1980s Mergers and LBOs

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Population: 226.5 million (1980), 248.7 million (1990)

Employment: 63.8% employment (1980), 66.5% employment (1990)

Peak unemployment: 9.7% in 1982

Presidents: Jimmy Carter (1977-1981), Ronald Reagan (1981-1989), George H.W. Bush (1989-1993)

Big names in advertising:

Jay Chiat and Lee Clow, Chiat/Day; Phil Dusenberry, BBDO Worldwide; Hal Riney, Hal Riney & Partners; Allen Rosenshine, BBDO Worldwide; Martin Sorrell, WPP Group; Dan Wieden and David Kennedy, Wieden & Kennedy

Top agency in 1980: Young & Rubicam ($2.3 billion)

Top advertiser in 1980: Procter & Gamble Co. ($649.6 million)

Total U.S. ad spending in 1980: $53.6 billion

Most of the 1980s unfolded under the Reagan administration. It was a decade of relative affluence, deregulation and peace, though Iran and Iraq went to war, Lebanon erupted into civil war, and John Lennon was gunned down on the streets of New York. Egyptian leader Anwar Sadat and Indian Prime Minister Indira Gandhi were assassinated; both Pope John Paul II and President Reagan survived attempts on their lives. Mount St. Helens blew its top, killing dozens and coating some Western states in ash. The 1980 Olympics in Moscow were boycotted by the U.S. and other nations, and Muhammad Ali retired from boxing. The opening of Eastern Europe to Western brands spurred U.S. companies to enter these untapped territories, with Coca-Cola Co., General Electric Co., McDonald's Corp. and Microsoft Corp. leading the way. Meantime, Microsoft's Bill Gates became the first billionaire in

the computer world. A nuclear reactor at Chernobyl suffered a major malfunction, spewing deadly radiation across Ukraine. The space shuttle Challenger exploded as millions watched on TV in horror. The AIDS pandemic became big news and caused magazines from Parents to Vogue to begin accepting condom ads. The stock market crashed on Black Monday, Oct. 19, 1987, representing a setback to economic growth. The first McDonald's opened in Moscow. The Berlin Wall came down in 1989, leading the way for the eventual breakup of the Soviet Union.


By the end of the decade, more than $128 billion was spent on advertising annually, up from $53.6 billion in 1980. Advertising Age called the 1980s "The Decade of the Deal," due to the many mergers among advertisers and agencies. Kohlberg Kravis Roberts & Co. purchased Nabisco for $25 billion (the biggest leveraged buyout ever at that time), while Philip Morris bought Kraft, Eastman Kodak took over Sterling Drug and Grand Metropolitan assumed control of Pillsbury.

By 1983, eight major U.S. agencies had already been merged into larger companies-many with foreign ownership-and this trend continued throughout the decade, including some hostile takeovers. Saatchi & Saatchi bought McCaffrey & McCall as well as Dancer Fitzgerald Sample, Backer & Spielvogel and Ted Bates & Co. Interpublic Group of Cos. took over Dailey & Associates; WPP Group acquired J. Walter Thompson Co. and Ogilvy Group; and Needham Harper Worldwide, Doyle Dane Bernbach and BBDO merged to form Omnicom Group. Meanwhile, small creative boutiques began to emerge nationwide, sparking a period of advertising creativity that heated up slowly in the middle of the decade and echoed the creative revolution of the 1960s. Arriving on the scene in the late 1980s and early 1990s were Deutsch, Goldsmith/Jeffrey, Cliff Freeman & Partners, Buckley DeCerchio Cavalier, Kirshenbaum Bond & Partners and others.

Deregulation helped the ad industry by causing increased spending in some categories. As AT&T, under a 1984 court-imposed breakup, divested itself of its local phone companies, long-distance services MCI and Sprint rose up to compete with the former monopoly. All three spent increasingly greater amounts on advertising; MCI alone spent $12 million in 1989 and $100 million just four years later (when it introduced the Friends & Family plan in 1993). By 1994, the telecommunications sector was spending $3.5 billion on advertising, three-quarters of that from the Big 3 long-distance brands.

Healthy foods and beverages represented another growth category. Caffeine-free soft drinks were introduced in 1983, and oat bran became hot in 1989 as a means of reducing cholesterol. (The decade also featured a big marketing mistake-the introduction of New Coke in April 1985, followed by the backpedaling launch of Coca-Cola Classic just three months later.)

Nike began its reign as one of the leading sports marketers when it introduced the "Just do it" campaign in 1982 (through Wieden & Kennedy), and signed then-rookie Chicago Bulls player Michael Jordan to a five-year, $2.5 million contract in 1984. The 1980s also cemented the Super Bowl as the premium sports marketing venue, after Apple Computer premiered "1984," a spot directed by filmmaker Ridley Scott for Chiat/Day to launch the Macintosh computer. The effort cost $400,000 for the time and $500,000 for the creative, but it brought results: 200,000 people visited stores the next day to take a look, and 72,000 customers bought Macs within three months.

Infomercials took hold in the 1980s, generating $350 million in sales by 1988, $750 million by 1992 and $4.5 billion by 1998. Other techniques born or strengthened in the 1980s included green marketing; movie theater ads, with Coca-Cola an early participant; and 15-second TV spots. Celebrity endorsements also underwent a robust period, exemplified by Michael Jackson's record-setting deal with Pepsi-Cola for its "Choice of a new generation" campaign.

New media

TV's dominance as an ad medium solidified in the 1980s. But growth was due to the fast rise of cable television and a parallel increase in syndicated programming over independent stations ("Entertainment Tonight" was the first syndicated TV show delivered to stations via satellite in 1981)-both developments that intensified industry fragmentation. Cable allowed genre-specific channels, such as all news (CNN debuted in 1980). It also gave advertisers access to an international audience and gave birth to direct-response shopping services, with both QVC and Home Shopping Network premiering in this decade.

The first direct-to-home satellite system, DirecTV, launched in 1988, and cable and satellite channels including HBO, Showtime and ESPN continued to expand. The Fox network debuted on broadcast TV, further fragmenting a market formerly controlled by the Big 3 broadcast networks, which maintained a 70% share of the TV audience by the late 1980s, down from 90% a decade earlier. Spending on TV advertising (broadcast, cable and satellite) rose 5% during the decade at the expense of newspapers (down 4%), magazines (down 3%) and radio (down slightly).

Other developments in the 1980s: the rise of the VCR, allowing viewers to skip ads on recorded programming; the remote control, which enabled channel-switching during commercials; the introduction of the CD in 1983; the first digital camera, which, along with flatbed scanners, changed how print ads were produced; the first known large-scale computer virus via the Internet; and the beginning of significant deregulation and consolidation in the radio industry. The decade also saw a rise in outdoor media, which grew 300% over the 1980s and 1990s. Live Aid raised $600 million for famine relief in Africa, beginning a lengthy relationship between celebrities using their fame for good causes.

Everyday life

Fashion designers emerged as celebrities whose businesses expanded from clothing to "lifestyles." Designers such as Calvin Klein, Tommy Hilfiger and, especially, Ralph Lauren and his Polo brand (with agency Wells, Rich, Greene) extended into everything from fragrances to home furnishings, creating an entire lifestyle focused on their brand image. Fashion photographers such as Herb Ritts and David LaChapelle also gained influence and helped establish many fashion trends through their creative leadership.

In 1982, Steven Spielberg's "E.T. the Extra-Terrestrial" added credibility to the concept of product placement when sales of Hershey's Reese's Pieces candies, featured in the film, tripled within two weeks of the release and jumped 70% for the year. "Batman" became a pop-culture phenomenon in 1989 when fans stole movie posters from bus shelters before the film's release. In TV, "The Cosby Show," the No. 1 program for four years running, generated a record $400,000 for a 30-second spot in 1986. Prime-time soap operas from "Dallas" to "Dynasty" were the rage. Popular books included genre titles by the likes of Stephen King, Judith Krantz, Danielle Steel and Tom Clancy. The advent of MTV revolutionized music marketing, with the success of Michael Jackson's "Thriller" video largely due to airplay on the network.

Several ad slogans and spokescharacters became part of pop-culture history during the 1980s, including the "Where's the beef?" campaign from Wendy's International and Dancer Fitzgerald Sample; Coca-Cola Co.'s polar bears, stars of the first all-computer-generated animated ad; Foote, Cone & Belding's clay-animated raisins for the California Raisin Advisory Board; and Chiat/Day's Energizer Bunny.

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