Sharp shifts shops as TV rivalry intensifies

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Sharp Corp., aiming to take advantage of the booming flat-screen TV market but anticipating stiff competition from cheap Chinese products, has moved its estimated $40 million advertising account from Dentsu's Oasis unit to a new Manhattan office of sibling Dentsu shop Colby & Partners.

Sharp, with sales of $16.7 billion in 2003 and over 50% of both the U.S. and global market share in LCD TVs, according to company data, recently added assembly lines in Japan to triple its LCD production to meet growing demand, particularly as the Athens Olympics approaches. The wholesale market value for LCD TVs in the U.S. has grown from $651 million in 2003 to $1.4 billion this year, according to the Consumer Electronics Association. Sharp expects the sale of LCD TV sets to jump from 3 million worldwide in 2003 to 7.5 million this year. In the U.S. alone, demand is expected to triple from 740,000 units in 2003 to 2.4 million units in 2004.

However, competition is stiff, with traditional players Sony, Pioneer and others joined by a new wave of competitors such as Dell in the LCD arena and Gateway's plasma flat-screen TV offerings. China, meanwhile, is expected to have low-cost, high-quality products in the market by the end of the year, said Dominic Ainscough, senior analyst, the Yankee Group. While the Sharp brand is known for quality, the challenge is consumers "differentiate between the quality of analog and digital TV screens, they are not differentiating between a Gateway and a Sony screen because, visually, there really isn't." As prices decline, "there will be an added shakeup to the high-end market," he said.

Andrew Kritzer, senior director, Sharp's strategy marketing and communications division, said he shifted the advertising account because Sharp's marketing strategy involves the need to educate consumers about the benefits of LCD screens over plasma screens. Executionally, he plans a major push behind its AQUOS LCD TVs, including TV and print advertising, as well as retail and sports-marketing programs and even guerrilla efforts. He said he selected Colby because the shop's creative has been able to "marry humor in a very tasteful manner."

solar cells, copiers

In addition to a major boost in marketing support for its AQUOS LCD TVs, Sharp also plans more aggressive marketing for its residential and commercial solar cells and a line of business copiers with security technology.

Sharp's measured ad spending rose from $6 million in 1999 to $36.7 million in 2002 but dropped to $29.1 million last year, according to TNS Media Intelligence/CMR. One executive familiar with the account said the spending could go as high as $40 million. Mr. Kritzer declined to discuss his budget.

For Dentsu, the account shift allows for the building of its agency presence in the U.S. market, long an elusive goal. Rick Colby, president-executive creative director of the Santa Monica, Calif.-based Dentsu subsidiary, said the agency now has about 100 employees and $200 million in billings from clients that include Suzuki automobiles and motorcycles, Bandai, California Avocados, Gold's Gym, Japan Air Lines, Best Software and Sutter Home Winery, among others. Mr. Colby said he had been eyeing a New York operation in recent years, especially after it won the regional Suzuki automotive business, as well as New York-based clients such as SpikeTV. Between 20 and 30 employees will work in the office, with support from the West Coast headquarters.

more growth possible

"With the Sharp win, it all came together," he said. With an additional office in Brea, Calif., close to Suzuki headquarters, "We're becoming one of the biggest agencies for Denstu outside of Asia." With "possible acquisitions [of other marketing shops], the agency will grow possibly far beyond what it is now," he said.

The account shift was in part the result of other possible pending Dentsu moves in the U.S. market. Executives familiar with the situation said Dentsu plans to move its Oasis subsidiary into closer alignment with its DCA agency, a move that would have proved a conflict for Sharp and DCA client Canon USA. Executives from Oasis and Dentsu did not return calls by deadline.

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