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Part Seven Special Topics and Perspectives
Belch: Advertising and
Promotion, Sixth Edition
VII. Special Topics and
Perspectives
beer, and White Rabbit candy, will have to compete
against foreign brands in many sectors.
Multinational companies and advertising agencies
recognize that the enormous size of the Chinese market,
along with its strong economic development and
growth, make it important for them to establish a
foothold there. They want to begin marketing their
products and creating ads when a significant number
of China’s 1.2 billion consumers can afford the cars,
mobile phones, cosmetics, and other products. They
know that they need to be close to the action, which
20. International
Advertising and Promotion
© The McGraw−Hill
Companies, 2003
means setting up operations in key mainland cities. It
is likely that the advertising business in China will
come to resemble that in the United States, with
Shanghai, like New York, being the key city and Beijing
and Hong Kong, like Chicago and Los Angeles, being
important centers.
Sources: Normandy Madden, “Shanghai Rises as Asia’s Newest
Marketing Capital,” Advertising Age, Oct. 14, 2002, pp. 1, 13; Michael
Flagg, “China Remains a Tough Game, but Ad Agencies See Opportunity,”
The Wall Street Journal, May 21, 2000, p. B10.
their offices from Hong Kong to Shanghai to be closer to the world’s largest consumer
market, on the mainland of China.
Many American companies prefer to use a U.S.-based agency with foreign offices;
this gives them greater control and convenience and also facilitates coordination of
overseas advertising. Companies often use the same agency to handle international
and domestic advertising. As discussed in Chapter 3, the flurry of mergers and acquisitions
in the ad agency business in recent years, both in the United States and in
other countries, has created large global agencies that can meet the international
needs of global marketers. A number of multinational companies have consolidated
their advertising with one large agency. The consolidation trend began in 1994 when
IBM dismissed 40 agencies around the world and awarded its entire account to
Ogilvy & Mather Worldwide. 75 A year later Colgate-Palmolive consolidated all of its
global advertising with New York–based Young & Rubicam. The move, which followed
the worldwide restructuring of Colgate’s manufacturing and distribution system,
marked the first time a large multibrand advertiser put all of its billings with one
agency. 76
There are a number of reasons why global marketers consolidate their advertising
with one agency. Many companies recognize they must develop a consistent global
image for the company and/or its brands and speak with one coordinated marketing
voice around the world. For example, IBM officials felt the company had been projecting
too many images when its advertising was divided among so many agencies.
The consolidation enabled IBM to present a single brand identity throughout the world
while taking advantage of one of the world’s best-known brand names. Likewise, the
H. J. Heinz Company consolidated the advertising for its flagship ketchup brand to
help develop a consistent message and image worldwide.
Companies are also consolidating their global advertising in an effort to increase
efficiency and gain greater leverage over their agencies. Colgate notes that a major
reason for its agency consolidation is to achieve greater cost efficiency. The company
has moved into 25 new countries in recent years and increased its advertising and promotional
spending in many markets around the globe (Exhibit 20-13). Consolidation
has generated savings that can be invested in additional advertising. Consolidation
also gives advertisers greater leverage over their agencies. When a major client puts
all of its advertising with one agency, that company often becomes the agency’s most
important account. And, as one IBM executive notes, “You become a magnet for talent
and attention.” 77
Advertising executives also noted that a major reason for all of the account consolidation
is that agencies now have the ability to communicate and manage globally. Fax
machines, e-mail, and airline connections make it much easier to manage accounts
around the globe. Of course, placing an entire global advertising account with one
agency can be risky. If the agency fails to deliver an effective campaign, the client has
no backup agency to make a fast rebound and the search for a new agency can be very
time-consuming. Clients who consolidate also face the problem of selling the idea to
regional offices, which often previously enjoyed their own local agency relationship.