Advertising and the Content Industry - The Coca-Cola Case

Attempts to dictate their rules to the media has become a common practice among marketers and the advertising industry. Similar as in the Chrysler case, where the company demanded that magazines give advance notice about controversial articles, recent attempts to put pressure on content providers have been pursued by the Coca-Cola Company.

According to a memo published by the New York Post, Coca-Cola demands a free ad from any publication that publishes a Coke ad adjacent to stories on religion, politics, disease, sex, food, drugs, environmental issues, health, or stories that employ vulgar language. "Inappropriate editorial matter" will result in the publisher being liable for a "full make good," said the memo by Coke advertising agency McCann-Erickson. Asked about this practice, a Coke spokes person said the policy has long been in effect.

(Source: Odwyerpr.com: Coke Dictates nearby Editorial. http://www.odwyerpr.com)

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The Advertising Industry

The advertising industry is dominated by three huge advertising networks, which offer their services throughout the world. Gross income of the three leading agencies is twice as much, as the one of places four to ten.

Table: World's Top 10 Advertising Organizations 1999

(figures in millions of U.S. dollars)

Rank 1999

Advertising Organization

Headquarters

World-Wide Gross Income 1999

1

Omnicom

New York, USA

$ 5,743.4

2

Interpublic Group of Cos.

New York, USA

$ 5,079.3

3

WPP Group

London, UK

$ 4,819.3

4

Havas Advertising

Levallois-Perret, France

$ 2,385.1

5

Dentsu

Tokyo, Japan

$ 2,106.8

6

B Com3 Group

Chicago, USA

$ 1,933.8

7

Young & Rubicam Inc.

New York, USA

$ 1,870.1

8

Grey Advertising

New York, USA

$ 1,577.9

9

True North

Chicago, USA

$ 1,489.2

10

Publicis SA

Paris, France

$ 1,434.6



Table: Top 10 Global Marketers 1998

(figures in millions of U.S. dollars)

Rank 1998

Advertiser

Headquarters

World-Wide Media Spending 1998

1

Procter & Gamble Co.

Cincinnati (US)

$ 4,747.6

2

Unilever

Rotterdam (NL)/London (UK)

$ 3,428.5

3

General Motors Corp.

Detroit (US)

$ 3,193.5

4

Ford Motor Co.

Darborn (US)

$ 2,229.5

5

Philip Morris Cos.

New York

$ 1,980.3

6

Daimler Chrysler

Stuttgart (GER)/Auburn Hills (US

$ 1,922.2

7

Nestle

Vevey (SUI)

$ 1,833.0

8

Toyota Motor Corp.

Toyota City (JP)

$ 1,692.4

9

Sony Corp.

Tokyo (JP)

$ 1,337.7

10

Coca-Cola Co.

Atlanta (US)

$ 1,327.3



On the other hand the three biggest advertisers only spend about US$ 2 millions less than places four to ten together. Whereas money spent on advertising in traditional media comes from very diverse categories, companies offering computer hard- and software, peripherals or Internet services mainly pay for on-line advertisements.

Table: Top 10 Internet Advertisers 1998

(figures in millions of U.S. dollars)

Rank 1998

Advertiser

Internet Spending 1998

1998 - 1997 % Change

1

Microsoft Corp.

$ 34.9

9.4

2

IBM Corp.

$ 28.5

58.6

3

Compaq Computer Corp.

$ 16.2

169.8

4

General Motors Corp.

$ 12.7

84.8

5

Excite

$ 12.4

1.5

6

Infoseek Corp.

$ 9.3

22.3

7

AT&T Corp.

$ 9.3

43.5

8

Ford Motor Co.

$ 8.6

46.7

9

Hewlett-Packard Co.

$ 8.1

102.9

10

Barnes & Noble

$ 7.6

280.2



Source: Advertising Age

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Public Relations and the Advertising Industry

The public relations industry, the same as advertising, is concentrated in the hands of few dominant firms. Still, the striking element about corporate public relations is that PR firms are tightly related to advertising companies. Nine out of the ten biggest international PR agencies have close ties with the advertising industry. Also, looking at the largest acquisitions involving U.S. PR firms from 1997 to 1999 it is apparent that money coming from advertising agencies has played an important role.


Table: Top 10 PR Firms 1998


Rank 1998

PR Firm

Advertising Agency Related

1998 Net Fees (in U.S. $)

1997 - 1998 % Change

1

Burson-Marsteller

yes

258,417,000

4.2

2

Hill and Knowlton

yes

206,000,000

8.9

3

Porter Novelli Int.

yes

183,050,000

23.6

4

Shandwick

yes

170,300,000

7.3

5

Fleishman-Hillard

yes

160,692,000

19.1.

6

Edelman PR Worldwide

no

157,840,530

18.1

7

Ketchum

yes

125,248,000

29.6

8

BSMG Worldwide

yes

118,963,000

93.0

9

Weber PR Worldwide

yes

83,166,000

36.2

10

GCI/APCO

yes

79,667,957

28.4




With many PR agencies sold to advertising companies, the advertising industry's influence further increases; enabling them to offer their clients not only advertising services, but also know-how in marketing, public opinion, crisis and issues management and political lobbying.

Table: Acquisition of PR Agencies (1997 - 1999)

Acquired Company

Buyer

Buyers Industry

Estimated Purchase Price (in millions of U.S. $)

International PR

Interpublic Group of Cos.

Advertising

230

Fleishman-Hillard

Omicom Group

Advertising

85

Ketchum

Omnicom Group

Advertising

60

Dewe Rogerson

Incepta

Advertising

40

Financial Rel. Bd.

BSMG/TN

Public Relations

33

Weber PR

Interpublic Group of Cos.

Advertising

15

Alexander

WPP Group

Advertising

15

Charles Barker

BSMG/TN

Public Relations

15



Source: Odwyerpr.com.

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Product Placement

With television still being very popular, commercial entertainment has transferred the concept of soap operas onto the Web. The first of this new species of "Cybersoaps" was "The Spot", a story about the ups and downs of an American commune. The Spot not only within short time attracted a large audience, but also pioneered in the field of online product placement. Besides Sony banners, the companies logo is also placed on nearly every electronic product appearing in the story. Appearing as a site for light entertainment, The Spots main goal is to make the name Sony and its product range well known within the target audience.

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German Bundeswehr

The German contribution to the Western defence system, apart from playing host and contributing to the continued presence of allied troops on its soil, takes the form of its combined arm of defence known as the Federal Armed Forces (Bundeswehr). Constituting the largest contingent of NATO troops in Europe, the armed forces are divided into an army, navy, and air force. From its inception it was envisioned as a "citizens' " defence force, decisively under civilian control through the Bundestag, and its officers and soldiers trained to be mindful of the role of the military in a democracy. Conscription for males is universal, the military liability beginning at 18 and ending at 45 years of age.

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Hill & Knowlton

John W. Hill opened the doors of his first public relations office in 1927 in Cleveland, Ohio. His early clients were banks, steel manufacturers, and other industrial companies in the Midwest. Hill managed the firm until 1962, and remained active in it until shortly before his death in New York City in 1977. In 1952, Hill and Knowlton became the first American public relations consultancy to recognize the business communication implications engendered by formation of the European Economic Community. Hill and Knowlton established a network of affiliates across Europe and by the middle of the decade had become the first American public relations firm to have wholly-owned offices in Europe. Hill and Knowlton, a member of the WPP Group integrated communications services family, has extensive resources and geographic coverage with its 59 offices in 34 countries. Hill and Knowlton is known for its hard-hitting tactics and said to have connections with intelligence services.

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Comsat

The Communications Satellite Cooperation provides international communications solutions via the global, 17-satellite INTELSAT system and 4-satellite INMARSAT satellite systems. Calls are beamed up to the satellite and back down to Earth, where special gateway land earth stations re-route them through the appropriate local or international telephone network.

COMSAT operates Earth Stations in each part of the world to route calls efficiently within each ocean region. Earth Stations are located in Santa Paula, California; Southbury, Connecticut; Ankara, Turkey; and Kuantan, Malaysia.

http://www.comsat.com/default.htm

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