60 LBOs shake up marketing world
In December 1988, Kohlberg Kravis Roberts & Co. swoops in to snatch RJR Nabisco for $25 billion in the largest leveraged buyout in history. The LBO shakes up the marketer and agency worlds, setting in play various venerable corporations and their brands.
Since 1977, KKR has been acquiring small companies in friendly takeovers, often playing the "white knight." Along the way it discovers the LBO-that with enough debt in the form of junk bonds, the smallest company could become the equal of the biggest. The LBO is the fiscal steroid that puts convergence on a fast track in the '80s. Philip Morris buys General Foods (1985) and Kraft (1988). In the U.K., GrandMet captures Pillsbury for $5.8 billion (1989). Stockholders prosper, employees are fired and assets are sold to pay down debt.
In the agency world, Martin Sorrell's WPP sucks up J. Walter Thompson Co. in '87 and Ogilvy & Mather in `89.
59 Birth of Univision and Hispanic TV
Spanish-language TV in the U.S. begins in the '60s as a station in Texas , and by the turn of the century is dominated by media giant Univision Communications, serving the nation's second-largest ethnic group. In 1961, KWEX starts airing in San Antonio as the first Spanish-language TV station and later becomes part of Univision precursor Spanish International Network. Four decades later, KWEX is still a Univision-operated station. Hallmark acquires SIN in 1986 and a year later changes the name to Univision, and later introduces talk-show host Cristina Saralegui to the world. Already dominating Spanish-language TV with up to 80% of viewership and a similar share of ad dollars , Univision Communications launches Univision Online in 2000, then adds a music group in '01 and a second network, TeleFutura, in '02. NBC Universal's Telemundo is the No. 2 Hispanic network.
58 Advertising Council formed
In November 1941, 600 leaders of advertising meet in the Homestead of Hot Springs, Va. There, James Webb Young of J. Walter Thompson Co. tells them how their business can improve its sagging public image. Other industries have their societies and councils to do good deeds, the executive says, and advertising must now do the same. Three weeks later America is at war, and Mr. Young's proposal is suddenly drafted into the cause of victory.
The non-profit Advertising Council is established in Washington in February 1942 by members of the Association of National Advertisers and American Association of Advertising Agencies. It solicits the talents of top agencies to sell not necessarily the war but its many essential home-front duties. The first Ad Council effort is a scrap metal and fat drive from McCann Erickson. In June comes the first payroll deduction campaign for war bonds from JWT, Young & Rubicam and other shops. Lord & Thomas (soon to become Foote, Cone & Belding) tackles forest fires for the Department of Agriculture and creates Smokey Bear. Victory Gardens, "Loose lips sink ships" and Rosie the Riveter are other council creations.
57 Reese's Pieces soar via `E.T.'
Steven Spielberg's heartwarming sci-fi fable "E.T. the Extra-Terrestrial" hits theaters in 1982 and introduces the marketing world to the potential of product placement, even if it consists of putting candy in the tummy of a cuddly alien. Sales of Hershey Foods Corp.'s new Reese's Pieces candy, which plays a pivotal role in the film, triple in just two weeks.
The script originally calls for the story's young protagonist, Elliott (Henry Thomas), to entice E.T. with M&Ms, but Mars Inc. declines to participate, leaving the windfall to competitor Hershey. Sales of Reese's Pieces skyrocket by 70% for the year.
In the two decades since "E.T." landed, product placement in entertainment content has become commonplace as marketers seek to cut through the clutter of ad messages. Recent reality show hits, such as "Survivor" and "The Apprentice," have featured prominent roles for brands such as Target and Pepsi. Integration of brand messages with content is widely seen as a necessary ingredient of effective marketing in the 21st century.
56 Emergence of `positioning'
As the creative revolution of the 1960s wanes, marketing focuses in on positioning. It's most notably put into words by the legendary David Ogilvy, who states in a 1971 New York Times ad that results "depend less on how we write your advertising than on how your product is positioned."
Actually, it was first put into words and then most famously espoused by admen Jack Trout and Al Ries.Their articles first in Crain Communications' Industrial Marketing and later Advertising Age (and later still in book form) outline the "Positioning Era" and explain there's no way to make headway in the marketplace unless a product or brand is properly "positioned" in the consumer's mind.
As Hertz holds No. 1 among rental cars at the time, Avis succeeds by "positioning" itself as a viable No. 2 with its "We try harder " campaign. 7UP "positions" itself among soft drinks as "the Uncola." For this decade of marketing, long-term strategic thinking replaces the hot creative idea. Actually, the positioning era doesn't end. What becomes a part of the marketing lexicon in the early '70s holds its own in the textbooks of today.
Contributing: Hillary Chura, Larry Edwards, Jim Hanas, John McDonough, Laurel Wentz