The ultimate consequences of the global tobacco settlement may not be known until next year. But the tobacco companies' unprecedented marketing concessions and an agreement to be regulated by Food & Drug Administration have drawn the wrath of congressmen, senators and critics not consulted in the original deal.
The opposition is a far cry from the companies hoped-for protection from liability lawsuits.
The original settlement called for tobacco companies to discontinue outdoor advertising; limit magazine advertising to publications with 85% adult readership; and halt giveaways and event sponsorships under brand names.
Lawsuits were settled in Florida and Mississippi. R.J. Reynolds put to rest its Joe Camel ads.
At yearend about the only sure thing about the tobacco issue is that Congress will continue weighing it into the new year while marketing dollars hang in the balance.
Mcdonald's corp. was tripped up by last spring's high-profile but short-lived "Campaign 55" discounting program, and a continuing slump in U.S. sales. The marketer, the biggest spender in the competitive $100 billion fast-food business, tried to regain some of its shine last summer by switching a significant portion of its $600 million advertising account from Leo Burnett USA, Chicago, to DDB Needham Worldwide, Chicago.
First, Needham won the creative assignment for national ads targeted to adults. Then, McDonald's pulled responsibilities for national media buying for adult advertising from Burnett and gave that to Needham as well.
The victory was particularly sweet for Needham, which had lost the business to Burnett in 1981. Burnett continues to handle McDonald's advertising to kids and teens, which takes some of the sting out the loss.
In a strategy shift, McDonald's said it will leave price promotions and new product launches mostly to its five new U.S. divisions. DDB Needham's job is to help rebuild the brand nationally in tandem with the local efforts. Its first work, using humorous vignettes, broke in October with the new tag, "Did somebody say McDonald's?" Observers say it's too early to assess results.
COMFORT WITH GAYS & LESBIANS GROWS
Ellen degeneres made TV history -- and the cover of Time -- as she shepherded the lead character of her then-sagging, prime-time ABC comedy "Ellen" to come out as a lesbian. Then, Ms. DeGeneres came out, too.
Both Ellens illustrate the increased visibility of gay and lesbian Americans, as well as the dramatic rise in corporate comfort and public interest in them. ABC heavily promoted the coming-out episode and charged nearly twice the usual price for "Ellen" -- a dramatic change from the network's $1 million ad loss over a 1989 "thirtysomething" episode in which two men sat in bed together. The "Ellen" episode was the network's highest-rated program in three years and the program now consistently wins its time period.
"Ellen" joined an all-time high of 30 gay TV characters on mainstream TV while numerous major corporations from IBM Corp. to Seagram Co.'s Tropicana and United Airlines began entering gay print media -- something unthinkable even a few years ago.
Levi strauss & co. has been the gold standard for cool, as well as a role model for client-agency relationships. None-theless, after 67 years with Foote, Cone & Belding, San Francisco, Levi's put its $90 million jeans account into review.
Along with the review announcement came the news that Levi Strauss' flagship 501 jeans division was facing more of a market-share blues than previously thought. Levi's successful efforts for wide leg jeans and for jeans for women were dumped in favor of a branding effort tagged "They go on."
Will Foote, Cone & Belding go on in a relationship with Levi Strauss? Stay tuned for the January Super Bowl of the creative titans (at least those that don't have a category conflict): FCB vs. TBWA Chiat/Day, Venice, Calif.; BBDO Worldwide, New York and Los Angeles; Bartle Boggle Hegarty, London, and Hal Riney & Partners, San Francisco. A decision is expected in January.
TRUE NORTH, CORDIANT
Breaking up was hard to do in 1997. Publicis SA and True North Communications quarreled openly, while the "de-merger" of Cordiant was closer to a no-fault divorce.
True North and Publicis finalized their separation in June, ending what many saw as sound business in theory, but too dysfunctional in practice. But when True North sought another partner in Bozell, Jacobs, Kenyon & Eckhardt, Publicis came back. There were merger offers, lawsuits and a proxy fight, which carries on to the Dec. 30 shareholders vote on the BJK&E deal.
Publicis Chairman Maurice Levy, fighting off an image as a last-minute spoiler, claims the BJK&E deal is costly and will only compound True North's weaknesses. Besides offering to join True North again, Mr. Levy also demanded that True North halt the BJK&E deal and look at other offers, effectively putting True North in play.
By comparison, the Cordiant "de-merger" ended quietly Dec. 15, when the two new Saatchi & Saatchi and Cordiant Communications Group entities began trading as separate companies. Whether either or both continue independently is a question -- Bates, the major unit of CCG, repeatedly has been rumored to be takeover bait -- but management claims it has every intention to make it on its own.
MEDIA ACCOUNT CONSOLIDATION
Procter & gamble co., the world's largest advertiser, conducted the biggest review in advertising history.
The pot included a media-buying consolidation worth $900 million to $1.2 billion; MacManus Group's TeleVest won it. The results of the consolidation strategy will be watched by other marketers.
The strategy behind the move is to change the way national TV time is bought. Traditionally, national time is bought by dayparts; the new strategy will be to buy time in a show-specific method, based on individual viewing patterns of viewers.
P&G was not the only marketer to review and consolidate its media buying. Major advertisers such as Ameritech Corp., Bank of America, Bell South Corp., Exxon Corp., Glaxo Wellcome, PepsiCo and SBC Communications joined the parade.
The changes underscored the importance of media planning and buying expertise. It also showed advertisers that media could be unbundled from creative without detrimental results.
CHRYSLER AD FLAP
On february 15, Chrysler Corp.'s agency, Pentacom, Troy, Mich., sent a letter to more than 50 magazines requesting the automaker "be alerted in advance of any and all editorial content that encompasses sexual, political social issues or any editorial that might be construed as provocative or offensive."
While industry observers later noted that Chrysler was not requesting anything other advertisers haven't requested, the fact it was stated in a letter ended up placing Chrysler in the middle of an editorial integrity brouhaha.
Chrysler was blamed for creating an atmosphere that encouraged Mr. Kosner's decision. A debate in the magazine industry ensued regarding the influence of advertising on editorial.
Magazine Publishers of America supported the position and issued its own statement.
Chrysler in October dropped its policy of prior notification. But as a result, it decided it would most likely no longer use magazines it deemed too edgy in editorial for its advertising message.
DIRECT TO CONSUMER Rx ADVERTISING
This year, prescription drug marketers got permission from Food & Drug Administration to say both a brand name and the symptoms it treats in TV and radio advertising.
Though the relaxed rules came in August, the additional spending impact is further expanding an already exploding effort in direct-to-consumer prescription drug ad spending, possibly nearing $1 billion in 1997.
No. 1 DTC advertiser Glaxo Wellcome was prepared immediately for the rule change with the first TV spots behind its herpes treatment Valtrex. The same weekend, Hoechst Marion Roussel broke an updated version of its "wheat surfer" TV commercial for allergy drug Allegra. Not long after, competitor Schering-Plough Corp.'s Claritin came in with new TV spots as well, though it was quickly reined in by the FDA for modifications.
Still, Coalition for Healthcare Communication, a consortium of advertising and marketing groups, say the current FDA guidelines for broadcast commercials need clarification and that an update of the "brief summary" requirement for print ads is needed.
Everyone in the advertising community expressed an opinion about the influence wielded by advertising consultants. But the American Association of Advertising Agencies gave concerns a public voice.
The number of consultants involved in agency reviews increased -- in spite of gripes by agency executives about unfair influence on review candidates and decisions. According to the Four A's, 70% of all new-business reviews last year involving the top 10 agencies included a consultant.
Agency executives said the number of consultants was continually growing, with some new-business directors in 1997 listing up to 100 individual consultants in their databases.
In October, Four A's took a public stand on the topic and issued consultant guidelines for members. A new-business committee representing 22 national agencies put forth recommended procedures for agencies in dealing with consultants.
The guidelines were designed to impact how advertisers, agencies and consultants manage new business. Consultants fired back that the guidelines were too narrow and didn't take the input into consideration.
Telecommunications marketing acumen drew a crowd of bidders for MCI Communications Corp. last year.
British Telecommunications first had offered about $25 billion, although the company later adjusted the price downward to about $19 billion. That opened the door for WorldCom to offer an estimated $30 billion in stock. To the surprise of the already gathering crowd, GTE Corp. then launched its own cash bid of about $30 billion.
WorldCom eventually won the telco after increasing its offer to $35 billion.
Analysts and industry pundits say the attractiveness of MCI had everything to do with smart marketing strategies, practices and executives.
To MCI and analysts' great satisfaction, WorldCom will retain those key MCI