Marketing and Advertising: The Wave Of The Past, Present, and Future

Marketing and advertising have always been a constant in the business world, and today more than ever it can be seen everywhere you look; on television, on the internet, on billboards, in newspapers and magazines, and also heard on the radio. While searching the web this past week, I found a number of unmatched resources that I decided to include in my linkroll because of the significance they portray in my field of marketing and advertising. During my exploration of the web, I discovered nine sites that convey first-rate content, structure and navigation, visual design, functionality, interactivity, and authority. Their overall experience is also unparalleled, which helps them pass the Webby Awards grade of criteria. In addition, the one blog I came across passes the IMSA criteria, and it offers opinions, commentary, and news that is substantial in the world of marketing. This blog, entitled the Marketing Profs Daily Fix, involves a number of contributors and marketing professionals, which I believe is its primary strength because it helps limit its biases. It is also a leading blog in the marketing community, and it informs readers of hot topics in the area and shares a variety of information on the marketing profession itself. However, this blog does have a weakness, which I believe is the lack of effective visuals to support the topics of its posts.

The nine websites that I encountered allow deep exploration into the fields of marketing and advertising. These organizations are trade associations which pride themselves on offering its members a wide array of resources, services, expertise, certifications, and programs regarding the marketing and advertising agency business. Five of these organizations deal primarily with advertising. They are comprised of the American Association of Advertising Agencies, the American Advertising Federation, the Interactive Advertising Bureau, the International Advertising Association, and the Association of National Advertisers. Three of these organizations, the AAAA, AAF, and IAA, have an established history and are known as being premier leaders in the advertising industry, which gives them a huge advantage over their competition and I believe is their main strength. The key positive of IAB is that it primarily promotes interactive and online advertising for agencies, which is significant in this era dominated by the internet. The main strength of ANA is that its membership is attractive for both larger businesses and smaller companies. Throughout my evaluation of these five organizations, I found some possible weaknesses that can be developed further. Roughly sixty percent of AAAA's members generate revenue of less than $10 million per year, which is a huge disadvantge compared to its competition. I feel that the AAF is the best organization of the bunch, but they do not hold enough advertising events throughout the year to appeal to the younger audience (i.e. college students). The IAA also does not hold enough events or programs, which makes it difficult to spread the benefits of their membership. The IAB is a fairly new organization, which may persuade some potential members to sign up with a more experienced one. Lastly, the ANA only deals with corporate, not individual businesses, so their potential to grow is only delayed by their own obduracy.

The other four organizations I came across deal with marketing as a whole. These include the Direct Marketing Association, the eMarketing Association, the Business Marketing Association, and the Promotion Marketing Association. The primary strength of the DMA is that it contains the majority of Fortune 100 companies as its members and is an international leader with members in forty-six countries. The eMA is also an international leader with over forty nations being represented by them, and their primary strength is that it is the world's largest international association of emarketing professionals. The positives of the BMA and the PMA are they also have an established history, which makes them premier powers in the world of marketing. Even though these organizations have many strengths, there are some weaknesses that I feel can be improved upon. The DMA primarily holds conferences and events on the East Coast of the United States, which may make it hard for some business owners to attend. The eMA requires users to be paid members to access some of its online resources, which may discourage some browsers from inquiring about their organization. The primary weakness of the BMA is that it strictly focuses on business-to-business marketing as opposed to branching out to business-to-consumer marketing. I found that the lack of events and conferences held by PMA is their primary weakness, but other than that, it seems like they are resourceful and generate plenty of business. Throughout my analysis and evaluation of each of these organizations, I realized that there is a lot more to marketing than just coming up with a slogan or packaging a good or creating an ad. I learned that there are professionals willing and able to help, multitudes of classes and workshops, and an ample amount of resources available in the realm of marketing.

Microsoft's Takeover of Yahoo: A Good Deal or Bad Deal?

As I began to research online for potential marketing issues for my next post, I came across a number of articles and posts that involved two of the largest corporations in the United States, Microsoft Corp. and Yahoo Inc. It all started on January 31, 2008, when Microsoft made an offer to takeover Yahoo. This acquisition would combine the most powerful software giant (Microsoft) with one of the most powerful internet pioneers (Yahoo). Microsoft's original bid for Yahoo, offered at $31 per share (which amounts to $44.6 billion), was rejected and the two companies are still in negotiations. After Yahoo rejected Microsoft's offer, News Corp. (FOX) and Time Warner's AOL began talks with Yahoo about possible mergers. But while researching online, I came across two posts: one that argued the acquisition would be beneficial for Microsoft, and one that explains how Yahoo should just accept the deal before it's too late. I came to the conclusion that Microsoft and Yahoo can only benefit from this deal, and I do not believe that Yahoo will sell or merge with any other company that is also in the bidding war. However, Yahoo does need to make a decision fast, especially since their employees are being targeted by other competitors and shareholders are losing their patience. I also believe that with Yahoo as an asset, Microsoft can and will be able to compete with the highly praised Google enterprise.

The first post I explored, "Microsoft buying Yahoo!-Good or bad?" explains that this takeover is the right decision and it will be ideal for Microsoft. Accordingly, the second post I came upon, "Do or die time for Yahoo," argued that Yahoo has no choice but to merge, saying that Microsoft will just force a hostile takeover and the internet mogul will end up selling for less if it does not deal now. I have read that people are worried about internet start-up companies and entrepreneurs getting the short end of the stick, but I do not think this deal will affect them that much. True, Yahoo has been and still is one of the biggest buyers of these types of smaller companies, especially ones they can acquire for less than $50 million. But I believe Microsoft will easily pick up the slack in that department, even though they are not accustomed to this type of activity. Microsoft will battle with Google for "start-up supremacy" and online advertising, even if it means buying lower end start-ups they would otherwise leave untouched. Also relative to this argument is the fact that there are over 20 companies who are extremely active in purchasing start-up companies, including Amazon, Disney, and the previously mentioned News Corp. and AOL.

"Microsoft buying Yahoo!-Good or bad?"
Comment:
Throughout my research on this topic, I have come to the conclusion that Microsoft will in fact benefit from this deal if it does take place. They will challenge Google for internet supremacy, and hopefully the deal will get finalized soon. Although I agree with you wholeheartedly in every aspect you touched upon, I do believe you left out a big piece of the puzzle. What about the argument that people (so-called experts) are making about smaller start-up companies and the effect the deal will have on them? I'm not a big "computer guy" and I don't read up too much on advances in technology, but at first glance, I do believe that this sounds like a problem. I've read a few blogs and articles explaining that Yahoo is one of the biggest, if not the biggest, buyers of these start-ups and I really wonder if this deal will have that much of an effect. I believe that even though Yahoo does buy quite a few of these "cheaper" (under $50 million) companies, there are plenty of other companies that can pick up the slack, and entrepreneurs need not worry. There are companies out there such as Amazon, eBay, Disney, and Comcast that are frequent buyers of these start-ups, and with the majority of these companies prospering today, why should there be any worry on who's going to buy who? I was just wondering what your take was on the argument over these start-up companies, and if you have any idea on what Microsoft's plan is for future purchasing of companies under $1 billion. Thanks again for your insight on this proposed deal and I appreciate any feedback that you wish to leave.

"Do or die time for Yahoo"
Comment:
Most "experts" find it hard to believe that this deal is going to go through. I believe it will...eventually. Microsoft's offer is now worth just $40 billion (according to Microsoft's closing share price as of 2/19/08), down from the original offer of $44.6 billion. Yahoo Inc. should have taken the deal when it was first offered, and now they are going to lose out on billions of dollars. The takeover will happen, it's just a matter of time. Microsoft plans on going straight to the Yahoo shareholders, bypassing the board of directors who rejected the first offer, and Microsoft CEO Bill Gates has said Microsoft will not increase its offer. Once Yahoo realizes that, they will have nothing else to do but sell. Microsoft does not need to instigate a hostile takeover. They just need to be patient because the deal will get done. From what I have read, Microsoft shareholders are already astonished at the offer Microsoft originally laid out, and they believe Microsoft will be overpaying for Yahoo. I believe that Microsoft's original offer was more than enough, and Yahoo should not rely on a better offer from another corporation or from Microsoft itself. Also, with Yahoo's board of directors all up for re-election this spring, this makes for the best deal possible for both companies. I believe Yahoo should take the money and run with it, because they are just delaying the inevitable.

Super Bowl Ads: Are They Effective In Generating Profit?

On February 3, 2008, one of the greatest must-see events in sports history was held in Phoenix, Arizona. Seventy three thousand fans packed The University of Phoenix Stadium to watch the underdog New York Giants face off against the favored and undefeated New England Patriots. These fans were there to possibly witness history (with the Patriots going undefeated) or see the greatest upset (the Giants were twelve-point underdogs) in Super Bowl history. Even though it can be argued as one of the best Super Bowl finales ever (Giants won 17-14), the real show was on television; in between plays, during timeouts, and even through halftime. Millions of people tuned in at home to watch the game, but those record 97.5 million people also witnessed another year of Super Bowl advertisements. One after another, commercials ranging from beer companies to investing firms humored, informed, or shocked a record setting audience. Although some companies believe the ad costs are too high and out of their budget, it is always worth it to have almost one-hundred million people see their commercial, even if it is for only thirty seconds. These thirty-five advertisers negotiated for and obtained commercial time in order to promote their products and services, and the only way to find out if they succeeded is to look at the post-game numbers: stock price and market share.

This year’s Super Bowl ads on Fox had a price tag of $2.7 million for a 30-second spot, compared to $2.4 million last year on CBS. The graph to the right shows the cost per ad and the number of viewers since the first Super Bowl in 1967. Fox generated revenues of over $225 million from advertisements alone. It is no question that Fox came out a clear-cut winner during this year's game, especially with commercials promoting their own TV shows such as Prison Break and Terminator: The Sarah Connor Chronicles. But how did the companies that purchased these ad spots fair, and how do they expect to perform in the near future?

According to the Retail Advertising and Marketing Association’s 2008 Super Bowl Consumer Intentions and Actions Survey, 75.7 percent of viewers consider the commercials entertainment, and the percent of Super Bowl viewers that will tune in primarily to watch these ads is roughly 36.3 percent (see pie graph below). In RAMA’s survey, 18 percent of viewers wish that companies would just save the advertising money spent during the game and use it to pass savings along to shoppers, while 18-24 year olds (12.6 percent) are twice as likely as other groups (6.1 percent) to buy products from Super Bowl advertisers. Year after year, companies such as Anheuser-Busch and Pepsi are frequent leaders in airtime during the Super Bowl. This year, Anheuser-Busch spent roughly $14 million on seven advertisements (they did, however, receive a 25 percent discount from Fox for being the games biggest ad buyer and received one of the few 60-second spots during the game). Some fan favorites, according to MSNBC.com, during this year’s Super Bowl were ads for Budweiser, Tide, Coca-Cola, Pepsi, Doritos, Bud Light, and E-trade. They were an array of serious and funny commercials that people remember once the game is over and even search for online to see again.

Super Bowl ads are expensive to air, but they can also be costly to make. Audi paid $1 million just for the right to use The Godfather imagery in their ad, and other companies spent money getting well-known celebrities to act in their commercials. And every year, Anheuser-Busch shoots multiple ads and spends money to test them in focus groups before they decide which ones to air. One may ask the questions: Do these companies see a dramatic increase in revenues after the game is finished? Why spend so much money on one commercial when they can spread it out for multiple spots during other television events? Although a company should be wise with their marketing funds and spread out their advertisements, using a large portion of their allowance on an event seen around the world is not such a bad idea. Especially since it was the second-largest television event ever seen (second only to the 1983 "M-A-S-H" finale). There are definitely certain aspects of commercials that catch the eyes and ears of the audience and may even influence whether or not its products or services get sold. Celebrities play a huge role in promoting these products or services, as do animals, babies, and well-known fictional characters such as superheroes or cartoon characters. Clever and funny commercials get people talking the next day, which may ultimately lead to searching and re-watching the ads online or even buying the products or services advertised. These big name companies thrive on making decisions like airing an ad on Super Bowl Sunday, and the revenues and profits following this event reflect whether or not it was a good one.

However, the majority of companies that can afford to spend millions of dollars for a 30-second ad are bound to see an increase in sales, according to Chuck Tomkovick, a professor of marketing at the University of Wisconsin. He states that "these companies are getting more for their money than just 30 seconds." He has researched Super Bowl advertising for more than ten years and believes that the internet is a big reason for companies' advertisement success, due to the hype surrounding their ads: "There's an Internet following on these ads and they're being publicized way in advance." Studies have also shown that creativity can even increase stock price and revenues. Kenneth Kim, a researcher at the University of Buffalo, says: "Companies with well-liked commercials see, on average, a quarter of a percent increase in their stock prices the following Monday." While this increase may not seem substantial, the average company who purchases an ad has a market value of $30 billion, and a quarter of a percent of that increases its value by $80 million. Most investors would agree that an $80 million revenue boost is worth the measly $2.7 million spent for a Super Bowl ad.

Not only are beer and car companies are getting into the act, but movie studios are also taking advantage of the Super Bowl ad phenomenon. Research has shown that movie revenues increase an average of 36 percent if their trailer is shown during the game. Another example of a company greatly increasing their profit and market share is Under Armour Inc. The athletic apparel maker who had a 60-second ad during the game stated their market share price climbed about 30 percent after announcing it was advertising a new shoe during the Super Bowl. Tomkovick, who has completed a study on Super Bowl advertisements and the effect they have on stock prices, reported that companies who advertise during the game inflate their stock value by 1.3 percent. However, companies that try to promote beverages and automobiles stay relatively stable with no sudden increase. This can be explained by the demand for these products, which stays constant throughout the year. It is not a guarantee that a company will increase business revenues if they air a Super Bowl ad, but it is a possibility that their stock price will go up.

Year after year, Super Bowl ads humor and inform their audience, which eventually helps the company generate more business. Buying a 30-second spot during the largest sporting event of the year is beneficial to a firm willing and able to spend $2.7 million. This year's game, along with previous Super Bowls, proved that theory. Companies who purchase ad space see an increase in revenues, which may lead to increases in profit, stock price, and market share. The risk is worth the reward, especially with the number of viewers each year consistently breaking records. Fans and non-fans alike are already thinking about next years' game, just so they can see what commercials will stir up controversy or just give them a few laughs.