BIG ACCOUNT SWITCHES
A number of big-spending ad accounts, including at least four worth more than $100 million, changed hands in '96. Blockbuster Video started the year by moving its $140 million account from D'Arcy Masius Benton & Bowles, New York, to Young & Rubicam, New York. By the fall, though, Y&R had lost some creative responsibilities to former Blockbuster shop Bernstein-Rein, Kansas City, Mo. Also in January, S.C. Johnson & Son consolidated its worldwide account at Foote, Cone & Belding, Chicago, pulling $175 million in billings from two dozen shops, including DDB Needham Worldwide, Chicago. In the fall, American Honda Motor Co.'s Acura division moved its $120 million account from Ketchum Advertising, Los Angeles, to Suissa Miller, Santa Monica, Calif.--a shop with total billings before Acura of about $80 million. But the biggest shocker of all came in mid-summer, when United Airlines launched a review on its $120 million account. The move broke a 31-year relationship with Leo Burnett USA, Chicago, that had been considered one of the industry's stronger and more productive partnerships. Loud and strong, the review blared the news that nothing in advertising lasts forever. Though Burnett pitched to keep the business, United in October awarded its domestic account to Fallon McElligott, Minneapolis, and its media buying and international advertising to Y&R, New York. And to close the year, Delta Air Lines, despite 51 years with BBDO South, Atlanta, put its $100 million account up for review. A decision is expected in late February.
SPIRITS TV ADVERTISING
Seagram Americas became the first spirits marketer to break the industry's 60-year-old voluntary ban on broadcast advertising. Seagram's ad for Crown Royal Canadian whiskey on KRIS-TV in Corpus Christi, Texas, opened a floodgate of controversy, prompting admonitions from President Clinton and anti-drinking advocacy groups. Undeterred, Seagram expanded its foray into TV and radio this fall, seeking out small-market network affiliates and independents hungry for ad revenues. Most broadcast and cable networks have so far refused to take liquor ads, with the exception of Black Entertainment Television and a handful of local cable systems. Other marketers and distillers quietly readied their own electronic media plans, anticipating the inevitable: In early November, the board of the Distilled Spirits Council of the U.S. unanimously voted to lift the industry ban. Federal Communications Commission Chairman Reed Hundt responded with a formal inquiry into the placement and content of the Seagram ads. The Federal Trade Commission soon followed with its own investigation.
Little more than a year ago, Bill Clinton's re-election seemed a tough sell. But the incumbent repackaged himself to voters as a moderate candidate. And Republicans eased his battle by overspending in primary advertising, then fighting among themselves during Bob Dole's election run. For Republicans, who saw Mr. Dole spend so much to fend off Steve Forbes' negative barrage in the Iowa caucuses and the New Hampshire primary, the lesson may well be to conserve cash or get the national party to do more. By the time Mr. Dole got post-convention federal money, he was well behind. Yet with no Madison Avenue involvement, no overall theme or constant message, and no introduction of the candidate or his background, the disorganized Dole campaign will serve as a model for what not to do in a political campaign.
44 LIQUORMART CASE
The U.S. Supreme Court in May handed down what appears to be its broadest advertising free speech decision, ruling in the 44 Liquormart case that Rhode Island's ban on liquor price advertising was an unconstitutional restriction on commercial free speech. In this case, several justices said a previous high court decision in a Puerto Rican gambling case, which ad critics cite to justify restrictions, had been wrongly decided by an earlier court. In that case, justices ruled a government that could ban an activity like gambling could take the "lesser" step of banning advertising for the activity. In the 44 Liquormart case, the court said a ban on advertising has a much broader effect on constitutional liberties and should be a last step--not a substitute for dealing with issues that can be handled in other ways.
TOBACCO AD RULES
The Food & Drug Administration and President Clinton in August unveiled tobacco advertising rules that represent the most stringent marketing restrictions the government has imposed on a legal consumer product. Under the rules, tobacco ads in magazines with at least 15% of readers under age 18 would be limited to text in b&w; outdoor boards would be banned within 1,000 feet of a school and could show only text in other sites; and giveaways of merchandise with tobacco logos would be banned, as would sponsorships of events under brand names. Tobacco and advertising groups challenged the proposals immedi-ately, with the first court hearing on the case set for February. While the bulk of the rules are to take effect Aug. 28, the court challenge left in doubt whether they'll be implemented in 1997.
An unprecedented, 10-year alliance between Walt Disney Co. and McDonald's Corp. struck this spring gave these giants a big edge in kids marketing. The $1 billion-plus deal commits McDonald's to promote up to 17 Disney projects, worth in excess of $100 million a year. The arrangement cuts across nearly every Disney division, including film, theme parks and cable TV. The first piece of the pact came this fall, when McDonald's tie-in with the new "101 Dalmatians" movie produced its largest-ever Happy Meal promotion. The deal unseated fast-food rival Burger King, a Disney partner since 1992 that scored big wins in recent years through such hits as "The Lion King," "Pocahontas" and "Toy Story." It also left other fast-food players, such as Burger King and PepsiCo's KFC, Taco Bell and Pizza Hut, competing for kid-friendly film partners. PepsiCo, for example, is tying all its brands to the re-release of 20th Century Fox's "Star Wars" trilogy next year.
If the World Wide Web is such a response-driven medium, why are ads bought based only on how many people see them? That's what Procter & Gamble Co. and its agency, Grey Interactive, New York, wondered. So they told Web sites P&G would buy ads only if the sites charged based not on how many people saw the ads, but how many people actually clicked on them and visited a P&G site. Some sites declined to take ads under P&G's terms, saying that paying on a click-through basis devalued the site carrying the ad. But Web directory Yahoo! agreed, and eventually other sites did too. Now, while the ad industry may still buy Web ads based on impressions, much of the back-end analysis is based on click-through.
CEREAL PRICE CUTS
On April 15, Philip Morris Cos.' Post cereal division axed prices 20% on all its cereals, a move that Kellogg Co. and General Mills swiftly followed. The decision caused earnings losses at the country's major cereal marketers and a resultant drop in ad spending. At first, Post and Kellogg made hay of the price cuts through TV ads. But overall budgets remained depressed after the initial campaigns. Post also introduced a universal coupon offering money off on all its cereal brands, the only one of the Big 3 cereal marketers to do so. The profit-pinch also caused Ralcorp, unable to cut prices further, to go on the block and subsequently be snapped up by General Mills.
The passage of the Telecommunications Act in February created a bevy of corporate activity, the full effects of which haven't been felt. The legislation allows local and long-distance phone companies and cable TV companies into each other's businesses. While the long-distance industry is estimated at $75 billion and local at $90 billion, the convergence of various communications services is expected to create a new category estimated at $500 billion. In addition, thanks to the act, the telecommunications business is expected to become the third most-advertised industry by the end of 1997. The new bill has spurred proposed mergers of many players, including British Telecom and MCI; Bell Atlantic and Nynex; and Pacific Telesis and SBC Communications. But it's also crimped other efforts, such as the Tele-TV cable venture formed from an alliance of Baby Bell partners.
Dozens of marketers banked big bucks on consumer interest in the 1996 Summer Olympics in Atlanta. According to Advertising Age estimates, sponsor and non-sponsors spent $5 billion in Olympic-related media and marketing. Coca-Cola Co. put down $80 million for its Olympic marketing rights and spent more than five times that amount to leverage them. Yet many questioned how effectively sponsors got their messages across amid the clutter. Arguably the most visible marketer next to Coca-Cola was Nike, which didn't sponsor the event but backed U.S. Track and Field. On top of that, the city of Atlanta ambushed Olympic sponsors as marketers and vendors occupied sidewalks, parks and other properties, which earned Atlanta comparisons to a cheap flea market. The International Olympic Committee and United States Olympic Committee created new restrictions on what host cities can do in the future.
Copyright December 1996, Crain Communications Inc.