20 WPP buys J. Walter Thompson
Martin Sorrell shocks and forever changes the ad industry when embattled, 123-year-old J. Walter Thompson Co. accepts his $566 million bid on June 26, 1987, ending the conventional wisdom that hostile takeovers don't work in the ad business. Mr. Sorrell proposes the deal June 10 and the next day begins a hostile tender offer initially worth $460 million, sending JWT on a fruitless search for a white knight.
Working through the tiny publicly quoted WPP Group company he bought in 1985 while still Saatchi & Saatchi's group finance director, Mr. Sorrell was pursuing a relatively modest plan to build a marketing services group by buying small below-the-line companies. But when he spots an opportunity to wring bigger profits from badly managed JWT, Mr. Sorrell, then 42, changes strategy. With the JWT deal, he embarks on his destiny as a serial acquirer, buying, in often less-than-friendly deals, other venerable agency brands Ogilvy & Mather (1989), Young & Rubicam (2000) and Grey Global Group (2005), becoming Sir Martin along the way when Queen Elizabeth II knights him in '99.
19 FDA approves DTC drug advertising
In 1997, the Food & Drug Administration writes the pharmaceutical industry and its agencies a powerful prescription for profits when it brushes aside much of the regulatory congestion that traditionally restricted drug advertising to over-the-counter pain relievers and antacids of the "plop plop fizz fizz" variety. By loosening the constraints on advertising prescription drugs, the government will help spawn a $3 billion-plus ad category, an engine for growth when other categories are sputtering.
Drug companies for years had been free to market prescription drugs to doctors but not directly to consumers. By loosening the rules, the FDA unleashes a revolution. Within two years, annual direct-to-consumer prescription spending surges from $309 million to $1.1 billion. Schering-Plough Corp. at one point is supporting Claritin alone with $300 million in media annually. Pfizer makes erectile disfunction, or E.D., a part of the vernacular in ads for Viagra.
18 MTV turns music into eye candy
Both the cable industry and the music business enter a new era when MTV: Music Television launches at 12:01 a.m. on Aug. 1, 1981. The first hour features videos by the Buggles, famous for the record "Video Killed the Radio Star"; Pat Benatar; Rod Stewart; and the Who.
MTV, named Fortune's product of the year in its first year of operation, expands its programming well beyond music videos, including the groundbreaking reality series "The Real World."
Over the next 20 years, MTV gradually increases its presence to 80 million homes in the U.S. alone. Outside the U.S., MTV rolls out to 164 countries from China to Africa and all points beyond. MTV is telecast in 18 languages, and it says eight out of 10 MTV viewers are now outside the U.S. The cable channel is today owned by Viacom.
17 Agencies unbundle media departments
Penthouse begins publication, Sesame Street airs for the first time, the Jets win the Super Bowl, the Mets the World Series and Neil Armstrong walks on the moon. It's hardly surprising that the summer of '69 is not usually remembered for the creation of a small, forgettably titled French company that traded radio airtime.
But the formation of SGGMD-later to become Centrale d'Achat Radio Affichage et Television, or Carat-was a giant step for media and marketing kind.
Francois and Gilbert Gross (photo above), the brothers behind that small French company, were not necessarily the first to separate media buying from the business of advertising creation and account management. In the U.S. they were beaten to the idea by Dick Gershon, who sets up Independent Media Services in 1966 to handle the buying work for famed adman George Lois.
And Gilbert, now 73 and still working for Carat's holding company, Aegis Group, admits he got the idea from another Frenchman when he was working on a creative account for Perrier and discovered that the client had awarded the media portion of the business to another agency. "He was buying pages in this newspaper for Perrier as if he was in a souk in Marrakech," remembers Mr. Gross.
But it's the success of Carat that drives most of the largest ad agencies to separate creative and media services. By the late 1990s, almost all European media is planned and bought by media agencies. The same is now true in the U.S., where media is bought by a handful of massive shops, such as Omnicom Group's OMD, WPP Group's MindShare, Interpublic Group of Cos.' Universal McCann and Publicis Groupe's Starcom MediaVest. Extrapolation of Recma data reveals that the top five media agencies in America today will buy more than $50 billion of media in 2005. The unbundled media agency has, in quick time, imposed itself on the U.S. marketing landscape and changed the ad business forever.
16 Bob Jacoby's big pay day
Saatchi & Saatchi pays a record $507 million for Ted Bates Worldwide in 1986. Bates Chairman Bob Jacoby takes home $110 million-and pays the price. Mr. Jacoby, a short man with a big mouth, is vilified in the industry for commanding such loot. There's no doubt that after the sale of the fabled ad agency, a cozier world of agency/client relationships and 15% commissions disappears.
The question is whether Mr. Jacoby's actions bring on change (critics' view) or whether he takes the money and runs because he presciently sees a world about to change (his view). In either case, his payday shocks the system. The agency world begins a period of remarkable consolidation in '86; eight of the 10 largest U.S. agency groups in business that year have since been acquired. Wall Street relationships have become as important as client relationships. Mr. Jacoby, now 76 and retired in Florida, accepts that many cast him as a "pariah" when he was first to grab the prize. "I don't resent it," he told Advertising Age in 2002. "It's funny as hell. It turned out OK."
Contributing: James B. Arndorfer, Claire Atkinson, Jonah Bloom, Bradley Johnson, John McDonough
MILESTONES TO DATE
75 Advertising Age launches
74 Birth of reality TV
73 Gannett launches USA Today
72 Food marketers consolidate
71 Motivational research emerges
70 RJR retires Old Joe
69 Action for Children's Television founded
68 Food, Drug & Cosmetics Act passed
67 Absolut vodka is launched
66 Townsend Brothers/copy testing
65 Edsel introduced
64 "A diamond is forever"
63 MCI competes with AT&T
62 Fox network debuts
61 Tampax starts educating women
60 LBOs shake up marketing world
59 Birth of Univision and Hispanic TV
58 Advertising Council formed
57 Reese's Pieces soar via "E.T."
56 Emergence of "positioning"
55 Compensation consultant at IBM
54 Mary Wells' WRG raises the bar
53 Census 2000: a wake-up call
52 Nike signs Michael Jordan
51 Marlboro Man saddles up
50 Buick ads back used cars
49 Beginnings of syndicated TV
48 Breaking ad talent race barrier
47 Universal Product Code unveiled
46 Bank of America charges ahead
45 J&J's Tylenol tampering case
44 Bubble bursts as dot-coms crash
43 "Star Wars" saga begins
42 Avis declares that it's No. 2
41 Gallup applies research skills
40 Cigs "hazardous to your health"
39 Ike's "Man from Abilene"
38 "Pepsi Generation," the cola wars
37 Nielsen tracks share of market
36 Beverages go "light"-ly
35 Apple Computer's "1984" spot
34 Photo-driven Life on newsstands
33 Reeves' "Unique Selling Proposition"
32 Start of cable, satellite-delivered TV
31 "Bug bomb," aerosol can technology
30 Quiz show scandals change TV buying
29 Birth of the daytime soap opera
28 HotWired runs first Internet ad
27 Remote control device arrives
26 Packard's "Hidden Persuaders"
25 Y&R's Whole Egg theory
24 Levittown opens, suburbs mushroom
23 Communications Act of 1934
22 African-Americans enter ad industry
21 Nader and era of consumer advocacy
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