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Global Marketing

Tenth Edition

Chapter 13

Global Marketing Communication Decision One

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Learning Objectives

13.1 Define global advertising and identify the top-ranked companies in terms of worldwide ad spending.

13.2 Explain the structure of the advertising industry, and describe the difference between agency holding companies and individual agency brands.

13.3 Identify key ad agency personnel and describe their respective roles in creating global advertising.

13.4 Explain how media availability varies around the world.

13.5 Compare and contrast publicity and public relations and identify global companies that have recently been impacted by negative publicity.

I M C, Integrated Marketing Communications

Integrated Marketing Communications (I M C) is becoming more popular because of the challenges of communicating across national borders

“ We create demand for our brand by being flexible about how we tell the story. We do not rigidly stay with one approach… We have an integrated marketing model that involves all elements of the marketing mix from digital to sports marketing, from event marketing to advertising to entertainment, all sitting at the table driving ideas.”

Trevor Edwards, Former President, Nike

Global Advertising

Advertising is any sponsored, paid message that is communicated in a non-personal way

Single country

Regional

Global

Global advertising is the use of the same advertising appeals, messages, art, copy, photographs, stories, and video segments for worldwide suitability

A global company possesses a critical marketing advantage with respect to marketing communications: It has the opportunity to successfully transform a domestic advertising campaign into a worldwide one. Alternatively, it can create a new global campaign from the ground up. The search for a global advertising campaign should bring together key company and ad agency personnel to share information, insights, and experience.

McDonald’s: I’m lovin’ it

BASF: We create chemistry

Chevrolet: Find new roads

IBM: Let’s put smart to work

Coca-Cola: Taste the Feeling

Global advertising also offers companies economies of scale in advertising as well as improved access to distribution channels. Where shelf space is at a premium, as with food products, a company has to convince retailers to carry its products rather than those of competitors. A global brand supported by global advertising may be very attractive because, from the retailer’s standpoint, a global brand is less likely to languish on the shelves.

Globalization and Product Cultures

Products such as coffee and beer have emerged as true global products

Starbucks and the coffee culture

Irish pubs in the U.S.

German-style beer halls in Japan

The potential for effective global advertising also increases as companies recognize and embrace new concepts such as “product cultures.” An example is the globalization of beer culture, which can be seen in the popularity of German-style beer halls in Japan and Irish-style pubs in the United States. Similarly, the globalization of coffee culture has created market opportunities for companies such as Starbucks. Marketing managers also realize that some market segments can be defined on the basis of global demography—youth culture or an emerging middle class, for example—rather than ethnic or national culture. Athletic shoes and other clothing items, for instance, can be targeted to a worldwide segment of 18- to 25-year-old males.

Worldwide Market Segments

“Eighteen-year olds in Paris have more in common with 18-year-olds in New York than with their own parents. They buy the same products, go to the same movies, listen to the same music, sip the same colas. Global advertising merely works on that premise.”

- William Roedy, Director, M T V Europe

According to data compiled by various industry groups, worldwide advertising expenditures in 2012 passed the $500 billion milestone. Because advertising is often designed to add psychological value to a product or brand, it plays a more important communications role in marketing consumer products than in marketing industrial products. Frequently purchased, low-cost products generally require heavy promotional support, which often takes the form of reminder advertising. Consumer products companies top the list of big global advertising spenders.

Top 10 Global Marketers, Ad Spending, 2016

Procter & Gamble (U.S.)

Samsung Electronics (Korea)

Nestlé (Switzerland)

Unilever (U.K., Netherlands)

L’Oréal (France)

Volkswagen (Germany)

Comcast (U.S.)

Anheuser-Busch InBev (Belgium)

General Motors (U.S.)

Daimler (Germany)

For the top 25, see Table 13-1

Standardization versus Adaptation (1 of 3)

Primary Issue

Must the specific advertising message and media strategy be changed from region to region or country to country?

Think of cultural and legal issues

Communication experts generally agree that the overall requirements of effective communication and persuasion are fixed and do not vary from country to country. The same thing is true of the components of the communication process: The marketer is the source of the message; the message must be encoded, conveyed via the appropriate channel(s), and decoded by a member of the target audience. Communication takes place only when the intended meaning is transferred from the source to the receiver.

Proponents of the “one world, one voice” approach to global advertising believe that the era of the global village has arrived and that tastes and preferences are converging worldwide. According to the standardization argument, people everywhere want the same products for the same reasons. This means that companies can achieve significant economies of scale by unifying advertising around the globe. Advertisers who prefer the localized approach are skeptical of the global village argument. Instead, they assert that consumers still differ from country to country and must be reached by advertising tailored to their respective countries. Proponents of localization point out that most blunders occur because advertisers have failed to understand—and adapt to—foreign cultures.

Standardization versus Adaptation (2 of 3)

Four difficulties that compromise an organization’s communication efforts

The message may not get through to the intended recipient.

The message may reach the target audience but may not be understood or may even be misunderstood.

The message may reach the target audience and may be understood but still may not induce the recipient to take the action desired by the sender.

The effectiveness of the message can be impaired by noise.

The message may not get through to the intended recipient. This problem may be the result of an advertiser’s lack of knowledge about appropriate media for reaching certain types of audiences.

The message may reach the target audience but may not be understood or may even be misunderstood. This can be the result of an inadequate understanding of the target audience’s level of sophistication or improper encoding.

The message may reach the target audience and may be understood but still may not compel the recipient to take action. This could result from a lack of cultural knowledge about a target audience.

The effectiveness of the message may be impaired by noise. Noise, in this case, is an external influence, such as competitive advertising, other sales personnel, or confusion at the receiving end, that can detract from the ultimate effectiveness of the communication.

Standardization versus Adaptation (3 of 3)

“As the potency of traditional media declines on a daily basis, brand building locally becomes more costly and international brand building becomes more cost effective. The challenge for advertisers and agencies is finding ads that work in different countries and cultures. At the same time as this global tendency, there is a growing local tendency. It’s becoming increasingly important to understand the requirements of both.”

Nick Brien, C E O, Interpublic Group’s McCann Worldwide global ad agency

Standardization versus Adaptation Localization Argument

“If we could find one message on a global basis it could be effective, but so far there are different needs in different countries. We have been in Sweden for 60 years and in China for only 4 or 5 so our feeling is that retailing is local. It is important to take advantage of local humor, and the things on people’s minds.”

Nils Larsson, I K E A

“I can think of very few truly global ads that work. Brands are often at different stages around the world, and that means there are different advertising jobs to do.”

Michael Conrad, Chief Creative Officer, Leo Burnett Worldwide

Standardization versus Adaptation Globalization Argument

“Why should three artists in three different countries sit drawing the same electric iron and three copywriters write about what, after all, is largely the same copy for the same iron?”

Eric Elinder, Swedish ad agency exec in the 1960s

During the 1950s, the widespread opinion among advertising professionals was that effective international advertising required assigning responsibility for campaign preparation to a local agency. In the early 1960s, this idea of local delegation was challenged repeatedly. For example, Eric Elinder, head of a Swedish advertising agency, wrote: “Why should three artists in three different countries sit drawing the same electric iron and three copywriters write about what, after all, is largely the same copy for the same iron?” Elinder argued that consumer differences among countries were diminishing and that he would more effectively serve a client’s interest by putting top specialists to work devising a strong international campaign. The campaign would then be presented with insignificant modifications that mainly entailed translating the copy into language well suited for a particular country.

Pattern Advertising (1 of 2)

A middle ground between 100% standardization and 100% adaptation

A basic pan-regional or global communication concept for which copy, artwork, or other elements can be adapted as required for individual countries

The question of when to use each approach depends on the product involved and a company’s objectives in a particular market. The following generalizations can serve as guidelines:

● Standardized print campaigns can be used for industrial products or for high-tech consumer products. Examples: Apple’s iPhone and iPad.

● Standardized print campaigns with a strong visual appeal often travel well. Example: Chivas Regal (“This is the Chivas Life”). Similarly, no text appears in the assembly instructions for IKEA furniture. Picture-based instructions can be used throughout the world without translation.

● TV commercials that use voiceovers instead of actors or celebrity endorsers speaking dialogue can use standardized visuals with translated copy for the voiceover. Examples: Gillette (“The best a man can get”); GE (“Imagination at work”); UPS (“We ♥ Logistics”).

Pattern Advertising (2 of 2)

Similar:

Layout

Dominant visuals on left

Brand signature and slogan

Contrasting:

Photos

Body copy is localized, not simply translated

Exhibit 13-3 These print ads from U.K.-based TwoSides advocate for sustainable use of paper for printing magazines and books. The ads are a textbook example of pattern advertising. Overall, the layouts are consistent. The dominant visual elements are similar, but the references to a football pitch in the U.K. version and to a football field for the U.S. version are talking about two different sports. The subheads and body copy have been localized.

Source: TwoSides.

Layouts are similar.

Dominant visual elements are on the left side.

The Better Bt brand name is printed in reverse against a dark background.

The trapezoid-shaped brand signature and the slogan “Technology That Yields” also are common elements.

By contrast, the visuals themselves are different and the subheads and body copy have been localized, not simply translated.

Advertising Agencies: Organizations and Brands

Understanding the term organization is key

Umbrella corporations/holding companies have one or more ‘core’ advertising agencies

Each ‘organization’ has units specializing in direct marketing, marketing services, public relations, or research

Individual agencies are considered brands

Full-service brands create advertising, and provide services such as market research, media buying, and direct marketing

Advertising is a fast-paced business, and the ad agency world is fluid and dynamic. New agencies are formed, existing agencies are dismantled, and cross-border investment, spinoffs, joint ventures, and mergers and acquisitions are a fact of life. There is also a great deal of mobility in the industry as executives and top talent move from one agency to another.

Top 10 Global Advertising Agency Companies, 2016

W P P (London)

Omnicom Group (New York)

Publicis Groupe (Paris)

Interpublic Group (New York)

Dentsu (Tokyo)

Accenture’s Accenture Interactive (New York)

P w C’s P w C Digital Services (New York)

I B M Corp.’s I B M i X (Armonk, N Y)

Deloitte’s Deloitte Digital (New York)

Havas (Puteaux, France)

See Table 13-2 for the top 20

Selecting an Advertising Agency in the Era of Digital Disruption (1 of 2)

Company organization

Companies that are decentralized may want to leave the choice to the local subsidiary

National responsiveness

Is the global agency familiar with local culture and buying habits of a particular country?

Area coverage

Does the agency cover all relevant markets?

Company organization. Companies that are decentralized typically allow managers at the local subsidiary to make ad agency selection decisions.

National responsiveness. Is the global agency familiar with the local culture and buying habits in a particular country, or should a local agency be hired?

Area coverage. Does the candidate agency cover all relevant markets?

Buyer perception. Which kind of brand awareness does the company want to project? If the product needs a strong local identification, it would be best to select a national agency.

Digital expertise. Does the agency have in-house computer engineering and coding talent with a proven ability to work with staff from traditional functions such as creative services and account services?

Selecting an Advertising Agency in the Era of Digital Disruption (2 of 2)

Buyer perception

What kind of brand awareness does the company want to project?

Digital Expertise

Does the agency have in-house computer engineering and coding talent who can work with traditional functions like creative and account services?

Impact of the Digital Revolution

Traditional agencies are being asked by clients to leverage “big data”

Big agencies are buying digital marketing agencies and other tech specialists

Google and Facebook account for more than ¾ of new online ad spending; Snapchat is gaining

The digital revolution that is disrupting a wide range of industries is having an impact on the advertising business as well. Global companies such as McDonald’s and Unilever are seeking new agency partners that offer digital expertise. The traditional world of the advertising agency—including approaches to advertising creativity, long-standing communication channels, and media-buying processes—is being upended as clients seek to leverage “big data” and take advantage of social media opportunities to improve segmentation and targeting strategies.

In response to the changing environment, WPP, Omnicom, Publicis, and other advertising holding companies are snapping up digital-marketing agencies and other tech specialists. One challenge facing top management in these companies is bridging the cultural divide between staff “creatives” and newer hires from the tech world. Google and Facebook now account for more than three-fourths of new online ad spending, and Snapchat is gaining traction as an advertising forum. In the United States, digital media are on track to surpass television as the biggest source of advertising revenues. It is not surprising, then, that print advertising revenues are dropping in key markets such as the United States and the United

Kingdom, as print advertising budgets are shifted to digital media. As is clear from Exhibit 13-5, this state of affairs has prompted industry groups to promote the value of print-based media. Moreover, the MPA (formerly known as the Magazine Publishers Association) is promoting the value of real news from trusted print sources at a time when “fake news” is proliferating in social media.

Creating Global Advertising

The message is at the heart of advertising

Creative strategy-a statement or concept of what a particular message or campaign will say

Big idea- “The flash of insight that synthesizes the purpose of the strategy, joins the product benefit with consumer desire in a fresh, involving way, brings the subject to life, and makes the reader or audience stop, look, and listen.”

John O’Toole, legendary ad man

The message is at the heart of advertising. The particular message and the way it is presented will depend on the advertiser’s objective. Is the ad designed to inform, entertain, remind, or persuade? Moreover, in a world characterized by information overload, ads must break through the clutter, grab the audience’s attention, and linger in their minds.

In his book about Subaru of America, Randall Rothenberg describes the big idea in the following way:

”The Big Idea is easier to illustrate than define, and easier to illustrate by what it is not than by what it is. It is not a ‘position’ (although the place a product occupies in the consumer’s mind may be a part of it). It is not an ‘execution’ (although the writing or graphic style of an ad certainly contributes to it). It is not a slogan (although a tag line may encapsulate it). The Big Idea is the bridge between an advertising strategy, temporal and worldly, and an image, powerful and lasting. The theory of the Big Idea assumes that average consumers are at best bored and more likely irrational when it comes to deciding what to buy.”

Ex.: MSN “Life’s Better with the Butterfly;” MasterCard “There are some things in life money can’t buy”

The Big Idea

“The Big Idea is easier to illustrate than define, and easier to illustrate by what it is not than by what it is. It is not a ‘position’…It is not an ‘execution’… It is not a slogan. The Big Idea is the bridge between an advertising strategy, temporal and worldly, and an image, powerful and lasting.”

-Randall Rothenberg, author

Advertising Appeal (1 of 2)

Rational approach

Depends on logic and speaks to the consumer’s intellect; based on the consumer’s need for information; contains a great deal of copy

Pharmaceuticals and financial services

Emotional approach

Tugs at the heartstrings or uses humor; evokes an emotional response that reinforces the brand attitudes and directs purchase behavior

Advertising Appeal (2 of 2)

Selling Proposition

The promise or claim that captures the reason for buying the product or the benefit that ownership confers

Since products are at differing stages of the product life cycle in different national markets and because of cultural, social, and economic differences, the most effective appeal or selling proposition may vary.

Creative Execution

The way an appeal or proposition is presented

straight sell

scientific evidence

demonstration

comparison

slice of life

animation

fantasy

dramatization

Creatives and Their Tasks

Art Directors

Advertising professional who has the general responsibility for the overall look of an ad

Will choose graphics, pictures, type styles, and other visual