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1 Marketing of Media Media Products 1 © Eli M. Noam, March 27, 2010 I. WHAT’S DIFFERENT ABOUT MARKETING OF MEDIA 1. Marketing: General A Basic T pes of Marketing A. Basic T ypes of Marketing (1) Strategic Marketing (2) Tactical Marketing 2. Marketing: Structure & Organization 10 Organization A. Chief Marketing Officer (CMO)

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Page 1: Marketing of Media  · PDF file• Viral Marketing VI. ... are no bad movies, only bad marketing campaigns. ... Marketing of Media Products & Services marketing of Media

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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

10

Organization A. Chief Marketing Officer (CMO)

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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

11

(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

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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

13

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

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VI. ADVERTISING1. Advertising Agencies

A. Ad Agency Services2. Strategy3. Advertising: the Budget4. How Much to Spend on Advertising?5 Estimating ROI of Advertising:

15

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

16

MARKETING1. Self-Regulation of

Advertising

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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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23

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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

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HR Tech Finance

Accounting

Resources:

The Media Value Chain

Accounting of

Performance

Strategy

IP Creation Pricing

DistributionValue

Creation:Production Marketing

31

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.

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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)

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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

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• 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?

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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.

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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”

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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

49

in Media

I.1. Marketing g-

G l50

General

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•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

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•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.

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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

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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.

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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

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Basic Types of M k tiMarketing

•Strategic Marketing

68

•Tactical Marketing

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“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

71

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

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A. Chief Marketing Officer (CMO)

78

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• 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

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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.

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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

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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

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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.

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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

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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

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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

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• 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

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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

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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

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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

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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

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• 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

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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

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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?

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I.3 How Does the Marketing of Media

Products and Services Differ from Regular

124

Marketing of Other Products?

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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

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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).

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• 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

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• 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

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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

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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

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• 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

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• 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

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• 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

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• 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

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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.

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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

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• 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

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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

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Abundance- Magazines

153http://www.winterhouse.com/vancouver/10-magazine-rack.jpg

Abundance- Books

154http://www.glcc.org/ThingsToDo/pics/bookstore.jpg

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Abundance- TV

155http://www.september11news.com/Oct7thLondonCanBushTV7.jpg

Abundance- Advertising

156

Source: http://www.signindustry.com/led/articles/2002-07-30-LBledBillboards.php3

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•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

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• 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.

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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.

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• 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

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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)

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• 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.

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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

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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

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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

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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.

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• 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

http://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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7. Increase Marketing Effort to Gain AttentionEffort to Gain Attention For One’s Content and Usage

181

g

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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

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• 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

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•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

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*

189

The “4 P’s” of Marketing

P d t• Product• positioning• Pricing

190

g• Promotion

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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

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• 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

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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

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• 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

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• 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

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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

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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

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• 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

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• 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

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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

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“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

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• 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

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• 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

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(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

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How can one analyze the design of a product?design of a product?

Conjoint Analysis is one approachpp

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• 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

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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

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• 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.

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227

228

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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

The “4 P’s” of Marketing

• Product• Positioning• Pricing

P ti

230

• Promotion

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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.

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• For positioning of product, p g p ,need to understand one’s market.

Understanding One’s Customers

*

234

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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

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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

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• 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

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• 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

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• 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

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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

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•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

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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

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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

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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

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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

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Audience Distribution and Content Quality Level

Aud

ienc

e

257

Content Quality Level

Positioning

Aud

ienc

e

258

Program Content LevelQ

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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

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Market Niche PositioningA

udie

nce

XY Z

261

Content Quality Level

Eli Noam, Media Strategy 262

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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

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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

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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

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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

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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

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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

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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

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• 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

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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

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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

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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

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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

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C dé N tCondé Nast:Product Positioning

288

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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

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-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

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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

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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

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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

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Strong Brand

301

Difficult Brand

302

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• 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

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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

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• 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

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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

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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

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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

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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

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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

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•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

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•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

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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

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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

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CentralizedCentralized Brands

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• 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

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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

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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

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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

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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

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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

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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

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Stars as Brands

344

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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

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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

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How Does the Internet Affect Media

Branding?3 stages

351

3 stages

Stage 1 Perception:Stage 1 Perception:“The Internet Destroys

Brands”

352

Brands

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• 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

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• But then, pendulum swung in other direction

355

Stage 2 Perception:Stage 2 Perception:“Brands are Essential on the

Internet”

356

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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

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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

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• 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

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• 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)

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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

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III.5. The Creation of Brand

*

Creation of Brand Loyalty and of

368

“Lock-in”

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• 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

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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

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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

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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

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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”

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• 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

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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

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• How could “Fly & Sky” form

Case Discussion:

y yrelationships with its customers to enhance loyalty?

384

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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

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387

Eli Noam, Media Strategy 388

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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

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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

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•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

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How a firmHow a firm normally sets

prices395

prices

1. Market Pricing ( t hi tit ’(matching competitors’

prices)

396

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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

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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

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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

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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

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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

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Marketing:Niche marketing to sub-Niche marketing to subgroups

4. Flat Rate Pricing

408

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Examples:p• Internet• Mobile phone (“buckets”)• Cable TV (independent of

use)

Marketing:• Life-style, conveniencey ,• Target low use customers

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4 Strategic4. Strategic Pricing

411

• To achieve a strategic goal g gsuch as market share, brand identity, or market control.

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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

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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

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Case Discussion: Condé Nast

• How should “Fly & Sky” be y ypriced • Relative to other aviation publications?

418

• Relative to other Condé Nast products?

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• 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)

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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

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423

424

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425

The “4 P’s” of Marketing

P d t• Product• Positioning• Pricing

426

g• Promotion

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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

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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.

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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

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• 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

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• 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

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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

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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

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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

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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

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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

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TimingTiming

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• 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

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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

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• 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

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• 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

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• 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

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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

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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

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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

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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

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• 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

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Viral MarketingWord of MouthWord of Mouth (WOM), “Buzz”

Marketing

470

Marketing

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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

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*

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

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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

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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

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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

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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

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• 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

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• 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

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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

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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

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• 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.

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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

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• 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

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497http://derdo.files.wordpress.com/2008/05/nokia-e61i-00.jpg

498http://img.gsmarena.com/vv/pics/apple/apple-iphone-3g-01.jpg

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• 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

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• 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

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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

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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

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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

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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

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• 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

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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

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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

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• 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.

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• 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

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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

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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

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For details seeFor details see Appendix B: Viral

M k ti525

Marketing

526

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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.

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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

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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

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*

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

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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

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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

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• 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

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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

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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

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• 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

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• “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

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• 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

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• 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

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• 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

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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

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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

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• 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

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For more details see Appendix C: Public

Relations and Publicity.See also chapter on

entertainment law andentertainment law and media regulation

561

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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

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• 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

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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

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• 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

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• 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

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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

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• 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

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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

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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

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•New FTC Regulations on Testimonials andTestimonials and Endorsements, 2009- Must disclose connections

b t d ti dbetween advertisers and endorsers

582

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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

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• 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

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• 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

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• 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

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• 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)

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• 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.

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• 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

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• 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

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Book Promotion• Schedule reviews to coincide

with a books launch date

599599http://www.writing-world.com/promotion/buzz.shtml

Implications?

600

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• 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

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Product Placement

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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

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• 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

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“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

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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

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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

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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)

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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

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VI.iPromotion:

Advertising622

Advertising

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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

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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

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• 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.

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• 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

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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.

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• 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

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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.

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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

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• 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?

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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

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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

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• 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

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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

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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

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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

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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

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656

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AdvertisingAdvertising Agencies

658

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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.

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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.

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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

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• 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/

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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.

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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

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• If Interpublic bills 15% and pits revenues are $8 billion it places advertising of about $50 billion.$

671

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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

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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

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• 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

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Language Problems

679

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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.

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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.

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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:

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687

VI.2. Advertising: the

Budget688

Budget

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• 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

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• 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

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• 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

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• 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

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• 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

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• 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

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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

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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

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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

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• 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

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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

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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

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• 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

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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

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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

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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

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• 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

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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

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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

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• 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

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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

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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

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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

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VI.3. How Much to Spend on Advertising?

736

Advertising?

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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• Company would have to reduce budget to point where marginal expenditure =marginal expenditure marginal revenue

• Depends on productivity of d ti i

769

advertising

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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

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• 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

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• 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

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• 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

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• 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

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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

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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

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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

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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

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• 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

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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

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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.

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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

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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)

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Figure 1-9 Customer Life Expectancy and Retention

799Roger Best, Market-Based Management

Figure 1-10 Customer Lifetime Value

800Roger Best, Market-Based Management

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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

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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

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• 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

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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

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• 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/

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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

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• 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.

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A. Allocation ofA. Allocation of Advertising

Within a MediumWithin a Medium

815

Example: Choice of Magazines for AerobicMagazines for Aerobic

Exercise Ads

816

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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

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• 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

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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

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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

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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)

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Billboards

Billboards

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• 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

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•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

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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%

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Newspaper Ads

837837http://www.naa.org/advertising/pdf/athena60.pdf

Newspaper Ads

838838http://www.naa.org/advertising/pdf/athena60.pdf

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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>

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• 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

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• 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>

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• 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>

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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

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TV advertisingNational–National and local reach

850

•Effective persuasion

•High cost

http://www.usatvads.com/

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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

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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

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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

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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

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C. Optimal Advertising MixMix

859

Estimate of Advertising Allocations among Media for

Feature Film Releases

860Forrester Research (2007)

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Advertising Formats

http://www.marketingcharts.com 861

Studios Media Mix

862Marich, Robert. Marketing to Moviegoers. Burlington, MA: Elsevier Focal P, 2005

862862

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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]

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• 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

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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

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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

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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

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• 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

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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

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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

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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

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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

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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

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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

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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

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889http://www.bentley.edu/cmt/documents/tapscan.pdf

890http://www.bentley.edu/cmt/documents/tapscan.pdf

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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

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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

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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

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897

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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

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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.

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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

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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

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• 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

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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

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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

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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.

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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.

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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

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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

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• 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?

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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

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Promotion to

AdvertisersAdvertisers

Steps in Promotion of a M di O l Ad iMedia Outlet to Advertisers

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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

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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

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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

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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

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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>

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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>

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• 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>

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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

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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

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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

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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.

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• 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

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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

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• 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

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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

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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

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• 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.

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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

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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

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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

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• 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

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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

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Bulk AdvertisingBulk Advertising vs. Spot Advertising

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• 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

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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

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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

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•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

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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

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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

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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

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• 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

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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

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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

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995

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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

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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

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• 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

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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.

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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

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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

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• 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

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• 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.

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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

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• 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

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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

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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/

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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/

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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 !

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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

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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

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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

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http://edu-action.com/blog/wp-content/uploads/2009/10/sales-process.jpg

http://www.better-sales-and-selling.com/image-files/salesprocessmodel.jpg

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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

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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

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The conventional subordination of sales (tactical and down-market) to marketing (strategic and clever) is coming to an end

T l k tiTelemarketing Sales

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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

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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

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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

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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

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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

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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

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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

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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

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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

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1057

VII. The Impact f f iof Information

Technologies on 1058

ec o og es oMarketing

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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

The Impact of New Information Technologies

• Customization• Ubiquity• Immediacy• Interactivity

1060

• Telemarketing• New Tools (Internet)• Tracking of Product (RFID)

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For details see Appendix E:

New Information

1061

Technologies

VII 1 C t i dVII.1. Customized Advertising

1062

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• “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.

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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

http://www.lexisnexis.com/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T8577074912&format=GNBFI&sort=RELEVANCE&startDocNo=1&resultsUrlKey=29_T8577074915&cisb=22_T8577074914&treeMax=true&treeWidth=0&csi=334988&docNo=1

• Levels of targeted advertising can be on different levels, depending ondepending on•area•demographics

1066

•personal

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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

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• 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.

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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

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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)

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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

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• 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

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• 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

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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

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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

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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.

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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

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• 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

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&csi=244777&docNo=8

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Targeting: g gDirect Mail

•Most direct mail has CPM of $500CPM of ~$500

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• 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

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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.

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• 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

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1099

For details seeFor details see Appendix G:

T l k ti1100

Telemarketing

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1101

The Internet As M k ti T lMarketing Tool

1102http://www.guardianfinance.com/image/internetgoble.jpg

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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)

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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

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• 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

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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

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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

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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

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• 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

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• 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

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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

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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/

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Online Market Research• The Internet is also an

inexpensive, fast-turnaround medium for conducting marketing research

Source: www.harrispollonline.com

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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)

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• 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

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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

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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

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• 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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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/

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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/

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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

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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

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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

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• 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

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• 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

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1167

1168

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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

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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

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• 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

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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

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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

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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

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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

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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

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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

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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

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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

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• 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

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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

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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

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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

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“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

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• 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

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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.

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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

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X. Analyzing y gMarketing

Performance1208

Performance

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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

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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

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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

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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

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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

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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

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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.

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• 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

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• 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

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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.

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• 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.

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*

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.

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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.

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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.

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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.

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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.

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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

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For more details see Appendix J: Sales AnalysisSales Analysis

1243

1244

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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.

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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.

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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

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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

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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

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X. Outlook1256

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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

Analytical Tools Covered• Diffusion Models• Conjoint Analysis• Sales analysis• Marketing cost analysis• Marketing cost analysis• Promotion mix• [ ]

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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

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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

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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

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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

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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

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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]

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E d fEnd of Lecture

1271

Lecture