Fortune recently had this piece about the advertising business in its June 28 issue. It certainly continues along with the current trends that we're seeing throughout the industry. And, OK, if I can be so bold, it's what we've been saying for quite some time!
BBDO, one of the most respected ad agencies on Madison Avenue, has had a rude awakening. The agency is famed for its hip commercials like the Pepsi Twist spot, in which aging rocker Ozzy Osbourne watches in horror as his grungy children, Jack and Kelly, are transformed into ... Donny and Marie Osmond! Recently BBDO worked similar wonders for Chrysler. Everybody in the auto industry is talking about its ads in which a redneck car fanatic dreams of winning a drag race with the driver of a new Dodge Ram pickup equipped with a Hemi V-8 engine.
Chrysler, however, isn't being very appreciative. George Murphy, senior vice president for global brand marketing for the Chrysler Group, complains that his company is spending too much on television ads. It galls him that the price of a 30-second commercial continues to rise at a time when the broadcast networks are steadily losing their audience -- and when his own marketing budget is flat because the car industry hasn't been able to raise prices for five years.
Because of that, Chrysler has been giving BBDO fits. It wants less of the agency's expensive television ads and more Internet promotions, direct mail, and events that get behinds in the seats of Chrysler vehicles. "There's definitely been erosion in the amount of money we spend on TV," Murphy confirms. The same could be said for the fees that Chrysler pays BBDO. In late May the agency eliminated 100 positions in its Detroit office.
It's a whole new world for the advertising business -- and a cold one. The cost of network television ads is rising faster than most corporate marketing budgets. The Yankee Group predicts that by 2007, 20% of the nation's households will have personal video recorders like TiVo that enable viewers to skip television ads altogether. So companies are abandoning the old rules of marketing. You can't log on to the Internet without being bombarded with pop-up ads. Virgin Atlantic Airways is running magazine ads on such heavy paper that you land on them every time you flip through the publication. Burger King has given a warped twist to its "Have it your way" slogan: It created Subservient Chicken, a website where you can give orders to a garter-clad hen in a dingy motel room. Coca-Cola, Nokia, and McDonald's are quietly inserting sodas, cellular phones, and Big Macs into the videogames your children play.
Fortune.com - Intro - Nightmare on Madison Avenue (This not a free link -- you will need a print or online subscription to view the entire article.)
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