising has been effective to activate a particular audience and will probably l k i th k talso 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
118
• On the other hand, when films have large opening audiences which declines rapidly, they have “high marketability low playability ” (Thismarketability, low playability. (This actually shows the effectiveness of the marketing: “it’s a feather in our hat, since it shows we did a good job with
b d i ”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
244
119
Case Discussion:Estimating the
Demand for “Fly245
Demand for Fly & Sky” Magazine
Market and market size?• Pilot population: ~3 mil globally• People strongly interested in aviation:
estimated 5 mil worldwide• Service & product providers
• Insurance, fuel, maintenance, resorts: estimated 300 000 WW
246
estimated 300,000 WW• Total: 8.8 mil WW• Of these one quarter in US= 2.2 mil ->3%
of US population
120
•Market size• Indicator: Airshows are 2nd largest outdoor events, by audience, after NASCARNASCAR
• Weeklong Airshow in Oshkosh, WI, draws 800,000, of whom 80% are non-pilots
247http://imagesource.allposters.com/images/pic/PTGPOD/440584~Extra-300-Aircraft-at-Airshow-Oshkosh-WI-Posters.jpg
Sub- Audiences for Aviation Magazines
• Student pilots• Old-timers
• Do-it-yourselfers (home-builders)Old timers
• Military• Weekend flyers• Helicopters• Airlines
• Techno geeks• Space buffs• Flight controllers• Professional service
248
Airlines• Women• Private jets
providers• “Walter-Mitty” adventure
dreamers
121
100120140
Potential Reader Segments
2 million
020406080
100
fs ffs ts rs ts es ts rs lf ry s o
1 million
249
Adventure
buffs
Space B
uffs
Students
Week-e
nders
Helico
pter Pilo
ts
Seaplan
es
Ultrali
ghts
Active
Amate
urs
Do-it-yo
urself
Military
Airline C
aptai
ns
Prof S
ervice
Pro
Magazine
122
II.3. Product Positioning Requires Competitor Analysis
251
p y
“Competitor Analysis” is being discussed in thebeing discussed in the
chapter “Strategy”. It is only briefly touched here.
252
y y
123
Tools: for positioning radar chart
253
Tool: Competitor strength gridsxx xx xx xx xx xx xx xx xx xx xx
BMG
Universum
Sony
EMI
254
EMI
Warner
124
Identity Competitors• Easier said than done.
Example: Who is Porsche’s mainExample: Who is Porsche s main rival?According to Porsche CEO, it is---Rolex!
Eli Noam, Media Strategy 255
• Competes for disposable income of high-income, prestige-seeking, middle aged males.
P d tProduct Positioning
256
g
125
Audience Distribution and Content Quality Level
Aud
ienc
e
257
Content Quality Level
Positioning
Aud
ienc
e
258
Program Content LevelQ
126
Optimal PositioningA
udie
nce
X
259
Program Content LevelQx
•A second and third content provider Y and Z will positionprovider Y and Z will position themselves relative to X so as to maximize sales, too.
260
127
Market Niche PositioningA
udie
nce
XY Z
261
Content Quality Level
Eli Noam, Media Strategy 262
128
Examples forExamples for Positioning
263
Example: Fox TV Network• “Generation Fox”- label for
company’s desired core
*
demographic • Goal: to promote News Corp. as a
company strong in capturing young
264
adults
Atkinson, Claire, “’Generation Fox takes on Viacom,” Advertising Age, April 17, 2006. p. 41
129
Examples for Positioning• Fox TV• Apple iPad• Apple iPad• ESPN• Eastman Kodak• CBS EntertainmentCBS Entertainment• Disney Videogames• Nintendo Wii
News Corp’s “Generation Fox” • Promotes the entity as a one-stop-
shop buy for the 12 24 year old
*
shop buy for the 12-24 year old demographic.
• Goal is to outdo Viacom’s MTV t k d CBS/Ti
266
networks, and CBS/Time Warner’s CW
Atkinson, Claire, “’Generation Fox takes on Viacom,” Advertising Age, April 17, 2006. p. 41
130
Generation Fox
• Emphasize breadth of youth-oriented properties socialoriented properties, social networking site (myspace.com), gaming site, network TV and syndication shows and Mobizzo, the
l b l h t t f
267
global phone-content company from Fox Mobile Entertainment.
Atkinson, Claire, “’Generation Fox takes on Viacom,” Advertising Age, April 17, 2006. p. 41
Example: Apple’s iPad Positioning
Positioned as an alternative toPositioned as an alternative to Amazon.com, Kindle, and Sony’s Reader, with color and larger screen This enables magazinescreen. This enables magazine use (ads) and other color applications
http://it.tmcnet.com/news/2010/02/22/4634238.htm268
131
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 2010http://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
269
Marketing Consumer Gadgets to Women
Women influence 3/4ths of all
*
purchases Women : demonstrates need for
product
270
Men : demonstrates product features
Heller, Laura. “What women want: CE gadgets - consumer electronics -Marketing Technology to the Female Consumer”. January 5, 2004
132
Eastman Kodak Women more influenced by product’s
f
*
ease of useMarketing stresses ‘ease of use’ and
‘user – friendliness’h i l d il lik i l
271
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
Example: CBS’ Positioning the show Entertainment Tonight on
CBSTh h h d d li i iThe show had declining ratings, and a lack of loyalty from viewers; 71% of viewers said they would be “not very” or “somewhat”
272
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
133
Competing shows on “news of entertainment”- Today Show, Good Morning-America, CNN’s Hollywood Minute, Hollywood Insider
273Trout, Jack. New Positioning: The Latest on World’s No. 1 Business Strategy. McGraw-Hill, 1996, p. 104
273
CBS’ Positioning Entertainment Tonight
Plan of action: -Shift from “news” to “inside”-Stress the word “inside”… i.e., beyond gossip, exclusive access-Re-title show segments (Inside
274
Movies, Inside TV)
Trout, Jack. New Positioning: The Latest on World’s No. 1 Business Strategy. McGraw-Hill, 1996, p. 105
274
134
Example: Disney’s Positioning Videogames
• Women account up to 40% of• Women account up to 40% of gaming audience.
• 64% of online gamers in the U S are women
275
U.S. are women.
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006275275
Positioning Videogames
• Targeting female audience• Partnership with TV shows,
such as game related to “Desperate Housewives”
276
p• Print ads in soap opera
magazinesSource: Video games unveil feminine side, Advertising Age 2006
276276
135
• Disney’s Buena Vista Games offers game “Disneyoffers game Disney Princess” (young girls) and “Desperate Housewives” (first game ever targeted for
277
(first game ever targeted for 18-49 year old).
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006277277
• Stress personalization, dialogue and characters with
Content
dialogue and characters with aspirations.
• Also women tend to play in shorter time segments
278
shorter time segments.
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006278278
136
Example: Positioning Nintendo’s Videogame
ConsolesConsoles• Nintendo attempted to reach
the female market though the Wii game console
279
Wii game console.
Beth Snyder Bulk, Video games unveil feminine side, Advertising Age, Oct 2006279
Nintendo Wii
280280http://wii.nintendo.com/images/04_hardware/feature_img_main_hardware.jpg
137
Nintendo Approach• Nintendo’s objective: to j
position the Wii as a game board that will remain in the living room instead of the
281281
teenager's bedroom.
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped segment of potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Wii experiment by Nintendo• Nintendo merged viral
marketing strategies withmarketing strategies with Tupperware parties in Japan
282282Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped segment of potential users in an effort to promote its new console, Los Angeles Times, Dec 06
138
Wii experiment by Nintendo
• The so-called “alpha moms” pwere invited to play together with their friends.
283283Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped 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 y gplayers, but they could be influential within their communities.
284284Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped segment of potential users in an effort to promote its new console, Los Angeles Times, Dec 06
139
Wii experiment by Nintendo
• Getting the simplified and i l ll i h h dwireless controller in the hands
of this segment of potential users was a key element of Nintendo's marketers strategy
285285
Nintendo s marketers strategy.
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped segment of potential users in an effort to promote its new console, Los Angeles Times, Dec 06
Wii controller
286286
http://www.sciam.com/media/externalnews/2006-12-15T175532Z_01_NOOTR_RTRIDSP_2_TECH-NINTENDO-RECALL-DC.jpg
http://www.clubskill.com/downloads/Nintendo%20Revolution/Wii_nunstyle2_0501.jpg
140
C dé N tCondé Nast:Product Positioning
288
141
Case Discussion: Conde Nast
Example for diversity: US Magazines on subject
289
of Amateur Flying (partial list)
Case Discussion: Cande Nast’s Fly & Sky Competing US Magazines on Subject of
Amateur Flying (partial list)Amateur Flying (partial list)-AOPA Pilot -Aviation Consumer -Kit Planes -Light Plane Maintenance-Sports Pilot -IFR
290
-Sea Planes -Plane & Pilot-Private Pilot -Aviation Safety-Cessna Pilot
142
-Airway-Flight Training-Aeroplane
-Ultra Flight-Flight Journal-War Birds p
-Aviation History-Air Craft Illustrated-IFR Refresher
-Air Enthusiast-Flying-Air Classics
291
-Northeast Flyer-Cessna Pilots’ Magazine-Bonanza
-Air and Space- Air International
Additionally, there are several magazines for:• Commercial pilots• Helicopter pilots• Military pilots• Military pilots• Airline managers• Airport managers• Air freight companies
292
• Mechanics and Repair Shops• Designers and manufacturers • Avionics• Military contractors
143
2 million [Arian: This needs serious
1 million
needs serious clean up]
293
Conclusion• The market for serious Pilots is
saturatedsaturated• But the market for flying “adventure
buffs” (“Walter Mitty” types) is under-served
294
144
145
I. MARKETING OF MEDIA• Structure and Organization• Products and Services
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
• The Attention BudgetII. MARKET ANALYSIS
ForecastingPositioning
III. BRAND CREATION• Design• Diversification
IV PRICING
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCEIV. PRICING
V. PROMOTION• Viral Marketing
VI. ADVERTISING • Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
III BrandIII. Brand Creation
298
146
299
Branding
Branding Advantage • Creates differentiation, instead of
commodification • Provides a weapon to counter retailer p
power• Simplifies consumer choice• Communicates quickly• Projects credibility
300
• Strikes an emotional chord• Motivates the respondent• Creates user loyalty• Permits pricing at a premium
147
Strong Brand
301
Difficult Brand
302
148
• Consumer electronics markets
Consumer Electronics
are crowded with brands and products, and near commodity
303Parry, Caroline. "Analysis: Sharp Aims for High-End Electronics Market." Marketing Week 29 (2006): 11. 303303
CE and Branding
• Heavily dependent on brand y pto communicate unique benefits and positioning of products and the parent
304
company
Best Global Brand 2006- A Ranking by Brand Value. Interbrand/Businessweek304304
149
Trend • Emphasis is on advertising
the corporate brand than thethe corporate brand than the product
• Focuses on consumer lifestyle
305“Who Needs Friends? Study finds P-O-P stronger influence than word-of-mouth,” P-O-P Times Dec. 2005: 78. 305305
• Example: Sharp is repositioning p p p gitself to become a ‘premium’ electronics brand, on the high end.
306Parry, Caroline. "Analysis: Sharp Aims for High-End Electronics Market." Marketing Week 29 (2006): 11. 306306
150
• Example: Philips tried to reinvent its image to one of ‘sense and simplicity’.
307Campbell, Kerry. "Thinking Simple At Philips." Business Week 4013 (2006): 50.307307
Ultimate Marketing Tool for Newspapers: Credibility
• Research shows that the more• Research shows that the more people trust the newspaper, the greater the strength of it’s circulation.
308
Source Philip Meyer and Yuan Zhang……, 2002308308
151
Brand especially important for media products where users do not
have much informationm and search costs are high
• Cable programs• Film• Authors
309
• Authors• Consumer electronics
Branding for Media Firms• Name, logo, etc.• Color, distinctive look, etc.• Promotion of brand identity
310
152
On-Screen Logos
h l k l• Many channels keep a logo on screen
• Allows “Channel surfers” to
311
quickly identify what they are watching
http://www.books.com.tw/magazine/item/cnn/logo.jpg http://chinese.discovery.com/discoverychannel/features/images/logo.gif http://www.lifetimetv.com/
312
153
HBO: “It’s not TV, it’s HBO”HBO
313
CNN • Network positioning as a
knowledge provider, summed up ow edge p ov de , su ed upby the phrase “Be the first to know” – repeated both off (mobile, web and radio) and on the air
314
)
Tungate, Mark. Media Monoliths: How Great Media Brands Thrive and Survive. Kogan Page, 2004, p. 21
154
http://www.depauw.edu/photos/PhotoDB_Repository/2007/2/CNN%20Logo.jpg
315
CNN • Ensures that its marketing message is
consistent in all platforms- screen to poster to press.
• CNNI’s branding is incorporated in set design, music, graphics and the
i l k f h h l Th
316
on-air look of the channel. The network’s logo is an important element in its strategy.
Tungate, Mark. Media Monoliths: How Great Media Brands Thrive and Survive. Kogan Page, 2004, p. 21
155
Cross-Media Brands• An increasing number of brands appear in
multiple media• TV and cable networks have substantive
(not just promotional) Internet sites• cnn.com
• TV networks have multiple cable
317
• TV networks have multiple cable channels (NBC, MSNBC, CNBC)
• Some magazines have TV channels –Playboyhttp://money.cnn.com/2005/08/17/news/midcaps/adultentertainment/playboy_bunny.03.gif
Brand Extension
•Licensing &MerchandisingLicensing &Merchandising•Nickelodeon: toys, theme parks•Disney
318Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 401, 1998
156
•Making one program the flagship of the network
Branding through “Anchor Programs”
• For a time A&E’s brand centered around the show “Biography”• Comedy Central’s brand image
319
Comedy Central s brand image “South Park.” “The Daily Show” with Jon Stewart, and the “Colbert Report”
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 400, 1998
http://www.londonpostcard.co.uk/images/southpark/spmp3057.jpg
• How to develop a cohesive and
Strategic Questions for Media Companies
peffective brand structure
• Which brands to emphasize and build
• Whether to use the same brands
320
Whether to use the same brands across product groups and countries
• How different brands should be interrelated
157
•The branding task is easier for specialty channels like Nickelodeon and MTV.
•Traditional TV Networks have task to create one identity as they sell an array of dissimilar products directed at different audiences such as:
321
different audiences, such as:news, sports casts, sitcoms, movies & cartoonsHoward 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 (“F 4”)(“Fun 4”)
•National networks increasingly require local TV affiliated stations to call themselves by the network name and
322
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
158
Promoting the AT&T Brand• SBC launched a huge
marketing campaign in 2005marketing campaign in 2005 after the merger with SBC in order to rebrand the company as the new AT&T
323
as the new AT&T
Source: Integrated Marketing SUCCESS STORIES, B 2 B 2006323323
Promoting the AT&T Brand
• Examples were a huge billboard p gon New Year's Eve in Times Square, and an online “roadblock” on websites advertising
324
• Live programming und TV spots at big events, such as Super Bowl or the Academy Awards
Source: Integrated Marketing SUCCESS STORIES, B 2 B 2006324324
159
Local Television Promotion
• At almost all of the local• At almost all of the local television stations in the United States, promotion of news has the single highest priority to
325
the single highest priority to give stations identity and credibility.
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006
325
Promoting Cable Channels to Audiences
• NBC’s own in-house marketing agency NBC Agency offers services regarding advertising and
326
promotion to all NBC entities, such as CNBC, and the afilliated stations 326
160
CentralizedCentralized Brands
161
• Brands can be so important that the “Virtual firms” emerge
• Nationally recognized brand name
*
Nationally recognized brand name becomes major asset
• The role of the company becomes coordination rather than production,
329
p ,or even design.
• One major function of b d i t h l t l
Internal “Brand Auditing”
brands is to help central management establish control norms over a heterogeneous organization
330
organization• Brands are major
expression of corporate culture and strategy
162
The “Centralized Brand” View:
• Firms must have a consistent branding
*
branding• Consistent brand architecture
across countries and product lines
331
• Leads to push for brand consistency• Same color, logo size
• But a single brand aiming to j t t h t
The “Diverse Brand” View*
project to a heterogeneous population may be less effective than several sub- brands
Ti W AOL
332
•Time Warner: AOL, Warner Bros., Time Magazine, Etc
163
Diverse Branding Strategies
• Viacom NewsCorp Time• Viacom, NewsCorp, Time Warner, Bertelsmann (in US): Weak overall brand; strong sub-brands
333
• Disney: strong overall brand; often weak sub-brands (“Buena Vista”)
Viacom Branding• Viacom’s networks, MTV and
Nickelodeon are highly recognizable
*
Nickelodeon, are highly recognizable brands. Similarly Paramount Pictures. Blockbuster Video and CBS were showing individual brands when owned by Viacom, and could
334
y ,be readily spun off on their own
• But Viacom itself is not well known
164
Viacom Brands
335“Conglomerate Business Law Economics Society.” Conglomerate. Last accessed on 17 June 2008 athttp://entrepreneur.typepad.com/photos/uncategorized/viacom.png
Viacom Brands
336“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
165
Corporate Image Advertising• Creating a positive image for the
firmfirm• Boosting employee morale and
smoothing labor relations.• Helping diversified companies
bli h id i f h
338
establish an identity for the parent firm rather than relying solely on brand names.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
166
Media Brand CreationVivendi
• Stresses its field not itself
*
Stresses its field, not itself. Projects best as servicing human need, and not flimsy light entertainment.
339
entertainment.• Theme “Entertainment. It’s vital.”
Rolled out in France in 2007“Money Digest”. The Hollywood Reporter, November 28, 2006
Entertainment. It’s Vital.
340“Advertising campaign Manifesto.”Vivendi. Last accessed on 10 June 2008 athttp://www.vivendi.com/pub/en/manifeste.php
167
Vivendi • Ads highlight the significance
f i i d il
*
of entertainment in daily living, equating the need for entertainment with the need for f d d t
341
food and water • An a-technological image.
Brand Creation:Corporate Image Advertising:
1. Consumers are often not interested in this form of advertising2. Often perceived as costly self-indulgence
342
3. Often perceived as the firm must be in PR trouble (ex: oil companies)
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
168
Stars as Brands
344
169
Brand Name Stars • Actors, singers, directors, g
composers • Characters(“James Bond”)• It often takes a major marketing
345
It often takes a major marketing investments to build a star brand
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
t th t l b it d t
346
suggests that celebrity endorsement contracts are viewed as a worthwhile investment by the market
Jagdish Agrawal & Wagner A. Kamakura, “The Economic Worth of Celebrity Endorsers: An Event Study Analysis,” Journal of Marketing, Vol.59, July 1999
170
Jamie Lee Curtis
http://justendeal.com/blogimages/jamie.pnghttp://justendeal.com/blogimages/czj.png
Jamie Lee Curtis
Catherine Zeta-Jones
•New FTC Regulations on Testimonials andTestimonials and Endorsements, 2009- Must disclose connections
b t d ti dbetween advertisers and endorsers
171
172
How Does the Internet Affect Media
Branding?3 stages
351
3 stages
Stage 1 Perception:Stage 1 Perception:“The Internet Destroys
Brands”
352
Brands
173
• The Internet was assumed to b l l l i fi ldbe a level playing field
• Low barriers to entry• Low economies of scale
353
Low economies of scale
Led to view of brands as:• Brands are Industrial Age
legacieslegacies• Internet leads to end of mass marketing
• Price comparison shopping would
354
• Price comparison shopping would overwhelm brand image
174
• But then, pendulum swung in other direction
355
Stage 2 Perception:Stage 2 Perception:“Brands are Essential on the
Internet”
356
175
It Was Soon Found That Brands Are Important
O 100 illi b i i
*
• Over 100 million websites in 2008
• Most Internet users go to the
357
same sites again and again
• As a result, in the dot.com bubble, companies spent as much as 90%
f th i it l d ti i d
*
of their capital on advertising and marketing their brand (BusinessWeek 11/15/99)
• Seeking large market share
358
Seeking large market share
176
Stage 3 Perception:Internet Enables
“Brand” Customization:from mass-brands to customized, sub-
brands
359
brands
Branding Structure
M t b d
*
• Meta-brandsWith sub-brands tailored to sub-
markets.
360
177
• 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
361
,society recognized heterogeneity, and sub-brands emerged
• A single product and marketing approach to a heterogeneous population may be less effective than
l b d tseveral sub-products• Technology enables customization
• Cable TVI
362
• Internet• Computer data bases
178
• 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
363
ads, adjust brand strategies
Customization Issue: Privacy Protection
“It’s a fine line that separates good customer
364
ggood service from stalking”.
(http://channel6000.com/news/stories/news-981004-202141.html)
179
The Cost of Customized Branding
• Creating information and interaction is not cheap
• Requires skilled people and
365
q p ptechnology
• The Internet generates more human interaction, not less.
• Therefore do not expect Internet toTherefore do not expect Internet to cut costs of relationship-creation.
• On the contrary, Internet technology and marketing requires
366
technology and marketing requires more people, more effort, more creativity
180
III.5. The Creation of Brand
*
Creation of Brand Loyalty and of
368
“Lock-in”
181
• For media companies, cell phone service providers, or cable operators facing a saturated
*
p gmarket and competition, retention and are low churn critical success factors
http://msnbcmedia msn com/j/msnbc/Components/
369
http://msnbcmedia.msn.com/j/msnbc/Components/Photos/040218/040218_hmed_cellphones_1030p.hmedium.jpg
Goal of Lock-in• Reduce user’s ability to y
switch
370
182
Elements for Lock-In• Differentiate one’s product or p
service• Establish long-term relation
with user
371
with user• Raise customer’s investment
in the relationship
Elements for Lock-In:• Loyalty programs• Brand-specific training• Creation of community and
network effects
372
network effects• Contractual commitments
183
Seller Strategies for Lock-in• Customer will require concessions
to agree to be locked into agree to be locked in• Seller must invest in lock -in
through up-front discounts.F b ith hi h
373
• Focus on buyers with high switching costs
Lock-In Strategies• Get customers to invest in the supplier’s technology by theirsupplier s technology by their participating in customization.•Customers thereby raise their own switching costs
374
own switching costs.•Increase switching cost by selling complementary products
184
Lock-in Through Community Creation
• A strong sense of community is aA strong sense of community is a major brand asset among customers
• Substantial time and effort to develop a vibrant community by
375
p y ycommunity itself or by marketers.
• Creates switching costs
Example: iVillage• The Women’s Network
• A collection of Internet communities for women that attract and retain a base of highly loyal customers•Parent Baby Namefinder • Interactive
376
• Interactive Pregnancy Calendar
•Better Health
http://www.westonnewcomers.org/images/ek_2_3.jpg
185
W N t k
iVillage Creates loyalty over competitors:
• Women.com Networks• CondéNet• Oxygen Media
377
yg• Martha Stewart Living
Omnimedia
Community Lock-in in Phones
• Ex. AT&T
N
• “Reach out and Touch Someone.”
• Ex. Alltel • Ex. T-Mobile
• “My Circle”
Howard, Theresa, “T-Mobile Targets Five Folks You Call Most,” USA Today, April 16, 2007. p. 7B
•“Stick Together”•“myFaves”
186
• T-Mobile research
N
•65% of cell phone calls go the same five people
•Consumers wanted networks
379379
Consumers wanted networks built around them
Howard, Theresa, “T-Mobile Targets Five Folks You Call Most,” USA Today, April 16, 2007. p. 7B
• Magazines offer much more than information and entertainment.
Community in Magazines
• They tap into a sense of Community and belonging of readers
• few audiences are as loyal asfew audiences are as loyal as those of a magazines…
-Michael Harvey, Top GearLiz Clark, “The Rise and Rise of the UK Magazine Market,” London Press Service, 29 June 2005, http://www.uktradeinvest.co.nz/media/news/story_19.htm#. 380
187
Customer Loyalty*
381
• But community can take on a life f i d i iof its own and turn against its
creators•Product chat lines
• Can unite fragmented consumers
382
188
• How could “Fly & Sky” form
Case Discussion:
y yrelationships with its customers to enhance loyalty?
384
189
Building a brand for “Fly and Sky”
Case Discussion:
y•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/lock-Create loyalty programs/lock
ins and use discount programs.
386
190
387
Eli Noam, Media Strategy 388
191
IV. Pricing
389
ghttp://fourh.ucdavis.edu/4hresource/clipart/other/pics/dollar%20signs.gif
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
192
The Marketing Mix: The “4 P’s”
• Product• Positioning• Pricing
391
• Promotion
• Pricing – the setting of prices by seller--is expression of a business’ strategy and of its marketing plan
392
193
•Pricing issues are discussed in the chapter p“Pricing of Information Products”O l f i f ll
393
•Only a few points follow here
Pricing Strategy Goals• To win customers • To keep customers• To gain profitability
394
• To gain market share
194
How a firmHow a firm normally sets
prices395
prices
1. Market Pricing ( t hi tit ’(matching competitors’
prices)
396
195
Example: CPM prices for TV p pshows appealing to similar audience
If market pricing exists, p g ,Marketing needs to stress
• Product differentiationS i l f t d lit• Special features and quality
196
Broadband
• Broadband service providers’ use of pbundle packages and steeply discounted rates have created consumers who are price sensitive
81% f b db d b ib ld• 81% of broadband subscribers would consider switching providers to obtain a better monthly
Source: http://www.forrester.com/rb/Research/broadband_customer_retention/q/id/51925/t/2?action=5
399399399
2. Cost-Based Pricingg
•Cost-plus
400
197
Example: In the past, many IT p p , yfirms established their price based on cost
C t ’ illi t
3. Value Pricing•Customer’s willingness to pay (value)
402
198
Marketing then stressesg• Lower price (where cost is
lower)G t “ l ” i t f• Greater “value” in terms of quality (where cost is higher)
Value-based pricing usually means priceusually means price
differentiation among customers
404
customers
199
Price Discrimination is prevalent in media
• Books - hardback first, then ,paperback:•Price difference much larger than cost difference
405
than cost difference•Film: release sequence•Consumer electronics
• Newspapers offer discounts for mass corporate/business subscriptions
• Discounts for students and teachers• free online
406406406
200
Marketing:Niche marketing to sub-Niche marketing to subgroups
4. Flat Rate Pricing
408
201
Examples:p• Internet• Mobile phone (“buckets”)• Cable TV (independent of
use)
Marketing:• Life-style, conveniencey ,• Target low use customers
202
4 Strategic4. Strategic Pricing
411
• To achieve a strategic goal g gsuch as market share, brand identity, or market control.
203
A. Penetration PricingL P i (i l di L• Low Prices (including Loss-Leader)•To establish an early market
iti
413
position•To deter new competitors from entering
Montgomery, Stephen L. Profitable Pricing Strategies. New York: McGraw-Hill, 1988.
Marketing:• Stress pricep
204
B. Premium Pricing• High price to create image.g p g
415
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Source: Microsoft Word ClipArt Gallery
Marketing:• Stress qualityq y
205
Case Discussion: Condé Nast
• How should “Fly & Sky” be y ypriced • Relative to other aviation publications?
418
• Relative to other Condé Nast products?
206
• Start with penetration pricing in the introductory phase to gain market share. • special discounts for Condé Nast• special discounts for Condé Nast
subscribers of other magazines
419
• Later, value-based discriminatory pricing will be the best strategy• airline pilots (high professional value, high price)
• student pilots (lower price)
420
• flight instructors (lowest price since their word of mouth generates student subscriptions)
207
For more details on i i t t ipricing strategies
see chapter on “Pricing”
421
For more details A di Dsee Appendix D:
The Pricing of Advertising
422
208
423
424
209
425
The “4 P’s” of Marketing
P d t• Product• Positioning• Pricing
426
g• Promotion
210
V.V. Promotion
427
I. MARKETING OF MEDIA• Structure and Organization• Products and Services
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
• The Attention BudgetII. MARKET ANALYSIS
ForecastingPositioning
III. BRAND CREATION• Design• Diversification
IV PRICING
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCEIV. PRICING
V. PROMOTION• Viral Marketing
VI. ADVERTISING • Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
211
Getting Attention
429
http://www.andrew.cmu.edu/user/rfl/images/attention-red.jpg
Promotional Approaches
• Generate Word of MouthGenerate Word of Mouth• Public relations and publicity• Advertising
430
• Direct marketing, etc.
212
Ineffective promotion strategy
431
• “Movie marketing campaigns g p gare like election campaigns.” (film studio executive)
432Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005432432
213
• A film’s marketing effort starts when a project is green-lighted.
Marketing Planw e a p ojec s g ee g ed.
• The marketing department creates a task force to create an audience for this (yet non-existent) film.
433
• A marketing plan is designed
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005433433
• Launching computer games is
Marketing Plan
similar to television show• Important to hype launch date• Game previews on TV
434
p• Targeting loyal customers
Source: TV, GAMING INDUSTRIES CAPITALIZE ON PARALLELSTelevision Week 2006
434434
214
• Promoting games in own TV
Video Games
g gspecials- E.g. Microsoft and MTV produced a special about the
435
produced a special about the Xbox 360 that was aired on MTV
Source: MTV Finds A New Ally In Games, New York Times 2005435435
Case Discussion: Condé Nast Fly and Sky:
*
• Condé Nast should try to embrace the niche market of aviation enthusiasts
436
215
Different Categories Media Products Require Different
Types of Promotionyp• Talent Products• Marketing-driven products• Bread & butter products
437
• Bread & butter products• Niche products
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
• Artists with unique appeal, such as Elvis Presley Mick Jagger or
True talent products.*
*
as Elvis Presley, Mick Jagger, or Madonna
438
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
216
Mick Jagger
439Castaing, Ariane. “Jogging Through Jaggerland.” France Today. April 2006 Last accessed on 10 June 2008 at http://www.francetoday.com/images/articles/06.06/jagger.jpg
Madonna
440Ninh, David. “Madonna graces Vanity Fair cover.” The Dallas Morning News Shopping Blog. 29 March 2008. Last accessed on 10 June 2008 athttp://shoppingblog.dallasnews.com/madonnavanity_1720.jpg
217
T t l t d t ll f
*
• True talent products call for strong early promotion, and subsequent maintenance of
k f thwork-of-mouth
Marketing-driven media products• Interchangeable stars such as Britney
Spears or Christina Aguilera; light i TV f h B
*
entertainment TV formats such as Big Brother, Survivor, or Pop Idol; and marketing-intensive magazine titles such as “Us”
442Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
http://www.madonnalicious.com/images/2003/vma_show23.jpghttp://epguides.com/BigBrother/cast.jpg
218
C ll f t i d
*
• Calls for sustained promotional efforts
• Once the star value drops, drop promotion.
Potentially profitably but often low
Bread & Butter products and artists.
*
Potentially profitably, but often low profile. advisory books (e.g., Dale Carnegie)• mystery novels (Sue Grafton)
444
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
219
Niche products. • Appeal to specialized audiences
• increasing importance of a highly
*
increasing importance of a highly fragmented long “tail” of offerings.
• As storage and distribution gets cheaper with the digitization of content,
445
channels, even products with a very small audience can be sold profitably.
Aris, Annet, “Value-Creating Management of Media Companies: Chapter 5”, McKinsey & Company, Inc., 2003
C ll f t i d l
*
• Calls for sustained low-intensity promotion
220
TimingTiming
221
• Timing• Peak audiences (X-mas;
Theatrical Release
• Peak audiences (X-mas; Thanksgiving, Summer etc.)
• Peak attention (uncrowded period)
449
p )• summer movie season is mainly a US phenomenon
449449
450450450
222
Books: Selling Seasons.• The spring release of titles
anticipates the selling window of anticipates the selling window of July through September (light summer reading)
• The Fall release anticipates
451
pChristmas sales and is heavier in non-fiction and specialty books
Source: Lieberman, Al: The Entertainment marketing revolution. Prentice Hall, 2002
http://tubes.ominix.com/art/holiday/christmas/christmas-tree-with-lights.png 451451
Basic Principle for Release Sequence Strategy
• First, distribute to the market ,that generates the highest marginal revenue over the least amount of time
452
• Then, “cascade” in the order of marginal-revenue contribution
452452
223
• Prior to 1975, Hollywood used a “platformed” method of releasing its movies.
• Movies were first released in select theaters, and then added more theaters in following
453
gweeks and months
www.newyorker.com/talk/content/?030804ta_talk_surowiecki 453453
• But in 1975, Universal Studios released Jaws instead on more than 400 screens nationwide, the biggest release up to that point.
• It also launched one of the biggest nation-wide prime time
454
gg pad campaigns.
www.newyorker.com/talk/content/?030804ta_talk_surowiecki 454454
224
• The Jaws strategy caught on• Blockbusters are released on as
many as 7,000 screensy ,• Accompanied by a huge national
advertising effort
455www.newyorker.com/talk/content/?030804ta_talk_surowiecki
455455
• 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 office gross in the first three weeks.
456
g
www.newyorker.com/talk/content/?030804ta_talk_surowiecki 456456
225
• Foreign release can be delayed for reasons relating to the foreign environment (e.g. French movie theatres are slower in the summer but very b i O b )busy in October).
Martine, Danan. “Marketing the Hollywood Blockbuster in France” Adweek Magazines' Technology Marketing; Fall 1995; 23; 3; Research Library pg. 131457457
• The release sequence is being compressed-due to piracy-due to increasing revenues from post-theatrical distributiondistribution-due to marketing spill-overs
• The film Bubble, directed by Academy Award winning director, Steven Soderbergh, ignored the traditional release window model and
458
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. 2006< http://arstechnica.com/news.ars/post/20060112-5967.html>458458
226
Promoting Home Video• DVDs featuring new movies are
i fcoming out faster.• The average period between the
premiere of a movie and the l f it DVD h k
459459
release of its DVD shrank an additional 10 days in 2006.
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles 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
b i h h hby an entire month to three months and 25 days.
460460Claudia Eller, Wait time on DVD releases shrinks, Los Angeles Times, March 2007 http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
227
Promoting Home Video“The pace of the shrinkage is
of concern to us.”-- President of the National
Association of Theatre Owners, John Fi hi
461461
Fithian.
Claudia Eller, Wait time on DVD releases shrinks, Los Angeles 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 y j g
campaigns is the “first-week business” and studios need to concentrate on that.
462462Thomas K. Arnold, By the numbershttp://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
228
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,
h lf f th t t l l t k l
463463
so half of the total sales take place during that first week.
Thomas K. Arnold, By the numbershttp://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
Promoting Home Video• It is common to agree cross-
promotional partnerships withpromotional partnerships with retailers: Best Buy, Circuit City and Wal-Mart plug major new DVD releases in Sunday newspaper inserts,
d ff di d i
464464
and offer discounted prices to get buyers into their stores.
Thomas K. Arnold, By the numbershttp://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
229
Release Sequencing• Sony Pictures made its movie,
Hancock available over theHancock available over the internet, directly to viewer’s television sets if consumers own a Sony Bravia TV with a web
i
465
connection• after its theater run, before its
release on DVDArango, Jim. “A movie on your TV at home, before you can rent it.” The New York Times. 30 June 2008. Last accessed on 8 July 2008 athttp://www.nytimes.com/2008/06/30/technology/30sony.html?_r=1&adxnnl=1&oref=slogin&ref=technology&adxnnlx=1215525932-WakRzF5adtz7aAgdOJFGuA
465465
Hancock
466“Will Smith stars in Sony Pictures’ Hancock -2008” Yahoo! Movies Summer Movie Guide Last accessed on 8 July 2008 athttp://movies.yahoo.com/summer-movies/Hancock/1809801452/photos/303/9749
466466
230
• DVD standalone campaigns can be very expensive
• Spider Man campaign cost $100 M in 2002• $40 M for TV, radio, print ads,
467467
billboard and mall advertising
Source: Mega marketing campaigns up ante in home DVD segment,DSN Retailing Today 2002
• DVD’s can piggyback on the awareness of expensive theatrical marketing campaigns which creates incentives to release DVDs sooner.
468468Claudia Eller, Wait time on DVD releases shrinks, Los Angeles Times, March 2007 http://www.latimes.com/entertainment/news/homeentertainment/la-fi-dvd12mar12,1,569415.story?coll=la-headlines-business-enter
231
Viral MarketingWord of MouthWord of Mouth (WOM), “Buzz”
Marketing
470
Marketing
232
471
Word of Mouth (WOM)M k i i i d f
*
• Marketing is expensive so word-of-mouth marketing is a good solution to reduce advertising costs.S ll i d d
472
• Start-ups, as well as independent films benefit most from this low cost marketing tool
233
*
473
• Many researches concluded that interpersonal sources ofinterpersonal sources of information were the most influencing factor in movie promotionpromotion.
William Adams, Charles Lubbers. “Promotion of Theatrical Movies,” Kansas State University 474474
234
Example: VoIP AdvertisementVonage vs. Skype
• 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
475
2005, which means that almost all of its revenues went into marketing campaigns
Source: Verizon's VoIP Offensive, Business Week 2005; Skype's market share halves ZDNet 2006
475475
VoIP AdvertisementVonage
• In 2006 Vonage spent $360• In 2006 Vonage spent $360-$380 mil on marketing, an increase of 50% over 2005
476Source: Verizon's VoIP Offensive, Business Week 2005
476476
235
VoIP AdvertisementSkype
• Skype, the 2nd largest VoIP yp gprovider in the U.S. with a market share of 14.4% in 2006, has a different approach than
477
Vonage• Use mainly viral marketing
Source: Skype's market share halves, ZDNet 2006; A Tale of Two Marketers, CRMToday 2006
477477
VoIP AdvertisementVonage
• Vonage earned $27 a month gper line in 2005
• In comparison it spent $221.35 on marketing a month per line
478478
g pin 2005, which is factor of over 8
Source: Verizon's VoIP Offensive, Business Week 2005
236
VoIP AdvertisementSkype
• No high marketing budget, but g g g ,word of mouth marketing
• VoIP service for free so that users are encouraged to get their
479479
g gfriends in
Source: A Tale of Two Marketers, CRMToday 2006
VoIP AdvertisementSkype
• Skype is marketing their services yp gby using blogs and forums, which targets lead users instead of a mass market
480480
• Cheap way of advertisement
Source: A Tale of Two Marketers, CRMToday 2006
237
Creation of Word of Mouth
• Promotional messages through film-related sites (show times,
i d t il )reviews, and trailers)• Generating “buzz”
• The Lord of the Rings trailer downloaded 1.7 million times on its first day of goingtimes on its first day of going live
482Adam Finn, Nicola Simpson, Stuart McFadyen, Colin Hoskins. “Marketing Movies on the Internet: How Does Canada Compare to the U.S.?” Canadian Journal of Communication Vol. 25. No. 3 (2000)
482482
238
• Examples of creating buzz:p g• 1. The Harry Potter Series• Consumers must wait in line
(nearly all night) to buy copies
483483
(nearly all night) to buy copies of the novel
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
• Releasing bits of information or insights into the novel: Foror insights into the novel: For the sixth installment of Harry Potter, Rowling released the names of three of the chapters,
484484
p ,which set off a frenzy about the new plot
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
239
• Immediate translating the gnovels into different languages and international release creates world-wide hype (very
485485
much the case with Harry Potter)
http://www.cnn.com/2005/SHOWBIZ/books/07/14/harry.potter/index.html
PlayStation Launch• PSP and PS3 launches were
tailored for PR purposestailored for PR purposes- showed eager buyers waiting in line, which attracted media coverage
486
attracted media coverage
Rogers, Tim. “JAPAN: Psychology of a Hardware Launch”. 20 October 2006. NEXT GENERATION. <http://www.next-gen.biz/index.php?option=com_content&task=view&id=4054&Itemid=2&limit=1&limi>486486
240
Marketing Strategies for Social Media
Offer products for free or at a
**
plarge discount to influential users and popular buyers = > create Externalities
487
• Actively recruiting individuals who are
i d t bperceived to be trendsetters.
488
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W45-4PF1C0D-8&_user=18704&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000002018&_version
=1&_urlVersion=0&_userid=18704&md5=fb90e94ead7b2a6ba67c6093b1bd3d67488
241
http://www.catalogs.com/blog/images/pr%20buzz.jpg 489
• Concept: each user becomes aConcept: 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
242
• According to a 2006 survey by Advertising Age, American people engage in 3.5 billion p p g gWOM conversations each day:• 2.5 billion are face-to-face
conversations
491
• 630 million are over the telephone• 245 million online conversations daily
Advertising Age, Dec 2006 @ http://proquest.umi.com/pqdweb?index=7&did=1174959211&SrchMode=1&sid=5&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1173973029&clientId=15403
• “Live”, not canned• Custom tailored and driven• More relevant and complete
Advantages of Word of Mouth
• More relevant and complete• Most honest medium• Self-generating and self-contained• Time-saving, efficient and labor-saving
492
Time saving, efficient and labor saving• Unlimited in speed and scope• Becomes part of the product itself• Unlimited in speed and scopeSilverman, George. The Secrets of Word-of-Mouth Marketing.
243
Book Buzz• Create Hype: One of the best yp
and most efficient marketing tactics is word of mouth
• If people talk about a book
493493
p pbefore it comes out, readers will be eager to buy it
http://www.writing-world.com/promotion/buzz.shtml
• Broadway musical audiences• Broadway musical audiences most influenced by word of mouth rather than advertisements I t t t i ht l
494
• In contrast, straight-play audiences more swayed by reviews.
494494
244
• Off-Broadway audiences nearly 1/3 less influenced by advertising than Broadway audiences.
http://www.morehead-st.edu/statement/spg04/offbway.gif
495495495
Examples of Viral Marketing• Introduction of Google’s Gmail
*
• Ilovebees.com (for Halo 2videogame)
• Microsoft Xbox 360
496
Microsoft Xbox 360• Sony PSP• Cell phones
245
497http://derdo.files.wordpress.com/2008/05/nokia-e61i-00.jpg
498http://img.gsmarena.com/vv/pics/apple/apple-iphone-3g-01.jpg
246
• Google’s Gmail offered memberships to only a select number of people, generated p p , gmassive word or mouth marketing
• Creating an online community
499
Creating an online community
Online communities are largely viral
*
500
247
• Viral marketing has been used in the recent past for
*
peffective promotion of movies.
501
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W45-4PF1C0D-8&_user=18704&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000002018&_version
=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
502
q ymillion at the box office on opening weekend.
Emily Steel, “Using Social Sites as Dialogue to Engage Consumers, Brands,”The Wall Street Journal, November 8, 2006
248
But there’s also negative “buzz”:
• Kryptonite bicycle locks sales
*
yp ycrashed after a blogger posted a video clip of how to pick the expensive lock with a simple 30 cent Bic pen in 10 seconds.
503Jeffrey Hill. “The Voice of the Blog: The Attitudes and Experiences of Small Business Bloggers Using Blogs As A Marketing and Communications Tool.” Dissertation, 2005
A Viral Marketing Firm: BzzAgent
• Most major marketing or
*
j gadvertising agencies have developed viral marketing capabilities
504
p
249
Microsoft Viral Marketing• MS launched a cryptic web site yp
at origenxbox360.com. • The site is composed of a single
page of flash showing a tree a
505
page of flash showing a tree, a green bunny, and a numerical countdown in the background.
http://xbox360.ign.com/articles/644/644110p1.html
Viral Marketing from Microsoft
• Ourcolony.net: y•Information was released concerning the Xbox 360 through Ourcolony net
506
through Ourcolony.net.
http://xbox360.ign.com/articles/608/608712p1.html
250
More Examples of Viral Marketing:The Ring II movie campaign
• www.she-is-here.com, a ,roleplay website where characters discuss their experiences with the cursed
507
pvideo
http://en.wikipedia.org/wiki/Viral_marketing#Notable_examples_of_viral_marketing
Music Marketing
• Social networking sites good g gfor music marketing as• cheap• interactive
508
• interactive• authentic
Source: I Screen, You Screen, The New York Times 2005 508508
251
Music Marketing• Labels use peer-to-peer platforms,
th t k f i tthat are known for piracy, to spread their advertisements
• E.g. Jay-Z and Coke infiltrated promotions in file sharing systems
509
promotions in file-sharing systems
Source: Record Labels Turn Piracy Into a Marketing Opportunity,Wall Street Journal 2006
509509
Music Marketing• MySpace.com offers
• Users can become “friends” with bands• Users can become friends with bands• Communicating directly with bands, hired
people respond to fans• Users can share audio and video files
510Source: I Screen, You Screen, The New York Times 2005 510510
252
• Consumers are reluctant to trust
Trust Is An IssueConsumers are reluctant to trust electronics manufacturers.
• Tend to turn to friends and relatives for information before making purchase decisions.
511511
purchase decisions.New Strategy:
Concentrate on developing trusted relationships with previous customers to 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 marketingGuerilla marketing• Example: Motorola
• Inviting celebrities and trend setters to gatherings where they can try new cell phones
512
can try new cell phones• Aim to have press coverage and
word-of-mouth effectSource: Motorola Looks for More Buzz Per Buck, Adweek 2004
512512
253
Consumer Electronics Marketing
• One way of guerilla y gmarketing is to send street teams to trendy clubs where they distribute discount cards
513
to trendy people which can be cashed in at the next store
Source: Motorola Looks for More Buzz Per Buck, Adweek 2004513513
514Burke, 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
514514
254
Wii marketing by Nintendo• Nintendo hired several types of
“ambassadors”:“ambassadors”:• An already loyal gamer, to teach
how to use the Wii;• And an “alpha mom”, with
515
And an alpha mom , with influence to spread the word in her neighborhood).
Dawn C. Chmielewski, Nintendo reaches out to a relatively untapped segment of potential users in an effort to promote its new console, Los Angeles Times, Dec 06
515515
• Blogs, as a result of their accessibility and ease of understanding and increasing readership, are ideal for creating “buzz”buzz
• Blogs are attributed with qualities, such as “authenticity, transparency, honesty, and openness” which are more difficult for corporations to
516
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
255
• Companies like Chikita pay bloggers to post images or links gg p gof certain products on their site.
Product Reviews And Links Turn Pages Into Profit. Sara Kehaulani Goo. The Washington Post. Washington, D.C.: Jan 11, 2007.
517
Limits to Consumer Tolerance for Viral Marketing
• Though the inventive marketingThough the inventive marketing tactics of viral marketing tend to be received well by consumers, dishonesty erodes brand trust
518
dishonesty erodes brand trust.
256
• Example: In 2006, Sony hired a p , ymarketing agency to create the website:www.alliwantforchristmasisapsp.com, designed to create
519
buzz for its new product, the PSP.
Graft, Kris. “Sony Screws Up,” Business Week, Dec. 19, 2006
• The website appeared to have been ppcreated by a young boy who wanted a PSP for his birthday and was launched simultaneously with a Y T b id f kid i
520
YouTube video of a kid rapping about his handheld PSP.
Graft, Kris. “Sony Screws Up,” Business Week, Dec. 19, 2006
257
PSP
521
http://www.digihit.cz/jpg/sony-psp-playstation-portable-value-pack-2.jpg
• Suspicious customers discovered pthat the website was registered with a marketing agency,
• They exposed the marketing ploy
522
and Sony had a PR debacle on its hand.
Graft, Kris. “Sony Screws Up,” Business Week, Dec. 19 2006
258
Viral Marketing CampaignsSony Ericsson paid 60 actors to
*
y ppretend to be tourists asking New Yorkers to take photos of them using their new Ericsson camera phones and d i h f
523
demonstrating the features.Shinn, Annys. “FTC Moves to Unmask Word-of-Mouth Advertising,” The Washington Post. December 12, 2006
Federal Trade Commission looks into viral campaigns
•In response to concerns that some i l k ti i h d
*
viral marketing campaigns had crossed the line from innovative to dishonest, the FTC released a statement that all viral marketing
i di l h i
524
representatives must disclose their identities when in the field.Shinn, Annys. “FTC Moves to Unmask Word-of-Mouth Advertising,” The Washington Post. December 12, 2006
259
For details seeFor details see Appendix B: Viral
M k ti525
Marketing
526
260
V. 2. Publicity and P bli R l iPublic Relations
for Media
527
fProducts
Public Relations• “PR is a set of
i i h icommunications techniques to help an organization to create a good reputation for itself and its goals”
Eli M. Noam, Entertainment Law and Media Regulation 528528
its goals
Henry, Kenneth, Harvard Business Journal, Perspective on Public Relations, 1967.
261
Publicity vs. PR• Publicity is a subset of the public
relations effortrelations effort.• Publicity refers to the generation
of the news about a person, product, or service that appears in b d i di
529529
broadcast or print media.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
*
http://www.toastmasters.org/ImageLibrary/MagazineSection/908MagazineImages/PowerofPublicity.aspx
530
262
Publicity
P bli it i t i ll• Publicity is typically a short-term strategy, while public relations is a
t d
531531
concerted program extended over a period of time.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
• H
p ygenerally limited to the relatively modest objective of getting newspapers to
532532
g g p pmention products that already existed.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
263
*
http://www.pr-options.com/img/Publicity_Camps.jpg 533
• “To this end, freelance press agents, paid by the number of “mentions,” would provide editors of local
• H
newspapers with items to fill their pages or, in a few extreme cases, such as the ballyhoo of P.T. Barnum, would stage pseudo events to attract
534534
would stage pseudo-events to attract reporters to products.”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
264
P.T. Barnum*
Pix P.T. Barnum in a “media event.”http://toughsledding.files.wordpress.com/2008/08/ptb.jpg
535
• “In the early twentieth century, however, public
• N
relations began to assume the far more ambitious aim of shaping a newly defined
536536
product: public opinion”
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
265
Elements of PR
P l ti• Press relations• Product Publicity• Corporate communications
537537
p• Lobbying• Counseling
Lamb, Hair, Mcdaniel, Marketing, South-Western Collge Publishing, 1996
Target Audiences for PR• Employees of the firm
S kh ld i d fi i l
*
• Stockholders, investors and financial groups
• The media
538538
• Educators• Civic and business organizations• Governments
266
• Marketing of a film requires
Publicity*
g qcreating awareness even before early in the advertising campaign.
539
p g
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• Publicists try to create free ypublicity for films in production.
540Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
267
Early Film Publicity• The studios’ created publicity
*
p ydepartments, with 3 major tools
541Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New
York: E.J.E. Publications, Ltd., Inc., 2005
1. The studios produced their own newsreels, seen by national
di i t hi h th
*
audiences, into which they inserted publicity clips of their 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
268
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
3. The studios had symbiotic relationships with the major newspapers columnists such as
*
newspapers, columnists, such as Hedda Hopper and Louella Parsons.
Those columns which they red withThose 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
269
• Today, similarly, the film distributors plant celebrity stories in magazines like Entertainment Weekly, People, TV Guide,
*
and the E! channel, which happen to be owned by the same major media companies
• Publicists try to create free publicity for
545
• Publicists try to create free publicity for them.
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.”
546
Publicity staff often vet stories.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
270
• “Many magazines also need cover photographs of stars.
• The studios will provide photo• The studios will provide photo opportunities in return for cooperation in timing and content of the stories ”
547
of the stories.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• 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.
548Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
271
• To this end, the studios script “back stories” that merge theback stories that merge the stars’ activities, real or invented, with those of the characters they play in thecharacters they play in the films.
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, 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
272
• This back story generated a publicity short, Mission
*
Incredible, on MTV and other cable channels which were owned by Paramount’s
551
corporate parent, Viacom.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
• It pretended to be a documentary with the
*
director expressing great fear that Tom Cruise would be killed in one of the
552
be killed in one of the 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
273
• In reality, six stunt doubles were used for Tom Cruise’s
*
part.
553Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,”
New York: E.J.E. Publications, Ltd., Inc., 2005
Oscar Awards/Golden Globes
554554
http://www.kodak.com/US/images/en/corp/kodakHistory/academyAward.jpg
http://www.mickeys.net/image/golden-globe.jpg
274
The Oscar Season• Also, film studios promote other
i DVD t i t hprevious DVDs starring actors who are nominated. In 2007, Sony repromoted Annette Bening’s previous titles when she was
555555
previous titles, when she was nominated for Running With Scissors.
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-theaterPicture nominees had per theater take increase right after nominations, and the distribution expanded to additional theaters.
556556
p• "The Departed," for example, rose
from 127 to 1,453 theatersPatrick Enright, How studios manipulate 'Oscar bump', MSNBC.com, February 2007
275
The Oscar Season• For "Little Miss Sunshine",
during the week of nominations its DVD sales rose about 60%-200%.
557557Patrick Enright, How studios manipulate 'Oscar bump', MSNBC.com, February 2007
Running with Scissors
558558http://www.impawards.com/2006/posters/running_with_scissors.jpg
http://www.sonypictures.com/movies/runningwithscissors/site/downloads/wallpaper/dierdre_tub/dierdre_tub_1280x1024.jpg
276
• Film Festivals like the prestigious Cannes International Film Festival and DeauvilleFilm Festival and Deauville Film Festival help increase awareness of US film and star news and is fully covered by TVnews and is fully covered by TV stations.
Martine, Danan. “Marketing the Hollywood Blockbuster in France” Adweek Magazines' Technology Marketing; Fall 1995; 23; 3; Research Library pg. 131559559
• Studios advertise heavily on MTV and other music-video channels, as a way to incentivize them to play music videos from the movie
560
during its opening week.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005560560
277
For more details see Appendix C: Public
Relations and Publicity.See also chapter on
entertainment law andentertainment law and media regulation
561
278
V.3. Using the Star Power for
Promotion563
Promotion
• Big names sell a film, music, or books more effectively th th k ti ff tthan other marketing efforts.
564
279
• Investing in initial “signaling” properties of stars
565Source: Journal of Management, March 1, 2001
Music Tours• Effective way to promote new albumalbum•Measurable sales increase in regions of tour location after a concert
566This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 26 http://www.haro-online.com/stuff/thisiss2.jpg
280
Music Marketing• Music artists signings in stores,
(called “in-stores”)(called in stores )• Creates press coverage
567567567
Books Promotion
• Publishers: often passive•Too many titles, will push only a few
• Large number of titles reduces
568
gmarketing focus
• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
568568
281
• Promoting a potential blockbuster book requires a large investment before readers or reviewers show their reactionsreactions.
• Therefore, it makes often sense to postpone promotional efforts until information comes in about the
569
reactions and then invest more heavily in promotion.
• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
569569
• Most book marketing depends on publicity of authors on TV and the press through morning shows like “Good Morning America” or gNBC’s “Today” show.
• At times of war or national crisis, authors and publishers lose this ‘free time’ on TV channels as these
570
channels focus on the crisis.
Bill Goldstein “War Would Upend Plans of Publishers and Retailers“ The New York Times. March 10, 2003. Section C; Page 7; Column 1. 570570
282
• This means issuing more new titles than otherwise and wait for reaction.
(“throw it against the wall and see if it sticks”).
571• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
571571
Talk Shows•Publishers tend to promote their top bookspromote their top books on national shows like Oprah
572
Source: Lieberman, Al: The Entertainment marketing revolution. Prentice Hall, 2002http://www.lewis.army.mil/dpca/library/oprahread.gif
283
TV Talk Shows• Affects content
•Attractive Authors•Simple and provocative
bj t
573
subjects•Best sellers
Book Publicity• Review-copy mailings to reviewers• Book launches, parties, and signing
h hautophraphs • TV and radio appearances, • Display material• Article placements on Internet Sites
574
Article placements on Internet Sites
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.574574
284
• 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
575
• 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.
Cambridge: Harvard University Press, 2000
Promoting Blockbuster Books• Up to $1 million• Inflated first printingsp g• Authors’ tours of TV and
radio talk-show circuits. - Symbiotic relationship between
576
broadcasters’ need for material and authors’ need for exposure
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
http://i.cnn.net/cnn/2004/SHOWBIZ/books/03/04/publishing.religion.ap/cover.davinci.jpg
576576
285
Stars as Brands
577
Brand Name Stars • Actors, singers, directors, g
composers • Characters(“James Bond”)• It often takes a major marketing
578
It often takes a major marketing investments to build a star brand
286
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
t th t l b it d t
579
suggests that celebrity endorsement contracts are viewed as a worthwhile investment by the market
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
http://justendeal.com/blogimages/jamie.pnghttp://justendeal.com/blogimages/czj.png
Jamie Lee Curtis
Catherine Zeta-Jones
287
•New FTC Regulations on Testimonials andTestimonials and Endorsements, 2009- Must disclose connections
b t d ti dbetween advertisers and endorsers
582
288
V. 4. Influencing the Influencers: fPromotion on
Opinion Leaders &
583
Opinion Leaders & Critics
Promotional Copies of Music or Books:distributed free to:distributed free to:
•Reviewers•Radio stations
584
•Television stations
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 21 & 24 584584
289
• Critics become part of the industry
Managing Reviews
strategy to manage demand.• Studios incorporate the potential
response of critics into their
585
marketing and distribution strategy for each of their releases.
Source: Journal of Management, March 1, 2001
•Studio may engage in a wide distribution, backed by a strong marketing push, to
d f
*
g g p ,overcome damage from an expected negative critical response.
586Source: Journal of Management, March 1, 2001
http://www.video-business-school.com/Film%20Money.jpg
290
• Newspaper critics have a significant impact on the success of Broadway showsof Broadway shows.
• New York Times twice as much influence as critics from the D il N or N Y k P t
587Source: Srinivas K. Reddy, Vanitha Swaminathan, and Carol M. Motley. Journal of Marketing Research, Vol. XXXV (August 1998), 370-383
Daily News or New York Post.
http://www.liveperformances.com/settler/newdail1.gif
http://www.bigapplecircus.org/PressRoom/SourcePaper/NewYorkPost.gif
The Importance of Reviewers:
• Getting a positive review in the NY g pTimes or the NY Review of Books enhances a book
• Once in a best-seller list, the process
588
pbecomes self-sustaining: buzz, sales
http://www.serbia-info.com/g3/images/nytimes-logo.jpg
291
• Book reviews• Only a small portion of new titles get
i d N Y k Ti i 1 000reviewed; New York Times reviews ~1,000 books/yr, or 2% of new titles
589589589
• Harold Pinter’s play, The Birthday Party, premiered in London in 1958, Received a lukewarm review from the
Critic Story
Received a lukewarm review from the London Times: “Mr. Pinter’s effects are never more than puzzling, and after a little while we tend to give up the puzzle in despair…” (The
590
the puzzle in despair… (The [London] Times 1958, p.3; reported in Bennet 1990, p.43). Partly as a result, show closed.
Source: Journal of Marketing Research, Vol. XXXV, August 1998.http://www.btpl.org/Online_Databases/Online_Databases_-_Alphabetica/logo-london-times.gif
292
• Same play was revived 6 years later now,got an enthusiastic review in the Times. The Birthday Party is the Ur text of modernParty is the Ur-text of modern British drama: if John Osborne fired new authors into writing, Pinter showed them how to write” (The [London] Times 1964 p 18;
591
(The [London] Times 1964, p.18; as reported in Bennet 1990, p.43).
• This time, the play had a long run and big success. Source: Journal of Marketing Research, Vol. XXXV, August 1998.
There are two alternative perspectives on the role of critics. 1. Critics could be opinion leaderswho influence audience demand
*
who influence audience demand. (the “powerful critic”)2. Critics could be just predictors of their respective audiences. (the critic
“ k ”)
592
as a “spokesperson”)
Jehoshua Eliasberg; Steven M. Shugan, Film Critics: Influencers or PredictorsJournal of Marketing (Apr 1997)
293
• In other words, media would hire critics whose tastes, it believes, are similar to those of its audience.
593
• The % of positive and negative reviews is a statistically insignificant
di f b ffi f f
Research Findings:*
predictor of box office performance for early weeks of a film’s release (weeks 1-4).
• It is however a statistically significant
594
• It is, however, a statistically significant predictor of box office performance for later weeks, and for cumulative box office.
294
• Critics thus appear to act more as leading indicators
*
gthan as opinion leaders.
• Or, an early marketing push overcomes critics for a whileovercomes critics for a while
595
• Findings are inconsistent with the opinion leader perspective, which predicts p p , pthat the greatest influence of the review should be during the time immediately
596
the time immediately following the review.
M
295
• Studios arrange hundreds of screenings for film critics
• Distribute electronic press kits to television stationstelevision stations.
• Arrange for stars to appear on magazine covers, in entertainment-news reports, and on television talk shows.
597Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005597597
• 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” 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
296
Book Promotion• Schedule reviews to coincide
with a books launch date
599599http://www.writing-world.com/promotion/buzz.shtml
Implications?
600
297
• The “powerful critic” theory suggests that the marketing efforts of motion picture studios should target critics.
Wi d di• Wine and dine • Stars to meet the critics • Allow critics to get their names in
fil d ti t
601
film advertisements. • Avoid inviting uncooperative critics• Avoid pre-screening of bad films
• But if critics are only early y ypredictors rather than influences, this seems to be a waste of moneyy
602
298
Product Placement
299
Disadvantages of Product Placements
• Product release difficult to• Product release difficult to coordinate with film release
• Ericsson used product placement for new communicator
605
• However, when film was released, product was not ready
Source: Products as Movie Stars, Technology Marketing Intelligence 2000605605
Product PlacementProduct Placement on Video Games
300
• Advertisers are looking for new ways to reach 18- to 34-year-old males who are increasingly b d i t l i i ( d TVabandoning television (and TV
commercials) and spending more time playing video games.
• Ads in computer games that are
607
• Ads in computer games that are played over the internet.
http://www.nytimes.com/2005/04/11/technology/11game.html?ex=1270872000&en=f51cb1a7d7e22135&ei=5090&partner=rssuserland
New opportunity: In-game ads
• Rather than the typical ad, they integrate the brand in to game.
• More than 132 million
608
gamers 13 years or older in the U.S.
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
301
“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 places, and once a consumer is playing the game online it starts to communicate
609
online, it starts to communicate with our server.” --Alison Lange, marketing director at Massive, leading the industry.
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 $ gin 2004, only about $10 million came from advertsing.
610
302
ADIDAS In-game ads campaign
• German sports shoe maker• German sports shoe maker Adidas integrated ads into Power Challenge, an online video soccer game played
611
video soccer game played simultaneously on the Web.
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
ADIDAS In-game ads campaign
• Adida’s logo present in virtual players’ uniforms and throughout the stadium
612David 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
303
Consumer Electronics Marketing
• Product placement is popular p p pway to promote electronics
• Nokia, e.g. had gadgets in Matrix or the X-Files
613
Matrix or the X Files• Placements measured by time
products are seenSource: Products as Movie Stars, Technology Marketing Intelligence 2000
613613
The Devil wears Prada
614614http://media.movieweb.com/galleries/3688/posters/poster1.jpg
304
Promotion• When The Devil Wears Prada
was turned into a film, the project became a marketers dream
615615
Promotion• It generated a media frenzy of g y
interviews and television specials concerning Anna Wintour, Vogue, and Meryl
616616
Streep (who played Priestly in the film)
305
Promotion• Prada supplied many of Meryl pp y y
Streep’s bags and shoes, and the movie became an advertisement for the fashion
617617
industry’s finest
Telecom’s Marketing• In the past, in the era of monopoly, a
“build it and they will come”build it and they will come approach
• Today: -identify niche marketing
618618
-customer care-brand awareness-explain usefulness of serviceEd Finegold, Nothing Left to Analyze but the Customers Themselves, Billing World and OSS Today, October 2006
306
307
VI.iPromotion:
Advertising622
Advertising
308
I. MARKETING OF MEDIA• Structure and Organization• Products and Services
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
• The Attention BudgetII. MARKET ANALYSIS
ForecastingPositioning
III. BRAND CREATION• Design• Diversification
IV PRICING
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCEIV. PRICING
V. PROMOTION• Viral Marketing
VI. ADVERTISING • Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
Placement
309
DVD Advertisement
• $85 M for Ice Age DVD$ g• 14 partners, such as Coca-
Cola, Microsoft, and the National Hockey League
625
National Hockey League
Source: Mega marketing campaigns up ante in home DVD segment,DSN Retailing Today 2002
625625
Advertising Plays 2 Major Roles for Media
d i i di i• 1. Advertising in Media: It is the economic foundation of many media
626
• 2. Media products are being promoted through advertising
310
• advertising existed already in antiquity: Greece, Rome, Egypt.
• By the 1600s, advertisements were regularly printed in news papers.
627Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
• The industrial revolution was the main driver of advertising, by creating mass products andby creating mass products and brands
628Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
311
• Advertisements in the 19th
century typically were simply written descriptions of the pproducts.
• Until about 1925, advertising was product-oriented
629
was product oriented•information about product
Eyre, Rachel, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
Ads from the 19th Century
630Source: http://healthcare.zdnet.com/images/patent-medicine-ad-1800s.jpg
Ad for a cure for baldness, Eau Malleron from 1878
312
Ads from the 19th Century
631
Source: http://scienceblogs.com/neurophilosophy/cocaine_drops.gif
Ad for Lloyd’s Cocaine Toothache Drops from 1885
based less on the prod ct’s
2. Subsequent Approach: Lifestyle-orientation
• based less on the product’s value and more on what the product can do to improve the
’ lif
632
customer’s life.
Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
313
• The radio became the main vehicle for such “lifestyle advertising” in the 1930s and g1940s.
633Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
Radio Advertising*
634http://www.digitaldeliftp.com/Recommendations/RadioPrintAds/retro13_sentinel07.html
314
Ads for 1950s TV
635
Source: http://farm4.static.flickr.com/3283/2970805949_498f8e087a.jpg
Ad for Zenith TVs from the 1950s
• 1950’s Rapid growth in TV advertising and its effectiveness
636Rachel Eyre, Michel Walrave. “Advertising and Marketing”. The Media Book. Oxford University Press. New York.
315
50s TV
637
“Thumbnails for 1950’s and 60’s TV commercials.” Internet Archive Movie Archive. Archive. Last accessed on 12 June 2008 at http://www.archive.org/movies/thumbnails.php?identifier=1950sAnd60sTvCommercials-Part1Of3
• Postmodern Theory: advertising resonates in association with
How does advertising work?
resonates in association with cultural “stories.”
• Semiotic Theory: ads have symbolic meanings to consumers
638
symbolic meanings to consumers
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
316
• But despite a plethora of explanations, it is unclear what advertising worksadvertising works
• “1/2 of advertising works great. We just don’t know which half”
639
Who are the heaviestWho are the heaviest advertisers?
317
Heaviest US Advertisers (2002)• General Motors $2.9B• Procter &Gamble$1.7B• DaimlerChrysler $1.5B• Philip Morris $1.4B• Ford $1.2B
641
• Time Warner $0.9B• Johnson & Johnson $0.8B
Source: Schiekofer, The Media Marketplace. New York: Mediacom
641
• True? Not really. The yheaviest advertisers were the TV networks and station groups, for this own media
642
g p ,products
642
318
TV Self-advertising•Networks run spots promoting its shows, and itself•Cross marketing.
• in-depth story about David Letterman on the local New York CBS channel
• Cast of 60 minutes appeared on Murphy
643
• Cast of 60 minutes appeared on Murphy Brown in 1993.
Robin Andersen; Consumer Culture and TV PRogramming: Pg. 41, 1991http://ufalocal94.org/graphics/cbsny2_logo.jpg
643
$10.8%% of Total Ad $ Value
$157.6All Advertising (including value of unpaid TV promos)
$17.1TV Promotions
Source: TNS Media Intelligence, The Industry Forecast, AdWatch 2005
644644
319
• Cable Channels advertise themselves on other channels
• Initially, broadcast networks were reluctant to run ads for shows featuring programming from rival networks, or to pay rivals for advertising time.
• But promotions that provide time and
645
p pdate are typically rejected by rival networks.
Steinberg, Brian, “NBC Drops Promo from Rival TNT; Network Stops Running Ads that May Have Given Viewers the Idea to Switch,” New York, NY, The Wall Street Journal, Oct. 26, 2004. pg. B.6.
645
TV Network Promotion
• Cross plugs (promo for the next• Cross plugs (promo for the next show), and multiple spots (promo for shows scheduled sequentially) are promo.
646
• Prime time ads for the following day’s programs
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006
646
320
Aside from TV networksAside from TV networks themselves, who else are the biggest advertisers?
•The top advertisers inThe top advertisers in most countries are cell
phone companies
321
Top Advertisers Among Media Companies by Country: 2006. ($
In Millions)Tanzania Amount Spent in Country
1 Celtel International 5.12 Vodacom 3.54 MIC Tanzania 1.68 TZ Telcom Corp 1i i
o s)
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
Tunisia1 OTT Tunisia 62 Tunisie Telecom 5
649649
Top Advertisers Among Media Companies by Country: 2006. ($
In Millions)Pakistan Amount Spent in Country)
2 Pakistan Telecommunications 11
3 Pakistan Mobile Communications 11
5 Telenor 86 Jang Group 78 Warid Telecom 5
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
8 Warid Telecom 5
650650
322
Top Advertisers Among Media Companies by Country: 2006. ($
In Millions)Finland Amount Spent in Country
1 Elisa 20.52 TeliaSonera 17.39 DNA Finland 9.9
France1 Vivendi 389
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
4 France Telecom 295.410 Canal + Group 186.5
Georgia2 Magti GSM 3.4
651651
Top Advertisers Among Media Companies by Country: 2006. ($
In Millions)Portugal Amount Spent in Country
1 Portugal Telecom 1731 Portugal Telecom 1733 Vodafone 122
9 Optimus Telecomunicacoes 79
10 Cofidis 71Russia
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
7 Vimpel Communications 50
Slovak Republic1 Deutsche Telecom 1322 France Telecom 78652652
323
Top Advertisers Among Media Companies by Country: 2006. ($ In Millions)
Kuwait Amount Spent in CountryCountry
5 Vodafone 76 Wataniya Telecom 6
Oman3 Nawras Telecom 44 Mobile telecom 3
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
8 Omantel 2Qatar
2 Q-Tel 6
653653
Rank Name Global Spending U.S. Spending
Top Advertisers Among Media Companies: 2006. ($ In Millions)
7 AT&T NA 23418 Time Warner 2136 1838
14 Verizon NA 183715 Walt Disney 1755 143818 Sony 1620 1117
Source: 21st Annual Global Marketers: Global Ad Spending by Marketer. Advertising Age. November 19, 2007.
27 News 1104 87138 Vodafone 813 041 Microsoft 769 447
654654
324
656
325
AdvertisingAdvertising Agencies
658
326
Ad Agency Services• Account Services: Planning,
creating and producingcreating, and producing advertisements.
659Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
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.
327
Ad Agency Services• Creative Services: Creates and
executes the advertisementsexecutes the advertisements themselves.
• Copywriters conceive the creative ideas and then the art
661
department produces the corresponding advertisements.
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
Agency Organization
662
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
328
Advertising Agencies• Nearly 14,000 agencies exist on
the Standard Directory ofthe Standard Directory of Advertising Agencies
• But 500 firms accounting for almost half the business
663
almost half the business.
Belch, George E. and Michael A. Belch. Advertising and Promotion. New York: McGraw-Hill Irwin, 2001.
*
664
329
• 10 U.S. agencies handle gnearly 30% of the total advertising volume.
• 18 of the top 25 US agencies
665
are headquartered in New York.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
*
666http://www.darrenherman.com/2008/05/04/2007-ad-agency-rankings-released/
330
World’s Top Ad Agencies 2007
667Johnson, Bradley. “2007 Agency Profiles Yearbook” Advertising Age. 30 April 2007. Last accessed on 3 July 2007 at http://adage.com/images/random/agencyprofilesyearbook07.pdf
Top Advertising Agencies (2008)
Net Income in 2008
*
Net Income in 2008
1. Omnicom Group Inc. $ 1 Billion2. WPP Group PLC $805.8 Million3 Publicis Groupe SA$654 1 Million
668
3. Publicis Groupe SA$654.1 Million
DataMonitor. “Advertising in the United States.” New York, DataMonitor. November 2009.
331
Alternatively, Some Companies Have In-House
Ad AgenciesAd Agencies• Calvin Klein• Radio Shack• Benetton
669
• Benetton
http://www.students.bucknell.edu/like/Foundation/Calvin%20Klein%20Logo.jpghttp://www.garneriachamber.com/assets/images/Logo_RadioShack.gif
Agency Compensation• Commissions usually 15% of billing• This Incentivizes agencies to g
recommend high media expenditures to increase commissions
• Creates disincentive to use non-
670
commissionable marketing such sales promotions through discounts
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
332
• If Interpublic bills 15% and pits revenues are $8 billion it places advertising of about $50 billion.$
671
333
Negotiated Commissions• Can be a different rate, e.g., 10%• Or cost-plus agreement.• Or incentive-based compensation
673George 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 gworldwide.
• Consolidation: major agencies
674George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
334
Global Marketing• Economies of scale• Abilities to exploit good ideas on a• Abilities to exploit good ideas on a
worldwide basis• Maintain a consistent international
brand and/or company image
675
• Simplification of coordination and control
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Problems with Global Marketing
• Marketing a standardizedMarketing a standardized product the same way all over the world can turn off consumers, alienate employees,
676
consumers, alienate employees, and blind a company to diversities in customer needs.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
335
• Effectiveness of Advertising can be difficult in crossdifficult in cross-cultural context• Swedish maker of
vacuum cleaner Electrolux came
677
up with the slogan “Nothing sucks like an Electrolux.”
http://www.davidecolavini.it/ita/images/electrolux.jpg
Language Problems
336
Language Problems
679
337
M t fi f th f ll• Most firms prefer the full-service agency; approximately 75% of all companies employ thi t f
681
this type of agency.
Horsky, Sharon. "The Changing Architecture of Advertising Agencies." Marketing Science 25 (2006): 367-383.
• But there is a growing g gpopularity, especially among large advertisers, of unbundling the traditional tasks of the full-
682
service agency.
Horsky, Sharon. "The Changing Architecture of Advertising Agencies." Marketing Science 25 (2006): 367-383.
338
Interactive Ad Agencies
683
• These interactive agencies often gimplement search engine marketing to attract customers for its clients. The largest SEM
684
gvendor is Google AdWords.
Moran, Mike, and Bill Hunt. Search Engine Marketing, Inc.: Driving Search Traffic to Your Company's Web Site. Indianapolis: Prentice Hall Technical Reference, 2005.
339
Example: Razorfish
• Interactive ad agency Razorfish
*
• Interactive ad agency Razorfish was bought by Microsoft in 2007 and sold to Publicis in 2009.
685Vranica, Suzanne and Steel, Emily. “Publicis to Buy Razorfish.” The Wall Street Journal, August 10, 2009.
Other Examples:
340
687
VI.2. Advertising: the
Budget688
Budget
341
• Until the mid-1980s, film ,marketing was mostly publicity-driven.”
• But today film promotion relies i il i l i i
689
primarily on expensive television ads
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005689689
Advertising a Film
• The last stage of the marketing g gcampaign is the “drive”- mostly in the two weeks preceding opening weekend.
690Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005690690
342
• The search for the “hook” • elaborate testing of the most promising
images through interviews, focus d t t igroups, and even test screening
691Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005
691691
• With the “hook” found, the ad ,agency designs television commercials.
692Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005692692
343
• When a film seems doomed the distributor may decide to “triage” the movie by cutting the advertising b d t d d i th b fbudget and reducing the number of screens on which it will open.• Warner Bros. in 2002 with The
Adventures of Pluto Nash.
693
Adventures of Pluto Nash.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005693693
• Studios spend heavily on p ynewspaper advertisements before an opening.
694Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005694694
344
• Advertising to identifiable groups can be done on cable television channelstelevision channels
695Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in
Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005695695
Film Marketing Cost
• Can rise to $50-$75 million.$ $
696Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 696696
345
• Of the 25 major studio movies of in 2005, advertising averaged 28% of the box office gross.
• Sequels had a significantly smaller percentage, 11.3%.
697
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344
697697
Advertising Budgets• A film’s advertising budget used to
t b t h lf f it d ticost about half of its production costs
• But this keeps increasing
698698
346
• Does not include the expenses associated with premieres, p ,publicity events, and personal appearances of stars.• or, promotion on own TVor, promotion on own TV channels
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344 699699
• Short, intensive bursts of TV advertising• &10-20 Mil
• Requires for the film to open• Requires for the film to open nationally
• 2,000 screens and more.• heavy cost of prints of the film (2,000
@ 1 300: another $3 million)
700
@ 1,300: another $3 million).• And increasing the density of
exhibitors requires shrinking of the geographic span of each theater.
700700
347
Why Over-spending?• Enlarge market share.• Massage the ego of a valuableMassage the ego of a valuable
director, star, or producer.• Seeking awards and Oscar
nominations
701
nominations.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
701701
• National saturation release used to prevent unfavorable word of mouth
• In 1998, for the opening week, Godzilla increased its advertising budget to
702• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce.
Cambridge: Harvard University Press, 2000
$50 million and opened the film on a record 7,363 screens.
http://bz.berlin1.de/kino/arch/gifs/gozilla.jpg
702702
348
Budgets for Book Promotion
• A typical overall marketing• A typical overall marketing budget for a general trade publisher about 20% of revenues
703
revenues
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.703703
Budgets for Book Promotion
• For smaller educational or• For smaller, educational or academic publishers will lower the marketing budget , between 6-10% of revenue
704
6 10% of revenue.
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.704704
349
Budgets for Book Promotion
• Specific promotional budgets• Specific promotional budgets are often based on a percentage of a book’s anticipated revenue
705Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.
705705
• Access to an artist’s future earnings raises media company’s incentive to promote the artist's first album film as bookfirst album, film, as book
706706
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
350
• IN music, in fact, a larger part of promotion costs are precoupable from the artist’s royalties.
707707Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
Finding Nemo• More than $20
million on TV ads alone
• Biggest single-title video marketing
708708
campaign of the year.
Thomas K. Arnold, By the numbershttp://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
351
Promoting TheaterTheater
709
http://www.kennesaw.edu/images/arts/theater.if
709709
Theater Promotion
• Placement and frequencyPlacement and frequency (repetition) of advertisement constitute the two essential considerations in theater
710
considerations in theater promotion.
Langley, Stephen. Theatre Management in America. New York: Drama Book Specialists, 1990. 710710
352
Theater Promotion
• A few focal points for theatricalA few focal points for theatrical advertising include: a star performer, associated celebrity, a well-known production title
711
a well known production title and venue, quotes and awards.
Langley, Stephen. Theatre Management in America. New York: Drama Book Specialists, 1990. 711711
712712712
353
• Advertising ~¼ of a production’s operating costs and of pre-opening expenses.
• For a major Broadway shows, ~$1 mil.
713http://www.best-of-broadway.org/images/broadway.jpg
http://www.teehonya.ok.ru/pics/river_cd.jpg713713
NYTimes Advertising•Inclusion in the thumbnail Theater Directory ads known as
http://www.otcnet.org/2003/images/NY-Times-logo.jpg
ythe ABCs.
•many readers mistakenly assume that the ABCs are free
714
assume that the ABCs are free listings, but actually they cost a minimum of $2,000/wk
714714
354
Off-Broadway productions pay the same per-line rates as Broadway shows. Theaters 199Broadway shows. Theaters 199 seats or smaller receive discounts of 4% to 15%
715715715
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.
716
• 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
355
717“Grassroots Films-The Human Experience-Solidarity” Grassroots Films. Last accessed on 25 June 2008 athttp://victorialabecki.wordpress.com/2007/04/01/grassroots-films-the-human-experience/717717
Film Advertising
• Quarter page in The New Q p gYork Times costs approximately $20,000 for just one day.
718Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 718718
356
Film Advertising• Ads also in:
Th Vill V i•The Village Voice•Time Out New York•The New York Observer
719
•Newsday•New York Post
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 719719
“Promoting Films” Film Release
• 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
720
break markets for any indie release• But they are also the two most
expensive media markets.Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
720720
357
• A five city run – New York, Los Angeles, Boston, San Francisco, Chicago, and Dallas for one-week, could reach $500,000 newspaper ads and $350,000 in trailers and prints. Total of $8 0 000 i h
721
$850,000, with no TV.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
721721
• Instead of spending money on advertising , Independent film producers count more on PR.p
• Increased appearances of the cast on talk shows, public events, press, and movie premieres.
722Martin, Reed. “Indie Film Marketing”. Filmmaker Magazine. July 23, 2003.722722
358
Other Techniques• Premieres generates media coverage• AwardsAwards
723William Adams, Charles Lubbers. “Promotion of Theatrical Movies,” Kansas State University
723723
Film Advertising
• Trailers and film prints can padd up to $250,000 of the “P&A” (prints and advertising) budget.
724Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 724724
359
Independents (cont.)• Film Promotion
• Poster-related costs of a five-city platformPoster related costs of a five city platform release to $45,000.
• “Out-of-house” publicists add another $20,000 to $40,000
• 10 15 agencies around the country
725
• 10-15 agencies around the country typically are also hired for regional publicity.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
725725
• Grand total is now $950,000 $ ,still without a TV ad buy.
726Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004726726
360
• Press screeningsP j k t
Independents: Publicity Costs
• Press junkets• Public appearance tours by
actors
727
• Film festival premieres
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004
727727
Independents: Film Advertising
• Have to spend around p$500,000 on TV advertising in opening 5 cities.
728Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 728728
361
Independents: Promotion Expenses
• Premiere party $10,000-$20,000.p y $ , $ ,• Hotel rooms and airfare for
actors on publicity tours $40,000
729Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 729729
Independents: Film Promotion
• Special screenings and web marketingmarketing.
• One film had 400 word-of-mouth screenings.
$
730
•Cost $800 per screening, can add $320,000 to the marketing budget. Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 730730
362
Independent Film Marketing
• Some independent film makers pare now handling their own marketing, distribution and DVD sales
731
Tozzi, John. “Indie Filmmakers hit their target.” BusinessWeek. 5 June 2008. Last accessed on 1July 2008 at http://www.businessweek.com/smallbiz/content/jun2008/sb2008065_226261.htm?chan=search731731
• Studios generally budget to g y gforeign marketing only a fraction of the amount they budget for the United States
732
and Canada.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005732732
363
Gone in 60 Seconds.• For North America, Disney spent
$42 million on advertising and $ gpublicity for that film.
• For the rest of the world, it spent a combined $25 million.
733
a combined $25 million.
Epstein, Edward Jay, “The Big Picture, The New Logic of Money and Power in Hollywood,” New York: E.J.E. Publications, Ltd., Inc., 2005733733
• $6.5 million for Japan • $3.1 million for Germany • $2.5 million for Britain
$1 4 illi f F• $1.4 million for France • $1.1 million for Australia • $1 million for Spain • $ .9 million for Italy
734
$ .9 o o ta y• $ .8 million for Taiwan• $6 million in 60 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
734734
364
VI.3. How Much to Spend on Advertising?
736
Advertising?
365
Ad Spending
• Over-spending can evaporate p g pprofits
• Under-spending can weaken a film.
737
film.
Farrar, Strauss & Giroux, “The Money Shot” Reed Martin 2004 737737
Approaches To Determine Advertising Budget
1. Resources available2 Percentage of Sales2. Percentage of Sales3. Competitive parity4. Objectives/tasks5. Quantitative Models6 M i l A l i
738
6. Marginal Analysis7. Return on Investment8. Value of Customer
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
Lamb, Hair, McDaniel. Marketing , Annotated instructor’s Edition, third Edition Pages 518-520
366
1. Resources Available
• Problems•In a good year large amounts of money could be wasted; in a bad year, the low advertising budget could
740
guarantee a further low year for sales.
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
367
Example:• Medaverse is a start-up company
that will make its first game forthat will make its first game for the best-selling Nintendo’s Wii
• With only six employees and a tight budget, Medaverse will not
741
g g ,be able to spend too much on advertising
Hall, Kenji. “Opening up the Wii”. BusinessWeek. 17 April 2008.Last accessed on 11 June 2008 athttp://www.businessweek.com/magazine/content/08_17/b4081070887317.htm?chan=searc
• Most important advertising-related decision for small to mid-i d i if h th tsized companies if whether to
buy access to the ABCs.
742742742
368
2. Percentage of Sales
• Based on an internal rule such• Based on an internal rule, such as•Percent of Sales
744
Budget = x% × Previous/forecast year’s sales
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
369
Percentage of Sales• Advantages: financially safe• But letting the level of sales
d t i d ti i d lldetermine advertising dollars reverses the cause-and-effect relationship between advertising and sales.
745
• Also, it treats advertising as an expense associated with making a sale rather than an investment.
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)
746
• Maybe % should be higher when sales are low
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
370
Example for Advertising Ratio of Industry
• Household audio and video equip.• % of sale: 3.2%• % of margin:10.7%• % of Annual growth: 6.9%
747
gSource: Schonfeld & Associates, Inc.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
371
3. Competitive Parity• Compare with industry• Advertising expenditures to
match those of competitors
749Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
• Problems with parity• Getting information about competitor’s spendingcompetitor s spending
•Assuming competitors have the same advertising opportunities
750
opportunities•Ignore creativity and media effectiveness
372
http://www.marketingcharts.com 751751
Competitive Parity• Companies often subscribe to p
services such as Competitive Media Reporting, which estimates the top 1000
752
pcompanies’ advertising in 10 media and in total.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
373
Competitive Parity• Smaller companies often use a p
clipping service, which clips competitors’ ads from local print media, allowing the company to
753
, g p ywork backward to determine the cumulative costs of the ads.
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• TW Cable s reputation is already
established with its customers, while satellite’s reputation is developing.
• Direct TV must focus on expanding it t
754
its customers.• TW Cable can focus on maintaining
impression on its service.Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
374
4. Meeting Objectives• Consider the firm’s
communications objectives and then budget what is deemed necessary at attain
756
ythese goals.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
375
Setting Objectives • Most critical step in the
promotional planning process: set p p g prealistic objectives.
• Budgeting and media strategies and tactics evolve from these
bj i
757
objectives • To be effective, objectives must
be realistic and attainable.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
758
specify a time period for accomplishing the objective(s).
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
376
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.Obj i 3 C i i f li
759
• Objective 3: Create positive feelings about the brand among 40% and preference among 25% of the target audience, etc.
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 ll t $500 000 f it• It allocates $500,000 for its campaign
• The result is 10-fold increase in th b f b ib i 6
760
the number of subscribers in a 6 month period
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
Lamb, Hair, McDaniel. Marketing , Annotated instructor’s Edition, third Edition Pages 518-520
377
Example for Objectives: PromotionObjectives: Promotion
of a New Film
761
1. Establish desired target.– Assume potential target p g
market of 50 mil– Estimate target audience
h 8%share= 8%– Audience of 4 mil desired
762
378
1. Estimate number of advertising impressions that are needed to persuade each 1% of target population – E.g., assume that each 1 TV
advertising exposure of l i d
763
target population persuades 2% of target audience.
(Cont.)• 2 advertising exposures to
get 4%, etc g• That means, for an 8 %
yield, 4 exposures of target population of 50 mil are
764
population of 50 mil are required
• 50 mil = 17% of US pop.
379
1. Determine numbers of Gross Rating Points that need to be bought.
• 4 exposures × 17 % of US
765
ppop. = 68 GRP
(Cont.)1. Determine the needed
advertising budgetadvertising budget • E.g. 1 GRP nationally/HH size• = per capita CPM ×target pop
1000
766
• $13 × 50, 000 = $650, 000 • 68 GRP =$44.2 mil
1000
380
Would That Advertising Expenditure Be Worth It?
• 4 mil audiences × $5.00 box office share of distributorof distributor• expected revenues : = $20mil. • This is less than the cost advertising of
the campaign, which is $44.2 mil.
767
• Therefore, revenues from after-markets would have to be the substantial to overcome the gap, (consider also added distribution and promotional expenses).
• It might be more profitable to do only minimal TV advertising, get only 2% of target population, but at a small cost.
768
381
• Company would have to reduce budget to point where marginal expenditure =marginal expenditure marginal revenue
• Depends on productivity of d ti i
769
advertising
382
5. Quantitative Model Approach
• Use research data to estimate parameters in the models
• Quantitative models to estimate consumer behavior.
771
• Sophisticated versions of the objective and task approach
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
• Statistical techniques such as multiple regression analysis to determine the relative contribution dete e t e e at ve co t but oof the advertising budget to sales.
772George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
383
• Some examples of these models:• Butters (1977)• Deneckere and Peck (1995)• Burdett, Shi, and Wright (2001)
773
( )• Bataille, Julien (2005) Model
http://ideas.repec.org/p/wpa/wuwpio/0511008.html
• While these models could potentially change the way companies will allocate their padvertising dollars, most are theoretical and make a lot of assumptions.
774
p• They cannot be applied easily in
real world situationshttp://ideas.repec.org/p/wpa/wuwpio/0511008.html
384
• Most models assume that a company’s advertising attracts customers probabilisticallyp y
775http://ideas.repec.org/p/wpa/wuwpio/0511008.html
• Models also typically assume that consumers choose only one of the companies based on the ads pviewed, and at only the advertised price.
776http://ideas.repec.org/p/wpa/wuwpio/0511008.html
385
• The Marketing Engineering (ME) approach relies on the design and construction of decision models in the form of marketing management support systems (MMSS)
777
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 athttp://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
• Marketing Engineering captures marketing problems in well-specified models and it improves decisions.
778
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 athttp://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
386
• Some commonly used market yresponse models are:• Linear model • Calibration
779
Calibration
• Linear model: Y = a + bX• X is an independent variableX is an independent variable (e.g. advertising)
• Y is a dependent variable (e.g. sales)
780
(e.g. sales)• a and b are constantsLilien, 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 athttp://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
387
781
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 athttp://books.google.com/books?id=RymGgxN3zD4C&printsec=frontcover&sig=QSYKx2Lul8qx203m3MgI85UJ4Q0#PPA233,M1
388
6. Marginal Analysis Approach• advertising's marginal
contribution to profit(marginal revenue - marginal advertising cost)
783
• Problems • hard to isolate other influences on sales
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
784
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
Cravens, Hills, Woodruff . Marketing Management..1987, Pages 514-520
389
Marginal Analysis• Firm would continue to spend
advertising/promotional dollars as long as the marginal revenues created by these expenditures
785
exceeded the incremental advertising/promotional costs.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• In the table above: • Optimal advertising expenditure calculated by comparing thecalculated by comparing the marginal revenue (4th column) with marginal cost (2nd column)
• Advertising add to profit until a
786
• Advertising add to profit until a budget level of $65,000 is reached
390
Weaknesses1. Assumption that sales are a
d f ddirect measure of advertising and promotions efforts.
2. Assumption that sales are
787
determined solely by advertising and promotion.
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 quality, or pricing.
788
p g• Effects of advertising can
occur over a long time.George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
391
• Consumers do not respond pimmediately
• Advertising may create a favorable predispositions
789
favorable predispositions toward the brand.
• Easiest to gauge results: g gdirect-response advertising
• Direct mailing
790
392
7. Return on Investment (ROI) Approach
• Expands impact of advertising into future, p p g ,to calculate Net Present Value, and ROI
• Advertising and promotions are considered investments, like plant and equipment.
792George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
393
Valuing Customers • In 1999 AT&T paid almost $4,200 per
subscriber to buy the cable companiessubscriber to buy the cable companies with TCI and MediaOne.
• In 1999 Deutsche Telekom spent $6,000 per customer to buy Britain’s
793
One 2 One mobile wireless company.
http://www.gonuts4free.com/finall/pda/images/logo_deutsche_telecom.gif
“Lifetime Value” of a Customer• The LV of a customer is the
present value of all futures profitspresent value of all futures profits that a company can potentially generate from customer.
• Similar to DCF, with one
794
,difference: customer retention or loyalty is incorporated.
394
Lifetime Value of a Customer
LV = (Annual gross margin per customer)/(1+discount rate-retention rate) minus acquisition cost
795LV= M · – ACR
1 + I - R
Measuring Lifetime ValueLV : Lifetime ValueM = MarginI = Discount Rate
796
R = Retention RateAC = Acquisition Cost
395
Margin Multiple• Can Assume Constant Marginsg
R/(1+I-R)• Or can Assume growth in Margins
R/(1+I R(1+g))
797
R/(1+I-R(1+g))where g = Growth rate
Therefore maximum investment in customer acquisition is
M · R1 + I – R
• Higher with retention rate R, higher margin M (and growth rate g)
798
rate g)• With lower discount rate (e.g.,
lower risk)
396
Figure 1-9 Customer Life Expectancy and Retention
799Roger Best, Market-Based Management
Figure 1-10 Customer Lifetime Value
800Roger Best, Market-Based Management
397
Calculation of Sales and Marketing Expenses (per new subscriber)
Commissions $175Co ss o s $ 75
Handset Subsidy $75
Advertising $175
Other $10
Total Subscriber Acquisition Cost $435
801Deloitte & Touche, “The PCS / Wireless Marketplace”
Total Subscriber Acquisition Cost $435
Average Life (months) 30 mo (2.5 years)
Amortized Monthly Subscriber Acquisition Cost $15
801801
Value of CustomerBut traditional Customer Lifetime Value (CLV) model may underestimate the value of new acquired customers because it qexcludes the network effects, for example, word-of-mouth. Villanueva, Julian, Yoo,Shijin, & Hanssense, Dominique M. “The Impact of
Marketing-InducedVersus Word-of-Mouth Customer Acquisition on Customer Equity Growth”. Journal of Marketing Research 45 (Feb, 2008), p48-59.
802
398
803
• Customers must be not only gained but also retainedg
• Need reward their loyalty.
804804Ed Finegold, Nothing Left to Analyze but the Customers Themselves, Billing World and OSS Today, October 2006
399
• Marketing spend all of their promotional dollars just to win the p jcustomer
• Follow-on promotions and loyalty tactics, are often viewed as wasted
805805
,money
Ed Finegold, Nothing Left to Analyze but the Customers Themselves, Billing World and OSS Today, October 2006
• Yet, customer churn is a main cost l d lelement and revenue loss
806806Ed Finegold, Nothing Left to Analyze but the Customers Themselves, Billing World and OSS Today, October 2006
400
Marketing Radio Loyalty
• Radio Stations’ directors ofRadio Stations directors of promotion have three distinguishable aims:1 Instituting activities that
807
1. Instituting activities that bring in new listeners to station (acquisition)
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.807807
Marketing Radio Loyalty
2. Encouraging long periods of g g g pcontinued listening (maintenance)3. Listeners must return at
808
various times in the day (recycling)
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.808808
401
• One promotion method is• One promotion method is creating contests and on-air games that can achieve audience acquisition maintenance or
809
acquisition, maintenance, or recycling.
Eastman, Susan T. Media Promotion & Marketing. Burlington, MA: Focal P, 2006.809809
Using Social media to create brand loyaltyCustomers do not haveCustomers do not have
relationships only with the organization but also with the human face of the organization
810
human face of the organization – people who work for the organization
http://customersrock.net/2008/09/21/using-social-media-for-customer-loyalty-part-1/
402
811
VI.5. Media MixMix
http://edu.kde.org/contrib/graphics/renaud/tv.jpg
http://www.cctvstuff.co.uk/images/radio-cd-200.jpg
http://www.kreysler.com/projects/billboards/marineworld2a.jpg
812
http://clear.msu.edu:16080/dennie/clipart/magazine.gif
http://tubes.ominix.com/art/office/newspaper-07.png
403
• The preceding section dealt p gwith determining the overall promotion budget.
Next question:• How to allocate that budget
*
• among promotional activities• among media (TV vs. radio vs. print vs. web, etc)
814
• within each medium •e.g., which radio station, rock station vs. C&W station.
404
A. Allocation ofA. Allocation of Advertising
Within a MediumWithin a Medium
815
Example: Choice of Magazines for AerobicMagazines for Aerobic
Exercise Ads
816
405
Magazines Purchased by People who do Aerobics
Total Circulation
Aerobatics Users %
Redbook 10533 1074 10 2Redbook 10533 1074 10.2
Road & Track 3838 133 3.5
Rolling Stone 6154 496 8.1
Scien. Amer. 1835 137 7.5
S lf 2957 594 20 1
817
Self 2957 594 20.1
Ses. St. Mag. 3606 444 12.3
Seventeen 3532 259 7.3
Shape 1664 252 15.1
• Shape, Self, and Vanity Fair magazines seem good selections for aerobics ads, whereas Road and Track, Sports Afield,or Sports Illustrated would achieve lessor Sports Illustrated would achieve less desired exposure.
818George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
http://www.booksamillion.com/mag/covers/0/05/281/0052814.jpg
http://www.amagarea.com/imgB/HWPET.jpg
406
• Another factor is regional gchoice.
-Some regions generate stronger national buzzstronger national buzz.
Film distributors advertise in newspapers (2007)
New York papers, $274 mil, LA papers $127 milLA papers, $127 mil
407
408
Case Discussion: Fly & SkyGoal:
The idea of exclusiveness is to provide greater customer value, increase loyalty and attract new
823
increase loyalty and attract new members
823
Fly & Sky
Place ads for Fly & Sky in thePlace ads for Fly & Sky in the complimentary seatback magazines of major airlines, such as American Airlines and
824
Continental.
824
409
Fly & Sky• Fly & Sky can be promoted by cross
marketing in different Condé Nast publications
• Fly & Sky can also be promoted through the Condé Nast website and
825
through the Condé Nast website and Fly & Sky’s homepage
B. Allocation among media: gMedia Mix
410
Different media vary in effectiveness based upon
Demand for Ad Space
effectiveness based upon •Length and quality of exposure,•sensory involvement,
827
•interactivity and ease of response.
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
Advertising Media•Outdoor/indoor displayOutdoor/indoor display
-Limited information -To reinforce image
828
(http://search.corbis.com/default.asp?i=11027651&vID=1&rID=101)
411
Billboards
Billboards
412
• Magazine advertising•Targeted •Creative•Good information vehicle
http://pobox.upenn.edu/~davidtoc/images/ck.furlong1.html
831
vehicle•But time lag
http://www.absolutad.org/cities/paris.jpg
• TV Networks will advertise shows in magazines that they feel have a strong readership among its core viewers.
832832
413
•Magazines benefit from gtheir highly targeted audience, which increases their appeal to
833
increases their appeal to target marketers
833833
Magazine Customization• 1970s: “Selective binding” permits
ti f lti l diti fcreation of multiple editions of an issue • Farm Journal has thousands of
individualized versions
834
• for time-sensitive information: electronic newsletters is a better vehicle
834834
414
Newspaper advertising
•Geographic targeting
•Broad reach
835http://www.islandnet.com/~iblack/newsads.html
Broad reach•High cost
Newspaper Advertising Prices High:Market Structure:
• Over 90% of US papers are the only daily paper published in their marketspaper published in their markets
• % of US cities with only one daily newspaperin circulation:• 1888: 39% • 1910: 43%
836
• 1910: 43% • 1940: 87%• 1981: 98%• 1990: 99%
415
Newspaper Ads
837837http://www.naa.org/advertising/pdf/athena60.pdf
Newspaper Ads
838838http://www.naa.org/advertising/pdf/athena60.pdf
416
Newspaper Advertising: Declining Market
L f ti l d ti l• Loss of national ads: national advertising declined from 25% in 1980 to less than 8% of 2009 newspaper revenue
839
newspaper revenue.
• Classified ads made up 60 to 70% of online advertising for newspapers.
• But Websites, such as Craigslists, post a huge threat.
• Also, Shoppers (or “penny-”) d f di t ib ti
840
savers”) and free-distribution newspapers
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>
417
• Leaves local business ads as main economic base
Newspapers Ads
economic base• But these, too, are eroding with
growth of national retail chains which have “permanent sales”
841
which have permanent sales (Home Depot), or use national TV and cable rather than local papers
Industry-wide Ad Campaign• The Newspaper Association of
America started a $50 million ad campaign to remind advertisers that newspapers are still the dominant source for consumer information “(5 times more than any other medium)”
842
times more than any other medium)
“More Than 700 Newspapers Create Historic Media Roadblock as Newspaper Industry Launches $50 Million Trade Campaign.” PR Newswire US, 20, Mar. 2006
418
• 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.’”
843
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>
• Campaign trying to show ads in newspapers, unlike those in other media, are “a destination, not a distraction.“”
844
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>
419
• 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
l d i
845
welcome ads in newspapers.
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>
420
Radio advertising
• Audience and geographic selectivity
• Mobility
847
Mobility • Divided attention• Localism
http://www.old-time.com/werus.html
• Radio spots and magazines are h th TVcheaper than TV
• Magazines can be an affordable alternative to television for films
ith ll b d t
848848
with smaller budgets.
Thomas K. Arnold, By the numbershttp://www.hollywoodreporter.com/hr/search/article_display.jsp?vnu_content_id=1000603668
421
TV advertisingNational–National and local reach
850
•Effective persuasion
•High cost
http://www.usatvads.com/
422
TV Advertising Sub-markets• Network primetime:delivers to a
range of audiences
*
• Network daytime: delivers to a relatively pure audience of 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
• TV audiences have come to expect quality commercials. Th t f d i d
*
• 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
423
30 Second Adverts• The price of a 30 second
*
padvert is dependant on the time that it airs and during what televised program.
853
p g
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
854
$340,000 for a 30 second spot.
http://adage.com/article?article_id=139923
424
TV Advertisements (2009)TV Network Average Price
*
for 30 Second Slot during Prime Time
ABC $126 476ABC $126,476CBS $111,840NBC $90,714FOX $111 529
http://adage.com/article?article_id=139923#sun855
TV Advertisement• The highest priced advert on
*
g pprimetime is Monday Night American Idol, which costs up to $700,000 for a 30 p ,second ad.
http://tvbythenumbers.com/2007/09/30/30-second-ad-cost-for-broadcast-primetime-shows/962856
425
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 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 FOXhttp://adage.com/article?article_id=139923#mon 857
858
426
C. Optimal Advertising MixMix
859
Estimate of Advertising Allocations among Media for
Feature Film Releases
860Forrester Research (2007)
427
Advertising Formats
http://www.marketingcharts.com 861
Studios Media Mix
862Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005
862862
428
Audience size
Radio
Advertising Productivity of Media (Schemati*
size, revenues
TVBillboards
863
$ Advertisement Spend
[revise for magazine]
A B C
Advertising Mix• A simple answer using the
*
preceding graph would be• $C on radio spend•$B on TV spend
864
$B on TV spend•$A on billboards spend[revise]
429
• This assumes no interaction among advertising vehicles, and no overlap of target segmentsp g g
• If these assumptions do not hold, then the calculation is more complex and requires cross-elasticities of productivity of different media.
865
• Furthermore, this is not a marginal analysis
• A, B, and C an incremental dollar spent results in less than a dollar incremental in revenue.
866
430
Absolute and relative advertisement productivities will vary according to:will vary according to:
• Product and its attractiveness• Fit of the medium with target
867
audience• Effectiveness of ad
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
431
20
25
30
NewspaperN t k TV
(%)Film Advertising Mix in Different Media
10
15
20 Network TVSpot TVInternet/OnlineTrailersOther MediaOther Non-Media
0
5
2001 2003 2005 2007(Year)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.
• The 3-D cube of advertising value shows average CPMs for
Effectiveness of Media
value shows average CPMs for different media which explained by three factors: •targetability
870
• targetability, •sensory intensity, •interactivity.
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
432
The Cube of Advertising Value
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
• Fox Searchlight has a long-term contract with the New York Times O li in hich the for the same
872
Online in which they for the same space with rotating ads.
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344872872
433
• Miramax, whose movies target an older, more affluent audience and uses newspapers more than other studios.
• Sony allocated a small share (11.5%) in 2005 of marketing
873
( ) gbudget to newspapers.
http://www.hollywoodreporter.com/thr/film/feature_display.jsp?vnu_content_id=1002464344873873
Reach versus Frequency• Trade-off of reach and frequency• Must decide whether to have the
message be seen or heard by more people (reach) or by fewer
874
p p ( ) ypeople more often (frequency).
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
434
Optimal Advertising Mix • Requires
•Information about the•Information about the audiences of each advertising vehicle
875
•Complex model to optimize exposure to target audience
Optimizing Models of Advertising Budgets
O d l ti l• One can model an optimal advertising budget•Optimal size of budget
876
•Optimal allocation among media
435
Computers in Media Planning
• Advanced planning models have been around since at least 1963.
• Limited success.• Programs based on linear
i i l ti d it ti
877
programming, simulation, and iteration have been adopted
Advertising Reach and Frequency Models
• ADplusAd –Nielsen SAVIE
•Examples of media mix models:
• Adware• IMS• Media Control
by Control G SoftwareM di
(formerly AdExpress)
–Tapscan–Telmar
TV
878
• Media Management
PlusGeorge E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
–TVscan–TV Conquest
436
Media Mix ModelingMedia Mix modeling was invented
*
gby a database marketing company in 2005.
879
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
Media Mix ModelingDrawing on databases, it
*
gmathematically forecasts the most effective advertising schedules (and hence, most effective d ti i b d t )
880
advertising budgets)
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
437
Media Mix ModelingMedia Mix Models plan advertising
*
p gcampaigns across a range of media.
Multiple schedules can be created
881
for combinations of mixed media.
http://www.telmar.com/ZA/?page_id=418
Media Mix ModelingOriginally Media Mix optimization
*
g y pwas only used by a few industries (pharmaceuticals, financial services) but now it is becoming
id d
882
more widespread.
Campanelli, Melissa.“Dell Finds Right Media Mix.” DM News, July 27, 2006
438
Nielsen Savie• Windows-driven system• The system allows Nielsen clients to
**
yidentify 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
Nielsen SavieSAVIE – Strategic Audience
Value Identification and Evaluation
Integrates ratings, geographic,
884
g g , g g p ,demographic and product-usage information on local cable
Moss Linda. Multichannel News “A.C. Nielsen buys AdExpress Jan 1993
439
Nielsen Savie A C Nielsen purchased the spot cable software system from AdExpress in 1993
Identifies spot cable
885
Identifies spot cable opportunities
Moss Linda. Multichannel News “A.C. Nielsen buys AdExpress Jan 1993
TapscanEnd-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
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=428599886
440
TapscanSoftware tool used by media
planners (ad agencies) to decide the placement of their client’s radio commercials
887
Research, Plan, Buy and Post radio campaigns
http://www.bentley.edu/cmt/documents/tapscan.pdf
888
441
889http://www.bentley.edu/cmt/documents/tapscan.pdf
890http://www.bentley.edu/cmt/documents/tapscan.pdf
442
TapscanEvaluates cost and radio station data to provide information for improvement in efficiency and
891
in efficiency and effectiveness
http://www.bentley.edu/cmt/documents/tapscan.pdf
Advertising Reach and Frequency Models
• The Telmar program computesThe Telmar program computes various media mixes for TV and radio at different TRPs.
892George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
443
Telmar WebplannerEvaluate individual web
campaigns
**
campaignsView media expenditures by
Website type Review individual site R/F as
well as by type or genre and total schedule 893
Telmar Webplanner Interface **
http://www.telmar.com/US/?page_id=1080 894
444
Telmar Scheduling*
895Source: http://www.telmar.com/ZA/?page_id=418
• Bass diffusion model is appropriate for forecasting sales of an innovation for which no closely
ti lt ti i t i thcompeting alternatives exist in the marketplace
• Bass model attempts to predict how many consumers willhow many consumers will eventually adopt the new product and when will they adopt
445
897
446
IX.4. Marketing and the Product
Life Cycle899
Life Cycle
Life Cycle• For media products and o ed a p oducts a d
high-technology products, life-cycles can be short and intense
900
intense
447
Implications of Product Cycle for Marketing
MManagement• Different strategies for each
phase
901Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Product life cycles Introduction Growth Maturity Decline
Sales
Time
Lamb, Hair, McDaniel, “Marketing,” Cincinnati, Ohio: South-Western College Publishing. 1996.
448
In the early stage, (#1), Introduction to Customers are
“Innovators”Innovators• Fundamentally committed to new
technology or style-Technology as toys
903
-Style as creativity• Often no moneybut influencehttp://www.iccwbo.org/home/news_archives/2002/images/thinking%20man_b.jpg
Stage 1. Introductory Phase • Sales Sa es• Profits negative• Few competitors
904
• Costs high• Price high
449
In the Introductory Phase: • Marketing costs high
•High dealer margins to obtain distribution
•High advertising costs
905
•High advertising costs•educational effort required
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Introductory Phase • Market leadership strategy:p gy
• give away product to build market share, loyalty (Google, AOL)
906
450
• James O. Peckham estimated that the average share of advertising to sales ratio necessary to launch a new
d t f ll i i t lproduct successfully is approximately 1.5-2.0.
• This means that a new entry should be spending at approximately twice the
907
spending at approximately twice the desired market share
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
451
As the product takes off, customers are “Early Adopters”
(Stage #2 Growth)• Have influence because they oftenh
909
have money
http://direct.motorola.com/HelloMoto/assets/images/countryselect_circle_woman.gif
2. Growth Phase• Sales • ProfitsProfits • Competitors • Marketing Strategies: Shift from
generating primary demand to aggressive brand specific advertising
910
brand specific advertising. • Distribution key to establishing position• Example: Mobile Wireless ca. 2002
452
The product is itemized for mass market. “Early Majority”
(Stage #3 Maturity)(Stage #3 Maturity) • Make the bulk of purchases• Adopt technology only
912
when proven, style only when established
Geoffrey A. Moore, Inside the Tornado, 1995, HarperBusiness, New York, page 16http://www jrn columbia edu/admissions/visiting/grand central station jpg
453
3. Maturity Phase • Slow growthS ow g owt• Profits stable, decreasing• Consolidation beginning• Distinction segments
913
Distinction segments• Prices stabilize, decline
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Maturity Phase • Market saturation, longest phase
of life cycleof life cycle• Stylistic rather than functional
modifications• Heavy consumer promotion to
914
• Heavy consumer promotion to maintain market share
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
454
Maturity Phase
• Dealer margins shrink• Dealer margins shrink, promotion to dealers to retain loyaltyE ample: Mobile Wireless
915
• Example: Mobile Wireless post 2004
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
• Marketing strategies to sustain maturity phase:• Promotion of more frequent use of
productproduct• Find new uses for product• Pricing below market price• New distribution channels to reach
916
new markets• Adding elements to product mix• Raise network effects
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
455
The product peaks and declines. Last to join are the “Late Majority” (Stage #4Late Majority (Stage #4,
Decline)• Pessimistic about product’s value
B t l b th d ’t
918
• But so along because they don’t want to lose out
• At that stageGeoffrey A. Moore, Inside the Tornado, 1995, HarperBusiness, New York, page 17
456
4. Decline Phase • Long-run drop in sales• Profits declineProfits decline• Marketing Strategies: Niche
marketing targets narrow segments of market.N ti l k ti
919
Non-essential marketing dropped
• Example: AOLLamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
• Some stages are “profit taking” brands, or “under-spenders”
• Others are “investment brands”Others are investment brands , those whose share of advertisers is above their market share, “over-spenders ”
920
over spenders.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
457
• What would be the product pstages for “Fly & Sky” Magazine?
• How might “Fly and Sky’s”
922
• How might Fly and Sky s marketing change over its life-cycle?
458
Case Discussion: Condé Nast
H d th ti l• How does the promotional message for “Fly & Sky” change as the product
t ?
923
matures?
For details see Appendix K:Appendix K:
Marketing and the Product Life
924
the Product Life Cycle
459
460
Promotion to
AdvertisersAdvertisers
Steps in Promotion of a M di O l Ad iMedia Outlet to Advertisers
461
Ad Sales Process ParticipantsAdvertiser/Ad Agency Media Outletg y
Media Director Ad Sales Director
M di B /
929
Media Buyer/ Media Coordinator
Ad Sales Representative
http://marketing.about.com/od/exploremarketingcareers/l/bladvsalesdir.htm
• Account executive salaries are usually commission based. The flat rate before commission isflat rate before commission is called draw.
930F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”. Perspectives on Radio and Television. University of Florida 4th Ed
462
Sales Staff• 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
931
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
• Reps have various branches in major outlets and advertising centers (National reps: >3 major
l R i l 3 l )outlets, Regional: 3 or less). • Radio and Cable reps receive about
15% commission on revenue. TV f 7% t 15%
932
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
463
Local Stations’ Ad Sales• National advertisers would have to
dealing with thousands of accountdealing with thousands of account executives for each station. This is too costly.
• Instead, stations with contract with ,advertising representatives (reps).
• Reps are independent firms.F 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 b g u be o V spots atdiscounted prices from stations and resell them individually for profit.
934F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”. Perspectives on Radio and Television. University of Florida 4th Ed
464
1. Spread the word
M k ti th di tl t t• Marketing the media outlet to create awareness
• Promotion of advertisement inPromotion of advertisement in cable channels is placed in trade magazines, such as Advertising Age
936
g g
Source: Behind-the Scenes as TV Guide Channel Prepares for Upfront,Media Village 2005
465
2. Developing a Prospects Database
• Identify the media buyer- the person who makes the buyingperson who makes the buying decision for advertising purposes-for each potential advertiser
937937
advertiser• Large companies use ad
agenciesWoodard, 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-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
Developing a Prospects Database
• Rent mailing list (Dun & g (Bradstreet, etc.)
• Yellow pages• Google
938938Woodard, 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-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
466
3. Making contact • Send-out letter introducing the
media product and its audiencemedia product and its audience. Samples may be attached.
• Follow-up on request for appointment
939939
appointment• Must send a complete media kit.
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-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
4. Preparing a Proposal • Proposal must coincide with potential
customer’s advertising goalscustomer s advertising goals• Includes ad size and frequency
suggestions based on prospect’s budget and needs
• Includes price of the ad based on the
940940
• 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. <http://www.magazinelaunch.com/article/articles/49/1/The-Advertising-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
467
• Cable channels such as Time-Cable channels, such as TimeWarner’s channel The Cartoon Network, create advertisement packages that they sell to advertisers
h k i l d
941
• These packages include events, promotions, online, on-air activity, marketing and production
Source: Advertisers toon into kids TV networks, B&T Weekly 2005
Preparing a Proposal • Define the advertising product
to be soldto be sold
942942
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-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
468
Research• Magazines must be able to show
that ad dollars are effectivethat ad dollars are effective
943
Source: Media management : a casebook approach / Stephen Lacy et al., L. Earlbaum Associates, Publishers, 1993.
Types of Newspaper Ads• Business Card Ad• Coupon Ad• Sale Ad• Spotlight Ad
944944
• Spotlight Ad• Information Ad
http://retail.about.com/od/marketingsalespromotion/a/effective_ads.htm
469
Advertising Page Layout With Ad Sizes
945http://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's rate for advertising.
946946http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
470
Advertising Rate Cards• It may also detail any deadlines, y y ,
demographics, policies, additional fees and artwork requirements.
947947http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
Advertising Rate Cards
948948http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card.htm
471
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
949
• Preprints or inserts: advertising that is printed separately and inserted in a newspaper
• At standard rates a black and• At standard rates, a black-and-white full-page ad costs $132,678 (Sunday $148,680) in the New York Times whose
950
the New York Times, whose circulation is 1.13 million.
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
472
• Cost per black and white• Cost per black-and-white column inch for Sunday costs $1,180 for the New York Timesand $1 050 for the Los Angeles
951
and $1,050 for the Los Angeles Times.
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
Calculating Display Ad Rates Per Column Inch
952952http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_7.htm
473
5. Closing the Sale • Can be done via the phone/email
as soon as the advertisers sends aas soon as the advertisers sends a positive response such as an “insertion order”-a purchase order specifying ad size, issues where
953953
p y g ,the ads will run, and price of the adWoodard, 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-Sales-Process-for-Magazine-Publishers...in-a-Nutshell>
• It may a take a year to sell an ad y yto an advertiser may take up to one year dependent
474
• The account executive then follows through servicing thefollows through servicing the account to follow up on the contract.
955F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”. Perspectives on Radio and Television. University of Florida 4th Ed
475
Selling Time on Local TVTV
Local TV Time Sales• Local TV stations have to ‘sell’
themselves to local merchantsthemselves to local merchants and advertising companies.
• They have either an in-house or contract sales team
958
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
476
Who advertises on local stations?
•Local advertisers•National advertisers seeking targeted geographic markets
959Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 424, 1998
TV Ad Services offered to Advertisers by Station
• Sponsorship of program• Local ads• Local ads• National ads• Time Block• Voice-overs and logos
S t B i f i l l t
960
• Spot Buying of commercial slot• Upfront Buying
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 416, 1998
477
• Magazine audiences are• Magazine audiences are appealing because specialized publications deliver readerships that are tightly focused by
961
that are tightly focused by demographic.
Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005.
478
Selling Ad Space Online
Selling Ad Space Online Company: Mediabids.com • Advertisers’ auctions- bid
provided by publications• Ad Space offers• Sends-out RFP to
964
publications for advertiser’s
http://www.mediabids.com/about_us/pub/aboutus.jsp
479
Selling Ad Space Online Advertiser’s Auction:• Advertiser posts ad budgetAdvertiser posts ad budget• Publisher makes an offer
(bid)• Winner is selected at the
965
auction’s close• Bidders are notified of results
• Google brokers online ads • tries to establish itself as a
middleman for purchasing TV spots.
966
480
Google AdSense:
• Google’s media ad program g p galso for radio and TV market ($68 billion local TV ad market).
967David Kaplan, Google’s Local Media Ad Program Raises Revenue For Print, Radio -Can TV Be Far Behind?, Mar 2007http://www.paidcontent.org/entry/419-googles-local-media-ad-program-raises-revenue-for-print-radio-can-tv-be/
Actual deals• Google promised a minimum of
$900 million in advertising revenue by advertisers to News Corp. websites and other media properties sites (primarily M S ) f i G l
968
MySpace) for using Google search technology.
Wall Street Journal, March 2007 @ 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
481
• Google changes how TV commercials are sold andcommercials are sold and delivered to viewers, challenging the traditional TV and advertising powers by selling to advertisers
969
p y gads across all media.
eMedia Exchange: Reverse Auction
• eBay allows cable networks to confidentially bid on advertising spend by agencies
970http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003381510
482
eMedia Exchange• Buyer submits budget for packages of time they want to buy
• Sellers would bid on a reverse-auction process
• Only the buyer would know who
971
Only the buyer would know who all the bidders are; sellers will be informed of who the winner is http://www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1003381510
Google AdSense• Google’s Print Ads program has
produced big ad revenues for p gnewspapers.
• 50 major newspapers in U.S. (Gannett, Tribune, NYT, Wash
972972
( , , ,Post) and over 100 local newspapers involved.
David Kaplan, Google’s Local Media Ad Program Raises Revenue For Print, Radio -Can TV Be Far Behind? Mar 2007
483
Bulk AdvertisingBulk Advertising vs. Spot Advertising
484
• TV network inventory can be sold using two methods:
• 1- upfront: to get the best spots, agencies buy specific spots at specific program times.
• 2- scatter: agencies buy the
975
‘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
This paved the way forUpfront Buying:
Networks offer advertisers time slots (called avails) at a
976
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
485
Timeline-Upfront Buying• Networks usually begin
lli i ti il iselling primetime avails in May for following season.
• Buying for Saturday morning
977
children’s programming can be as early as March.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998
• The buying season for network daytime slots starts in early summerin early summer.
• Upfront buying season for Network News begins in summer
978
summer.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998
486
Figures-Upfront BuyingNetworks sell approx. 65 – 75 % of prime time avails upfront% of prime-time avails upfront at a 15% discount.
979Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998
• Network & advertiser negotiate on Cost Per Thousand households orThousand households or viewers (CPM)
• Network/Advertiser negotiate on list of shows dates and
980
on list of shows, dates and expected ratings
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421-422, 1998
487
•Advertiser commits to time.
As a rule commitment is flexibleThe larger the commitment, the greater amount of flexibility in the deal. (i.e. Option to cancel up to
981
25% of order for first quarter)
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998
Newspaper “Open Rate” Advertising
• Newspapers offer an open rate p p pwithout discounts. This is the rate that you would be charged for running a single, one-time
982982
advertisement. This is referred to as the non-contract rate. http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_5.htm
488
Open Rate vs. Bulk-Space Contracts
• A discount offered by a ynewspaper for an advertising commitment to a certain number of ads within a specified time
983983
period, is called a Bulk Space Contract.http://retail.about.com/od/marketingsalespromotion/ss/ad_rate_card_5.htm
Promoting Cable Channels to Advertisers
• Around 35% of all cable channel d i ld i hadvertisements are pre-sold in the
upfronts• Cable channels have sales executives
that try to convince advertisers to
984
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
489
Promoting Cable Channels to Advertisers
• First, the big cable channel , gcompanies, such as MTV or NBC will close deals in the upfront
• Afterwards smaller channels, such as Court TV or the weather
985
as Court TV or the weather channel try to sell their ad space
Source: Cable Clicks in Upfront, Broadcasting & Cable 2004
Cons of Upfront BuyingNetworksLoss of revenue due to 15% discountMake-goods if audience is not deliveredA i /Ad iAgencies/AdvertisersMake-Goods may put their ads on the wrong programs
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998
490
Pros of Upfront BuyingNetworks:• Money is on the books early• Money is on the books earlyAgencies/Advertisers:• Upfront buy assures best
987
possible time slots• 15% discount
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 422, 1998
Upfront Buying• Ad agencies register their
li t ’ b d t ith t kclients’ budgets with network• And register request for a
package of shows for each of
988
their clients
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998
491
• Network responds with proposal including:N b f l t-Number of slots
-Programs-Air Dates
989Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 421, 1998
Advertising on Network Sports Programs
• Sponsorship vs. Spot Buying• Exclusivity within product
categories is primary concern
990
g p yof advertisers
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998
http://www.tal.org/~milang/miscpics/sponsor.jpg
492
Structure-Sports Events• Many sports programs are sold
on a series basis an advertiseron a series basis – an advertiser has a spot in some or all of the games in a season.
• Strip Sponsor – advertiser with 1
991
Strip Sponsor advertiser with 1 or more spots in each game.
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423-424, 1998
Sports Events• Contracts negotiated far in d f b dadvance of broadcast
• Contracts run for more than one year• Selling starts soon after rights to• Selling starts soon after rights to sports events are bought
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 423, 1998
493
Costs of Spots duringSports Events:
Weekend Bowling: $20 000Weekend Bowling: $20,000NFL Broadcast: > $500,000Super Bowl: > $2 million
993
Howard J. Blumenthal and Oliver R. Goodenough ; This Business of Television: Pg. 424, 1998
http://images.google.com/images?hl=en&lr=&q=Super+Bowl
http://images.google.com/images?hl=en&lr=&q=NFL
Multiple Ads on Cable TV
• Cable TV may associate with an yinterconnect. Advertisers then place an ad on multiple cable channels together.
994
• Cable ads are generally multi-channel.
F Leslie Smith, John W Wright II, David H Ostroff. “Sales and Advertising”. Perspectives on Radio and Television. University of Florida 4th Ed
494
995
495
Be prepared• Learn about what the customer sells• Identify the retailer’s customer baseIdentify the retailer s customer base• Determine the customer’s
marketing strategy• Find out how the business is
997997
d out ow t e bus ess sperforming
• Research the customer’s competitorshttp://www.naa.org/advertising/pdf/retail.pdf
Promotion to Retailers and
IntermediariesIntermediaries
496
B2B Marketing• B2B marketing strategies are
diff t f B2C t t i idifferent from B2C strategies in a number of essential ways.
• For example, B2B marketing uses personal relationships and p pconnections as a primary selling tool.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing, 2007. 999
• This is not common in B2C because the marketing executives do not have a personal relationship with the p plarge consumer base.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing, 2007.1000
497
• B2B marketing also uses l lli t ti f thipersonal selling tactics for this
reason. • This would not be feasible in
B2C marketing because there gare too many people that are being attracted to the product.
Brennan, Ross., Canning, Louise., McDowell, Raymond. Business to Business Marketing, 2007.1001
Book Publishers Target Retailers and Bulk Buyers
• Presence at trade shows • Visits to:
•Book fairs•Book storesR il h i
1002
•Retail chains•Libraries•School districts
Zell, Hans. Book Marketing & Promotion. Oxford: INASP, 2001.10021002
498
The Sales Rep• Reps cover geographic areas that
f f M hrange from part of Manhattan to a whole state.
• The reps are the publishers sales d k i li i i h h
1003
and marketing liaisons with the retail and super stores.
Greco, Albert N. “Market Practices and Procedure”. The Book Publishing Industry. Chapter 7: p 173-215. Viacom Publishing, 1997. 10031003
• In the mid 1990s, a book rep’s median income was in the low to mid $30000+bonus+benefits.
• The reps receive training and understand the of the titles they will promote, and attend a National Sales Conference
10041004
Conference.
Greco, Albert N. “Market Practices and Procedure”. The Book Publishing Industry. Chapter 7: p 173-215. Viacom Publishing, 1997.
499
Sales force of book publisher• There are scale economies for a
sales rep to cover several bookssales rep to cover several books from a publisher’s list in a session with a retailer
• but a large list reduces
1005
• but a large list reduces effectiveness.
Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000 10051005
Books Promotion• Publishers: often passive
•Too many titles, will push only a few
10061006• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
500
College publishing has high profit margins
• College texts are the most profitable li i th b k bli hi i d tline in the book publishing industry
• Price insensitivity:• cost of textbooks is typically small
relative to tuition
1007
• Textbook publishers typically issue new editions every few years
10071007
Textbooks
• Marketing costs are a major g jexpense, generally representing 25% of an el-hi publisher revenues
100810081008
501
• 22 states use the state adoption method•buying all books at the same•buying all books at the same time according to a schedule
• Concentrate on price
100910091009
• Print reviews and promotions have limited influence: airplay on broadcast media is the key.R d i f• Record companies focus on promotion to broadcasters.
• Music companies call radio stations and encourage to play promotional
1010
and encourage to play promotional copies
• 12,000 commercial radio stations in USThis Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 24
10101010
502
• Strong incentive for broadcasters to “sell” airplay to record companies:-“payola” results is a bribe paid in order to influence a gatekeeper’s choice
1011
g p
10111011
Consumer Electronics In-Store Marketing
• In-store info had greatestIn store info had greatest influence on final purchasing decisions for consumer electronics (Decision Analyst)
1012
electronics (Decision Analyst)
“Who Needs Friends? Study finds P-O-P stronger influence than word-of-mouth,” P-O-P Times Dec. 2005: 78.
503
Consumer Electronics Marketing
• Trying to influence retailTrying to influence retail sales people of big stores, so that these recommend products of company that
1013
products of company that trained them
10131013
Consumer Electronics Marketing
• Part of marketing campaign isPart of marketing campaign is to train retail sales people, so that these know products and can explain features to
1014
can explain features to customers
Source: Toshiba Kicks Of! HD DVD Promo Tour, Twice 200610141014
504
• B2B marketing also tends to gfocus on more complex products and 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
505
Examples of Corporate Promotions:C
*
-Corporate Events-Trade shows-Corporate GiftsC t Bl i-Corporate Blogging
Corporate Events : Checklist
K t ?
*
Key customers ? Key Media for publicity?Follow-Ups? p
1018http://specialevents.com/mag/meetings_making_sale_corporate/, Feb 1, 2010
506
Advantages: Corporate Events
Shaped to meet the needs of
*
Shaped to meet the needs of audiences
Focused selling timeC h iCustomers have time to
reveal their business problems.
1019http://directmag.com/b2b/marketing_event_marketing_direct/
Advantages: Corporate Events
N tit di t ti
*
No competitor distractionEasier to convince an
existing customer to come for the event
1020http://directmag.com/b2b/marketing_event_marketing_direct/
507
Trade Shows Taking advantage of an event I i ibili
*
Increase visibility Trade Show pop up displaysTrade Show Banners Inexpensive in comparison to face
to face marketing1021http://www.yousaytoo.com/diverse-methods-in-marketing-your-business/206902
Trade Shows
110 illi l tt d
*
110 million people attend 4,000 trade shows in the US and Canada
Opportunity to meet and talk to many high-value prospects 1022http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
508
Trade Shows : Statistics
Att d d 9 2 H t
*
Attendee spends 9.2 Hours at a 2-3 day trade show
86% new contacts 77% will remember company
1023http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
Trade Shows : Statistics Parameter Trade Show Field (Sales Call)
*
Cost per lead ($) 212 308
Cost per sale ($) 705 1140
1024http://www.trade-show-guru.com/2009/10/are-trade-shows-obsolete/
Costs are lower in a trade show !
509
Variables Affecting Trade Shows
**
1025Assessing Trade Show Functions and Performance: An Exploratory Study, by Roger A. Kerin and William L. Cron
Corporate Gifts Brand Recognition
*
Brand visibility Transported to places –
increasing visibilityincreasing visibility
1026http://ezinearticles.com/?Using-Conference-Folders-As-the-Promotional-Product-of-Choice&id=3458850
510
SalesSales
What is Sales?The sales process is everything p y g
that you do to close the sale and get a signed agreement or contract
http://marketing.about.com/cs/advertising/a/mrktingvssales.htm
511
The Main Function of a Sales Department
Attract and retain customers Increase the sales volume per period of timeFind appropriate persons/agencies to carry out
the sales activities Help marketing department in meeting theHelp marketing department in meeting the
forecasted sales volumeSales people training and motivation
http://wiki.answers.com/Q/What_is_the_functions_of_sales_department
Sales As a Part of Marketing
M k tiMarketing
Inbound Outbound
Sales Advertising andPromotions PRMarket Research
http://www.managementhelp.org/mrktng/mrktng.htm
512
http://edu-action.com/blog/wp-content/uploads/2009/10/sales-process.jpg
http://www.better-sales-and-selling.com/image-files/salesprocessmodel.jpg
513
Sales ChannelsSales channels are the means by
hi h lli i ti hwhich selling organizations reach their marketplace and audience. They are used as bridge between the product or service offering and e p oduc o se v ce o e g dthe 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 ChannelsFirms use multi-channel sales organization to reduce cost or meet customer expectations
Sales Channels:Sales Channels:Field sales force. Face-to-face sales professionals
who build customer relationships
Inside sales force Telephone based salesInside sales force. Telephone-based sales professionals who conduct business over the telephone
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.
1034
514
Sales ChannelsTelemarketing groups. Outbound
telesales professionals typicallytelesales professionals typically assigned to transactional sales or prospecting activities
Indirect sales force. Third parties, such di ib ll il das distributors, resellers, retailers, and
agents, used to reach end customers and increase market coverage
1035Marone, 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.
Sales ChannelsE-commerce. System that allows
customers use the Web to make purchases
Inbound call centers. Centers staffed by service representatives who up-by service representatives who up-sell or cross-sell customers
1036Marone, 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
515
The conventional subordination of sales (tactical and down-market) to marketing (strategic and clever) is coming to an end
T l k tiTelemarketing Sales
516
When to use Telemarketing• When additional specific data
f ffrom customers are necessary for a sale
• When a list of target customers is il blavailable
• When approaching current clients about service changes or upgrades
Disadvantages of Telemarketing
• Inaccurate and incomplete accu ate a d co p etelists
• Time constraintsL l i i• Legal restrictions
Sissors, Jack, et al. Advertising Media Planning. New York: McGraw Hill, 2002, p.245
517
Contracted Telemarketing Campaigns
C t t d t l k ti ( I• Contracted telemarketing (vs. In-house)
• Allows short-term commitment• Avoids HR expenses• Minimal time resource usage for
company
Drawbacks to Contracted Telemarketing
• Less control over message andLess control over message and its delivery as unauthorized
• Image problems from nprofessional as contactsunprofessional as contacts
• Higher cost for extended campaigns
518
Only Limited Use of Telemarketing by Media
•Film and TV programs•Music•Consumer Electronics
1043
Consumer Electronics
• 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
519
Industry• 5,000 Telemarketing bureaus in
the US employing over 340 000the US, employing over 340,000 workers
• Plus, ad-hoc efforts
1045
• Outsourcing is a growing trend
“Telemarketing: Five Industry Centres,” Issues in Labor Statistics. December 2006.
Frequent use of Telemarketing by media
• Telecom• Internet• Cable• Local Newspapers
520
Telemarketing of Service Long Distance
• Once done primarily byOnce done primarily by contracted firms
• Problems with unauthorized service transfer (Slamming) led to companies taking over their own
1047
companies taking over their own telemarketing departments
• Slamming hurt companies’ reputations
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
521
Why Omaha? (cont)• Cost of living and relatively g y
labor cheap• English spoken with neutral
accentaccent• Central time zone allows for
calling to all areas of the country
Regulation
• Regulation is increasingRegulation is increasing• State and national “Do not call”
list
1050http://i.cnn.net/cnn/2004/LAW/02/17/do.not.call.ap/story.do.not.call.jpg
522
Telemarketing Service Buying • The rate is more commonly in the
range of $25 to $60 per hour, but g p ,can decreased to $10 per hour for discount-priced offshore companies
1051
p
http://www.buyerzone.com/marketing/telemarketing/buyers_guide8.html
Telemarketing Service Buying • Commissions range from 1% -
10% of revenues generated10% of revenues generated.• Companies that do not offer
commissions to TSRs pay a higher base ho rl charge
1052
higher base hourly charge.
http://www.buyerzone.com/marketing/telemarketing/buyers_guide8.html
523
Telemarketers• Generally young
Oft t k d j b• Often taken as a second job• Many people dislike the work and
quit within two weeks• Those who stay will usually miss y y
more work than average employees
• Quality management is necessary
Top 10 Call Center Companies (2006)
1. Teletech 6. vCustomer2. Convergys 7. eTelecare3. ClientLogic 8. OKS Group4. 24/7 Customer 9. TelAssist
1054
5. PeopleSupport 10. Stream Int’l
http://www.theblackbookofoutsourcing.com/top10callcenters.html
524
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 2005.11.5% growth from 2005.
• Teletech main headquarters in Englewood, CO
Major Offshore Locations for Telemarketing
1) China1) China2) India3) Philippines4) Mexico
1056
4) Mexico5) Jamaica
525
1057
VII. The Impact f f iof Information
Technologies on 1058
ec o og es oMarketing
526
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
The Impact of New Information Technologies
• Customization• Ubiquity• Immediacy• Interactivity
1060
• Telemarketing• New Tools (Internet)• Tracking of Product (RFID)
527
For details see Appendix E:
New Information
1061
Technologies
VII 1 C t i dVII.1. Customized Advertising
1062
528
• “Mass customization”; “1:1
Individualization
• Mass customization ; 1:1 marketing”
• Direct relationship with the t
1063
customer• Leads to the end of mass
advertising?
Differentiating TV Technology
• Special feeder channels for ads p• Digital TV could become a combination
of program channels plus a dozen advertising feeder channels.
1064
• Supported by software which decides which ad to play to the specific household.
529
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
1065
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• Levels of targeted advertising can be on different levels, depending ondepending on•area•demographics
1066
•personal
530
Zone Targeting•Fine-tuned geography by neighborhoodg
•But advertising community generally seeks individual household targeting rather than
1067
household targeting rather than geographic targeting
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
• Leads to shift in production strategy: from generic mass products to tailoring products for particular customers.
• Impact:•higher prices
1068
•higher prices•Higher sales•Higher cost
531
• Product “customization” strategy is also a price discrimination strategygy
1069
• Companies must find ways to protect their customers’ privacy while implementing one to onewhile implementing one-to-one marketing.
1070
Steinbock, Dan. “Consumer Marketing on the Web”. The Birth of Internet Marketing Communications.
532
Internet as a Marketing Tool• How do online advertisers
*
know what to advertise to each internet user?
-Cookies help them track-Cookies help them track user activity.
1071http://www.cluteinstitute-onlinejournals.com/PDFs/839.pdf
Online Targeting• online marketing provides the
*
g pability to track, measure, and to target marketing campaigns.
1072
p g
533
Personal Targeting• Addressable commercials
are targeted to individuals within households, using methods of estimating who
1073
within each household is actually present in the room
“Cable Advertising Revenue and Addressable Commercials” by Bill Harvey
Personal Targeting• Amazon.com suggests books
to the customer based on previous purchases
1074Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”(www.scottish-enterprise.com/ebusiness)
534
Local Targeting • A pay-per-click model that p y p
allows specificity of location • Yahoo! Local Sponsored
Search allows advertisers to
1075
Search allows advertisers to target by state, city or neighborhood
http://www.businessweek.com/magazine/content/06_12/b3976463.htm
• Dynamic advertising in sporting t ( t di ) h
Dynamic Advertising
events (e.g. soccer stadiums) has been around for some time
• Signs and billboard are often electronic and can be changedelectronic and can be changed remotely
1076Palmer, Shelly. Television Disrupted: Emerging Advertising TechnologiesNational Association of Broadcasters, Focal Press 2006
535
• Television audience may be exposed t th b th th di i
Dynamic Advertising
to other banners than the audience in the stadium
• Broadcaster superimpose banners over existing graphics in the stadiumover existing graphics in the stadium
1077Palmer, Shelly. Television Disrupted: Emerging Advertising TechnologiesNational Association of Broadcasters, Focal Press 2006
• A more recent technology makes it ibl t t i th
Addressable Dynamic Ads
possible to customize the advertisement during delivery
• The advertisement can be personalized according topersonalized according to preferences, location, behavior and interests of the viewer
1078Palmer, Shelly. Television Disrupted: Emerging Advertising TechnologiesNational Association of Broadcasters, Focal Press 2006
536
• Dynamic addressable ads are t il th t f l t l
Addressable Dynamic Ads
temporarily the most powerful tool available to advertisers
• Addressable ads can be addressed to a certain set top box computera certain set-top box, computer, person, household, town, region, time zone, etc.
1079Palmer, Shelly. Television Disrupted: Emerging Advertising TechnologiesNational Association of Broadcasters, Focal Press 2006
• Dynamic ads are not necessarily dd bl d d i
Addressable Dynamic Ads
addressable ads and vice versa, however, combining the two concepts can create a powerful instrumentinstrument
• Advertisers are enabled to deliver relevant advertising content
1080Palmer, Shelly. Television Disrupted: Emerging Advertising TechnologiesNational Association of Broadcasters, Focal Press 2006
537
Behavioral Targeting• Using a profile of prior behavior g p p
on the part of the viewer to determine which ad to show during a given visit.
1081http://en.wikipedia.org/wiki/Ad_serving#Ad_targeting_and_optimization
Behavioral Targeting• Behavioral targeting is the most
effective form of targeting available.effective form of targeting available. It allows re-targeting to the most desirable audience, which is based on the idea that users’ actions suggest
1082
what type of advertising they might be receptive to.
http://64.233.169.104/search?q=cache:f2KAxn7-yJwJ:www.clickz.com/showPage.html%3Fpage%3D3330751+aQuantive+behavioural+targeting&hl=en&ct=clnk&cd=2&gl=us
538
Behavioral Targeting•Reaches customers whose Web-surfing patterns and behavior indicate a potentialpatterns and behavior indicate a potential receptiveness to customized offerings for advertiser’s products and services
•IP addresses make it possible to follow the behavior of customers surfing the web
NTT DoCoMo uses Behavioral Targeting Technology
T t d Ad St t S t Ad• Targeted Ad Strategy – Sent Ads to Financial Times online users whose web-surfing profile matched mobile operator’s target
1084
p gaudience profile
http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T8576845446&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T8576845452&cisb=22_T8576845451&treeMax=true&treeWidth=0&csi=138620&docNo=3
539
NTT DoCoMo (Cont.)• Results of targeted advertising:
Brand awareness "lift" of 41%Brand awareness lift of 41%Online ad awareness went up by
193%Brand recall increased by 178%
1085
Brand recall increased by 178%
Geo-Targeting there are many Geo-IP solutions providers that sell licenses, and there
API’ th t t ti ll d t tare API’s that automatically detect an end user’s city, country or region. While this option is relatively inexpensive, it does require some level
New Thought Processes for Dealing with a Volatile Market , accessed 3/11/09 Link:http://www.ecsuite.com/articles/global-markets.php
inexpensive, it does require some level of monitoring and resource time on behalf of the website owner.
540
Interactive AdvertisingViewers can press the red button p
on an interactive commercial they are watching to view additional information and
t t b t th d t th
1087
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_T8576316654&cisb=22_T8576316653&treeMax=true&treeWidth
0& i 244777&d N 8
Google AdSense and TV
• In a few years, with customized yTV advertising Google can control which ads the television viewers will watch and tailor
1088
them ads according to the tastes of the consumers.
Raju Shanbhag, Google tests targeted TV ads, TMCnet, March 2007http://ipcommunications.tmcnet.com/news/2007/03/13/269109.htm
541
• 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
i ti d h h
1089
communication and how he responded.
Example: Multi-Channel Cable TV
• Viewers can click on an
*
interactive commercial they are watching to view additional information and content about th d t th i t t d ithe product they are interested in
1090
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542
Targeting: g gDirect Mail
•Most direct mail has CPM of $500CPM of ~$500
543
• List brokers• rent mailing lists compiled from• rent mailing lists compiled from many sources
109310931093
Mailing Lists for Magazines
B t li t f th l• Best lists are of those people who have subscribed to similar magazines
1094Source: James Kobak, "Testing a New Magazine Through Direct Mail," How to Start a Magazine, M. Evans and Company, Inc.: New York.
10941094
544
Direct Marketing for Books • For general (“trade”) books, target
readers cannot be easily identified• Scholarly and professional booksScholarly and professional books
readers can be easily identified and reached in specialized publications and mailing lists
• Textbooks, too, have easily identified
1095
Textbooks, too, have easily identified audiences
• Source: Caves, Richard E. Creative Industries: Contracts Between Art and Commerce. Cambridge: Harvard University Press, 2000
10951095
Direct Mail Testing for Magazines
• “Dry” test - no product actually y es o p oduc c u ypublished, recipients get only offer to subscribe to another magazine
• Gives good indication of reaction
10961096
to basic concept of magazine
Source: James Kobak, "Testing a New Magazine Through Direct Mail," How to Start a Magazine, M. Evans and Company, Inc.: New York.
545
• Good performance: 2% of magazine mailings result in subscriptions
i ili 100 000 i l• 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
1097
qcost $19
• Cost 8-10 But renewal rate only 30%.10971097
For details see A di FAppendix F: Advertising
1098
Targeting
546
1099
For details seeFor details see Appendix G:
T l k ti1100
Telemarketing
547
1101
The Internet As M k ti T lMarketing Tool
1102http://www.guardianfinance.com/image/internetgoble.jpg
548
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”• 4. Relationship building• 5. Placing ads• 6. Promoting Websites
• Virtual Reality
Next-Generation Internet Marketing
y•e.g. Test “drive” a car online, try on coat.
1104(http://www.altavista.com/query?mmdo=3&stq=12&nbq=12&stype=simage&what=web&q=porshe)
549
1. Ads on the Internet• Banner Ads• E mail ads• E-mail ads• Keyword ads• Interstitials (Pop-up ads)
Ri h M di d
1105
• Rich-Media ads• Sponsored links
1106Interactive Advertising Bureau, “IAB Advertising Revenue Report 2007.” May 2008
550
• 1. Ads on the Internet• 2. New types of uses (targeting,
content)• 3. Online market research• 4. “Relationship building”4. Relationship building• 5. Placing ads• 6. Promoting• 7. Websites
551
aQuantive• Microsoft owns aQuantive and its Atlas
i i i bl li k iDivision, DoubleClick’s competitor. • In 2007, Microsoft bought aQuantive
for $6 billion for behavioral targeting marketing purpose.
1109
e g pu pose.
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.html%3Fpage%3D3627102+mobile+advertiser&hl=en&ct=clnk&cd=13&gl=us
• To capture the younger, tech-f i dl f b Al P i
Podcasting to Promote Theater
friendly fan base, Al Pacino utilized a series of video podcasts to promote his leading role in Oscar Wilde’s Salome.
1110
role in Oscar Wilde s Salome.
Ascher-Walsh, Rebecca. "Pacino Turns Podcaster as Theaters Boost Web Promos." Wall Street Journal 6 May 2006, Eastern ed., sec. P: 2. 11101110
552
Th d i l R t t d
Podcasts to Promote Theater
• The edgy musical, Rent created podcasts and video clips for cell phone users, and adverted on the web at MySpace com
1111
the web at MySpace.com.
Ascher-Walsh, Rebecca. "Pacino Turns Podcaster as Theaters Boost Web Promos." Wall Street Journal 6 May 2006, Eastern ed., sec. P: 2. 11111111
TV Networks use Podcasting• TV review podcasts like “24 The
Podcast” help in the marketing of a showshow
• 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
1112http://en.wikipedia.org/wiki/Podcasting
1112
553
Advertising on “Second Life”• Many companies• Sony Music provides samples• Sony Music provides samples
and retail service for artist’s songs and videosU h Adid
1113
• 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
• Mobile marketing is another gtactic, in which the company offers free texts and other incentives so long as the user gagrees to receive a certain amount of advertisements.
De Mooij, Marieke, Global Marketing and Advertising: Understanding Cultural Paradoxes, 2010.
1114
554
• Example: Random House
• Book Author’s or Artist’s website
made excerpts of novels by Toni Morrison, Calvin Trillin, and many others available
li
11151115
online• “Insight” search program
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
• Search program that allows
Book Publisher’s Websites
p gconsumers to search and sample various titles
11161116http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
555
• Example: Harper Collins p plaunched its “Browse Inside” widget program
• Excerpts from novels by
11171117
p yMichael Crichton and Sidney Poitier among others
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
• This program also permits fans p g pand authors to embed sample pages of their favorite books directly onto social networking
11181118
sites and blogs
http://www.cbc.ca/technology/story/2007/02/28/tech-books.html
556
Music Videos as promotion tools• Reduced need for tours
B t t h t t id l d• But, tough to get videos placed on music video channels
• The Internet created new possibilities for music promotion
1119
possibilities for music promotion artist’s websites: YouTube
This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 26 11191119
557
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”4. Relationship building• 5. Placing ads• 6. Promoting• 7. Websites
• Differs from traditional advertising in that it gives real-time results about effectiveness
• Most advertisers pay sites based on a click-through payback system
1122
payback system.
http://www.marketingterms.com/dictionary/banner_ad/
558
Online Market Research• The Internet is also an
inexpensive, fast-turnaround medium for conducting marketing research
Source: www.harrispollonline.com
559
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”4. Relationship building• 5. Placing ads• 6. Promoting• 7. Websites
• rather than bombarding users with all sorts of advertisements
4. Relationship Building
with all sorts of advertisements, to establish a “relationship” with the user so as to more
t l t f th tiaccurately put forth promotions
Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”(www.scottish-enterprise.com/ebusiness)
560
• An example is howAn example is how amazon.com suggests books to the customer based on previous purchasespurchases
Scottish Enterprise Network. “e-Business Smart Guide 22: Internet Marketing.”(www.scottish-enterprise.com/ebusiness)
• Fox, ABC, and UPN play previews on their websites
• ABC shows free episodes of p“Lost,” one its most popular shows
• Links to all of their programs
1128
Links to all of their programs• Cast biographies• Synopsis of past episodes 1128
561
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”4. Relationship building• 5. Placing ads• 6. Promoting• 7. Websites
562
DoubleClick
• DoubleClick was bought by Google for $3 1 billion in 2007Google for $3.1 billion in 2007.
• Google gains greater portion on display advertising market.
1131
http://64.233.169.104/search?q=cache:-6r9vu8a6eMJ:www.businessweek.com/technology/content/apr2007/tc20070414_675511.htm%3Fcampaign_id%3Drss_daily+google+doubl
eclick&hl=en&ct=clnk&cd=1&gl=us
Getting Advertising on Websites
• In the past bloggers and other p ggsmall Web publishers had few options to attract advertisers.
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
563
• The main possibility was to sell d f l f l dads for mostly of non-related
products.
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
• Google sells “keywords” to d ti f h fadvertisers for anywhere from a
penny to $100 a word. • Those are the terms people type
i t b h thinto query boxes when they are searching.
Jefferson Graham, Google's AdSense a bonanza for some Web sites, USA TODAYhttp://www.usatoday.com/money/advertising/2005-03-10-google-ads-usat_x.htm
564
Internet advertising• For most every words y
searched, Google pops up a number of “sponsored links” (paid advertisements) next to/above the search results.
Internet advertising
• Google converted search gqueries into “highly targeted advertising” opportunities for the “long tail” of products
1136
that appeal to a wide range of tastes.
http://www.totalcontentandmedia.com/View.aspx?ID=2165&t=5
565
Google AdSense• Lets web site publishers provide
Google search to their site users and gto earn money by displaying Google ads on the search results pages.
• Pay-per-click and pay-per-impression (on your content pages) advertising.
• Businesses fight for the top positions on the first page ofpositions on the first page of Google's results.
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
566
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
ifi hspecific search.
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
Google AdSense• Prices fluctuate• For instance, in the days leading upFor instance, in the days leading up
to Mother's Day, prices for keywords such as "Mother's Day" and "flowers" are likely to increase.
1140
567
Google AdSense
• The cost of individual AdWords is never made public (tough many of the most expensive involve US
1141
lawyers and financial services).
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 p $“school loan consolidation” and “abdominal mesothelioma”.
1142
Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06
568
Google AdSense• Advertisers also specify whether
they want their ad to appear only y pp yon Google, or on one of Google's partner websites, blogs.
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 ads and then split the ad revenue with Google if
li k th d
1144
someone clicks on the sponsored link.
569
Google AdSense
• Frees content creators from having to deal with actual advertisers.
1145
Google AdSense: click fraud
• According to a study by g y yMarketingExperiments.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
570
Google AdSense
• 99% of Google’s revenues gcomes from advertising sales.
• Around 50% of them comes from Google-run advertising
1147
from Google run advertising on other companies' Web sites.
Eric Auchard, Google lets Web sites sign up advertisers directly, Reuters http://www.signonsandiego.com/news/business/20051118-1343-media-google-advertising.html
Google AdSense: click fraud• The problem is big for Google
because scammers either usebecause scammers either use software that automatically clicks on ads or employ cheap workers overseas to click on ads manually
1148
overseas to click on ads manually or create networks of spam Web sites and blogs.
Ellen Lee, How Google determines ranks and rates of its sponsored links, San Francisco Chronicle, 2006
571
Google AdSense
• Advertisers know exactly which yad did the customer clicked on, what the ad looked like, what the text/content was, where it was
1149
displayed, how much it cost and how much the customer spent.
Nick Clayton, Business sense: How to turn your clicks to cash, The Guardian, Sep 06
Google AdWords
• Businesses create ads andBusinesses create ads and choose keywords related to the company, and the ads may appear when people search on
1150
appear when people search on Google using those words.
“Google AdWords.” Google. Last accessed on 9 July 2007 at http://adwords.google.com
572
http://www.steverenner.com/wp-content/uploads/2008/08/online-ads.jpg
Selling Ad Space Online Advertiser’s Auction:• Advertiser posts ad budgetAdvertiser posts ad budget• Publisher makes an offer (bid)• Winner is selected at the
auction’s close
11521152
• Bidders are notified
573
Google AdSense: future• The Print Ads program allows p g
advertisers to pick specific newspapers and specific sections within these that the
11531153
newspapers are opening up for this.
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online Auctions, Nov 06http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
Google AdSense: future• Newspapers are able to reject
ads that don’t meet their d d f dstandards of taste and can
determine pricing.• Google keeps about 20% of
f I d i
11541154
revenue for Internet ads it places.
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online Auctions, Nov 06http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
574
Google AdSense• Google Print Ads can
d i th l di lundermine the leading role long by media-buying agencies: it offers advertisers the possibility to deal directly
11551155
the possibility to deal directly with print publishers.
Rafat Ali, Google To Sells Ads For 50 Major Newspapers; Online Auctions, Nov 06http://www.paidcontent.org/entry/google-to-sells-ads-for-newspapers/
575
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”4. Relationship building• 5. Placing ads• 6. Promoting• 7. Websites
6. Promoting Websites: SEARCH ENGINE
MARKETING
576
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
Danaher, Peter J. Modeling Page Views Across Multiple Websites With An Application to Internet Reach and Frequency Prediction. 2007. 1160
577
Search Engine Optimization (SEO)
116111611161
• Websites often resort to professional search engine optimizers who perform aoptimizers, who perform a similar role to that of a Public Relations agency
116211621162
578
• SEO considers how search algorithms work and what people
h f
SEARCH ENGINE OPTIMIZATION
search for. • Internet marketing strategies can be
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
SEO• Search engine optimization g p
takes into account page titles, meta tags, key words and phrases that precede the “body” of a web page in the source code.
11641164
579
• By the same token, web yprogrammers and publishers specifically include these tags and keywords, because they know Google and other search enginesGoogle and other search engines are designed to look for them
11651165
For details see A di HAppendix H:
The Internet as a
1166
Marketing Tool
580
1167
1168
581
VIII. Regulation of
Marketing1169
Marketing
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
582
Self-Regulation of Advertising and
Marketing Practices
Eli M. Noam, Entertainment Law and Media Regulation 1171
http://www.aiap.org/aiap/advertising.jpg
Self-Regulation• Self regulation by• Self-regulation by
advertisers and agencies• Self-regulation by trade
associationsassociations• Self-regulation by
businessesGeorge E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
583
• Product promotion can• Product promotion can easily over-promise
• Even a conscientious marketer will face moralmarketer will face moral dilemmas
Marketing Essentials, Kotler, Phillip 1984.
• Many media outlets, advertisers, and advertising agencies check and reviewagencies check and review the ads before airing or publication to ensure that they are not deceptive or
Eli M. Noam, Entertainment Law and Media Regulation 1174
y poffensive
584
Examples for Self-Regulation of Promotions
• NAB - National Association of Broadcasters
• MPAA- Motion Pictures Assoc. of America
1175
• (NARC) National Advertising review Council
The NAD/NARB• The council has two operating arms,
the National Advertising Division ofthe National Advertising Division of the Council of Better Business Bureaus and the National Advertising Review Board.
• The NAD/NARB has become the
Eli M. Noam, Entertainment Law and Media Regulation 1176
The NAD/NARB has become the advertising industry’s primary self-regulatory mechanism.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
585
The NARB is composed of 85The NARB is composed of 85 advertising professionals and prominent public-interest members.
Eli M. Noam, Entertainment Law and Media Regulation
• Reviews complaints from consumers and consumer groups, local BBBs, and competitors.
Eli M. Noam, Entertainment Law and Media Regulation 1178George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
http://www.dc.bbb.org/images/main_center.gif
586
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 Board.
Eli M. Noam, Entertainment Law and Media Regulation 1179George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
The NAD/NARB• If the NARB panel agrees with the
NAD and rules against the d i h d iadvertiser, the advertiser must
discontinue the advertising.• If the advertiser refuses to comply,
the NARB refers the matter to the
Eli M. Noam, Entertainment Law and Media Regulation 1180
appropriate government agency and indicates the fact in its public record.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
587
The NAD/NARB• The NARB has no power to
order an advertiser to modify ororder an advertiser to modify or stop running an ad and no sanctions it can impose.
• But advertisers who participate i NAD i ti ti d
Eli M. Noam, Entertainment Law and Media Regulation 1181
in an NAD investigation and NARB appeal rarely refuse to abide by the panel’s decision.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing 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 th t d 75 difi dthe government, and 75 were modified or discontinued
Eli M. Noam, Entertainment Law and Media Regulation 1182George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
588
Children’s Advertising Review Unit• CARU reviews advertising in all
media directed to children under 12 years old as well as online privacy practices involving children under 13 years of age, to ensure they comply with its guidelines on informationwith its guidelines on information collection and the federal Children’s Online Privacy Protection Act.
http://www.us.bbb.org/WWWRoot/SitePage.aspx?site=113&id=24783d03-2c4b-4b0e-b46f-5fb29117b7c6
1184
589
VIII.2. Government
Regulation of MarketingMarketing Practices
• On the U.S. federal level, the Federal Trade Commission in charge of complaints of unfair competition and falsecompetition and false advertisement.
• Similar consumer protection agencies exist in most countries
Eli M. Noam, Entertainment Law and Media Regulation 1186
agencies exist in most countries, and in lower levels of government in the US and many countries
590
FTC Regulation of Other Promotional Areas
• Contests and SweepstakesContests and Sweepstakes• Premiums• Trade Allowances
Di M k i
Eli M. Noam, Entertainment Law and Media Regulation 1187
• Direct Marketing
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
Additional US Regulatory Agencies involved in the
Marketing Practices• The Federal Communications Commission• The U.S. Postal Service• Bureau of Alcohol, Tobacco, and Firearms
St t Att G l d• State Attorney General and consumer protection agencies.
• Similarly, in other countriesGeorge E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
591
Federal Regulation of Advertising
• Since 1938 the FTC has the t i d d i tpower to issue cease-and-desist
orders and levy fines on violators.
• May require corrective• May require corrective advertising
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
• Consent and cease-and-desistConsent 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
592
• 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 requirerequirement, 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
Eli M. Noam, Entertainment Law and Media Regulation 1192
consequences, conditions, and limitations associated with the use of a product or service.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
593
Affirmative Disclosure
• Fuel mileage claims in car ads• Fuel mileage claims in car ads• Cigarette ads must contain a
warning about the health risks associated with smoking.
Eli M. Noam, Entertainment Law and Media Regulation 1193
• Specificity on country of origin claims.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
FTC Requirements for Internet Ads, including on Internet
• Disclosures must be clear and• Disclosures must be clear and conspicuous• Understandable to the intended audience
Eli M. Noam, Entertainment Law and Media Regulation 1194
• Volume and cadence, and visual disclosures, must be of sufficient duration
594
Advertising Substantiation Requirement• Advertisers must have a
reasonable basis for ad claims.
Eli M. Noam, Entertainment Law and Media Regulation 1195
• Advertiser must possess substantiation of claim before dissemination.
Types of False Advertisement
• Misrepresentation• Bait and switch
•advertise product with no intention of selling, then
Eli M. Noam, Entertainment Law and Media Regulation 1196
switch to higher priced item• False price comparison
595
Deception
a material representation or omission that is likely to mislead a reasonable consumer
Eli M. Noam, Entertainment Law and Media Regulation 1197
Since 2009: M st pro ide onl• Since 2009: Must provide only product results that consumers can typically expect, not just the “best” results
Eli M. Noam, Entertainment Law and Media Regulation
best results
596
“Puffery” Permitted• Exaggerated
b i dboasting and subjective claims upon which no
Eli M. Noam, Entertainment Law and Media Regulation 1199
which no reasonable buyer would rely “Joe Isuzu”
• FTC considers whether the entire ad is likely to misleadentire ad is likely to mislead consumers acting reasonably•Not necessary for the ad actually to deceivey
597
• To avoid legal problem, media advertisers, and agencies must all check theagencies must all check the ads. They all can be held responsible, including the media outlet, if it should ,have known, or if it acted negligently.
The Lanham Act• U.S. district court fined Jartran a
record $20 million in punitive pdamages on top of the $20 million awarded to U-Haul International to compensate for losses resulting from ads comparing the p gcompany’s prices and equipment that were ruled deceptive.
George E. Belch & Michael A. Belch, “Advertising and Promotion: An Integrated Marketing Communications Perspective,” Fourth Edition, 1998, Irwin/McGraw-Hill
598
The Lanham Act• Wilkinson Sword and its
advertising agency were found il f f l d i i dguilty of false advertising and
ordered to pay $953,000 in damages to the Gillette Co.
• Suing competitors for false claims Su g co pet to s o a se c a swas 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
Advertising Aimed at Children
• Premise: Children cannot easily di ti i h b tdistinguish between programming and advertising and are easily influenced
• 1978-1989 FTC tries mostly1978 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.
599
Advertising Aimed at Children
• Children’s Television Act (CTA)•FCC to establish standards regarding amount of children’s programming to air
•Limit of 10 5 (weekday) and 12•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.
For details see Appendix I:Appendix I:
Regulation of Ad ti i
1206
Advertising Practices
600
X. Analyzing y gMarketing
Performance1208
Performance
601
Tools of Analyzing Marketing Performance
1 Ad ti i A l i1. Advertising Analysis2. Sales Analysis3. Marketing Cost Analysis
1209
3. Marketing Cost Analysis4. Marketing Audit
1 Advertising1. Advertising Analysis
602
Testing TV Ad Effectiveness• There are a few tools that can be
used to measure the effectivenessused to measure the effectiveness of TV ads in advance, during a marketing campaign, and afterwardsafterwards.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
1.Precampaign Tools• A. Focus Groups• B. Theatre Testing• C. Over-the-air recall study
603
Precampaign Tools• A. Focus Groups: After
geodemographic / psychographicgeodemographic / 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
Precampaign Tools (cont’d)
• C. Over-the-air recall Study:• To qualify, participants should’ve
seen the ad at home (i.e. naturally). The study measures how much the
i i ll f h dparticipants recall of the ad.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
604
Precampaign Tools (cont’d)• Most popular scoring schemes for recall
tests:• 1- Burke Score developed by Burke
Marketing Research, Inc.• 2- Gallup Proven Commercial
R i t ti (PCR) b G ll &Registration (PCR) score by Gallup & Robinson.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
• Advantage of theatre and recall testing:
• They don’t require completeThey don t require complete production of the ad. Advertisers usually produce a cheap (<$5000) animated version of the(<$5000) animated version of the ad and use it for the test.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
605
Precampaign Tools (cont’d)• A more complicated form of in-lab
testing includes phyosiometric h
*
research
2. Tools During Campaign
• A. The Test Market approach
*
pp• B. Measuring Results
606
Tools during campaign• A. The Test Market approach:
After the ad production isAfter the ad production is complete, the advertiser can test variations of the ad (length of ad, creative elements etc ) in at leastcreative 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 “fullMarket studies or the regular full launch campaign”, two methods can be used:1- pre/post attitude and awareness2- market audit
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
607
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
lpeople.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
Elements of Pre/post Attitude Study• a- Willingness to purchase
d t
*
product• b- Purchase activity or history
of purchases• c- Market Audit: Compare salesc Market Audit: Compare sales
data before, during, and after ad campaign.
608
• Elements of pre/post awareness study:1- Awareness of brand1- Awareness of brand2- Awareness of ad3- Several types of recall (descriptive, name-only, media channel, etc.)
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
• Elements of pre/post attitude study:1- Willingness to purchase
dproduct2- Purchase activity or history of purchases (product participant buys most often orparticipant buys most often, or bought most recently, etc)
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
609
• Awareness Change: Results from pre and post awareness tests are filled into a table. Degree of increased awareness measures the effectiveness of the ad campaignthe effectiveness of the ad campaign.
• In attitudinal change measurement, it is important to select the right attitudes to be measured and the right scale of measurement.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
Tools During & After Campaign• 2- Market Audit: Compare p
sales data before, during, and after ad campaign.
Poltrack, David. “Measuring Television Advertising Effectiveness” Television Marketing
610
IX.2. Sales Analysis
1227
2. Sales Analysis
i d l i• Measuring and evaluating actual sales in relation to sales goals
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
611
• Evaluate the firm’s success in the marketplace.•Sales volume M k t h
1229
•Market share
• Sales volume analysis• Rate of the growth for the industry.
•Competition.•Sales analysis by territory
1230
Sales analysis by territory and product line.
612
*
1231
Methods of Sales Analysis
• 2 1 Sales Variance• 2.1 Sales Variance Analysis
• 2.2 Micro-sales Analysis
1232
• 2.3 Market Share Analysis
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
613
2.1 Sales Variance Analysis
• Measures relative• Measures relative contributions of different factors to gap in sales performance
1233
performance
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
Sales Variance Analysis• Example:
•Forecasted sales: 4000Forecasted sales: 4000 units @ $1 each = $4000
•Actual sales: 3000 units @ $.80 each = $2400$.80 each $2400
•Total Sales Variance = $1600 = 40% of expected
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
614
2.1 Sales Variance Analysis• Example:
V i d t i d li• Variance due to price decline:($1.00-$.80)(3000)= $600 = 37.5%
• Variance due to volume decline:($1.00)(4000-3000)= $1000 = 62.5%
• Tot Variance = $1000 + $600 = $1600
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
2.1 Sales Variance Analysis• Example:
•Nearly 2/3 of sales variance is due to failure to achieve volume targetg
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
615
2.2 Micro-Sales Analysis
• Looks at specific products• Looks at specific products, territories, etc which failed to reach expected share of sales
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
2.2 Micro-Sales Analysis• 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
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
616
2.2 Micro-Sales Analysis• Example:
•Territory 1: 7% short of expected
•Territory 2: 5% surplus•Territory 2: 5% surplus•Territory 3: 46% short
NKotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
2.2 Market Share Analysis• Tracks performance of
company relative tocompany relative to competitors•Overall Market Share –sales expressed as a percentage of total industry salesN
Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
617
2.3 Market Share Analysis•Served Market Share – sales
d fexpressed as a percentage of industry sales in served market
•Relative market share – sales as a percentage of combined sales of leading competitors
NKotler, 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 time and improve customer satisfaction.
N fli d fi d h- Netflix needs to find out how many customers will want to watch films download to their computers and television sets to guarantee good service
618
For more details see Appendix J: Sales AnalysisSales Analysis
1243
1244
619
IX 3 MarketingIX.3. Marketing Cost Analysis
1245
Cost Analysis• Marketing expenses can be
broken down, depending on the company, i.e.:•Sales force expense, Promotion expense, Advertising expense,
1246Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
p g pMarket research , Sales Administration expense, etc.
620
Marketing Cost Analysis•Measure the efficiency of the fi ’ k ti ifirm’s marketing mix.•Advertising costs.•Test market expenses.
1247
p•Sale force expenses.
3.1 Cost Monitoring Ratios• Marketing Expense to sales
ratio can be broken down into components:
•Sales-force to sales,
1248Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
Sa es o ce to sa es,advertising to sales, market research to sales, etc.
621
3.2 Sales-Force Efficiency• Indicators include:
• Avg cost per sales cost (Time and• Avg. cost per sales cost (Time and money)
• Avg. revenue per call• #New customers per period
1249Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
• #New customers per period• #Lost customers per period
3.3 Advertising Efficiency• Indicators include:
• Avg. cost per thousand targetAvg. cost per thousand target buyers reached (by media category and media vehicle
• Consumer opinion on ad
1250Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
p• #Inquiries generated by ad, cost per inquiry
622
3.4 Sales Promotion Efficiency• Indicators include:
• Percentage sales sold on deal• Percentage sales sold on deal• Display cost per dollar• %Coupons rec’d#I i i l i f
1251Kotler, Phillip. Marketing Management: Analysis, Planning, and Control. New Jersey. Prentice Hall 1988.
• #Inquiries resulting from demonstration
IX 4 MarketingIX.4. Marketing Audit
1252
623
Marketing AuditComprehensive review of the organization’s marketing activities:
• orientation• orientation.• Planning.• Target market strategies.• Distribution decision
1253
Distribution decision.• Product Strategies.• Promotion Strategies • Pricing Strategies.
1254
624
X. Outlook1256
625
I. MARKETING OF MEDIA• Structure and
Organization
I. NEW INFORMATION TECHNOLOGIES• Internet as a Marketing Tool
OUTLINE: Section A: Marketing Media Products
g• Products and Services• The Attention Budget
II. MARKET ANALYSISForecastingPositioning
III. BRAND CREATION• Design• Diversification
Internet as a Marketing ToolII. REGULATION OF
MARKETING • Self-Regulation• Government Regulation
III. MARKETING PERFORMANCE• Diversification
IV. PRICINGV. PROMOTION
• Viral MarketingVI. ADVERTISING
• Budget• ROI
PERFORMANCE• Sales analysis• Marketing Cost Analysis• Marketing and the product life
cycle
IV. CONCLUSION
Analytical Tools Covered• Diffusion Models• Conjoint Analysis• Sales analysis• Marketing cost analysis• Marketing cost analysis• Promotion mix• [ ]
626
Issues Covered• Customization
•Consumer generated informationG ll b ti
1259
•Group collaboration•Dynamic pricing•Privacy
Issues Covered• Relationship Creationp• PR programs• Product Design Issues
1260
• Integration of marketing and product design
627
Issues Covered• Strategic marketingg g• Product Design• Customization
1261
• Pricing• Competitor Analysis• Legal marketing issues
Issues Covered• Pricing g-Market-based v. Cost-based v.
Value-basedP t ti i
1262
-Penetration v. premium-Flat-rate
628
The End of Media Scarcity• When food ceased to be scarce• Change of consumption mix to better quality
• Somewhat higher consumption
1264
• The same is true for information
629
The End of Media Scarcity• Media Strategies to deal with
abundance of information• Reduce supply?
Impossible• Lower cost? But everyone will do
1265
• Lower cost? But everyone will do so, too.
• Differentiate the product
Differentiate Product• Branding
• Expensive • Originality/Quality
• Expensive, difficult• Customization
• Move out of industrial style mass
1266
• Move out of industrial-style mass media to individualization
• Expensive, difficult
630
Media Marketing: Adding Up?
• Greatly expanded marketing effortGreatly expanded marketing effort• Greatly expanded cost• New marketing technologies• New products
1267
New products
•Marketing activities will be more important, more complex, more expensive, and requiring p , q gmore creativity than ever.
1268
631
Requirements for Media Marketing
• Improve productp p• Refine techniques of getting
attention• Refine individualization/
1269
Refine individualization/ customerization
• Better links with behavioral sciences
[ADD][ ][ADD]
632
E d fEnd of Lecture
1271
Lecture