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Sunday, August 19, 2007

Great Moments in Advertising 1982: Bill Gates and Gibbons

Jerry Gibbons, President of Doyle Bane Bernbach Advertising met with client Bill Gates of Microsoft in 1982. ‘Our feeling is that you’re not spending at a level that’s appropriate for your company right now’ Gibbons told Gates, whose advertising budget was $250,000. Gibbons took a bar napkin, drew a circle – ‘this is your industry today’ – marked out a pie section, saying ‘this is your current share, and as you know, the industry is going to be growing’.

Gibbons drew a larger circle to represent the difference between $1.5 billion and $5 billion. ‘This is how it’s going to be growing in the next few years, and good strategy for your company would be to capture as much share of the market as you can now while share points are cheap. Share points are cheap because the market size is small. As the market grows the cost of acquiring share points is going to increase greatly. If you can increase your share, then when it becomes more competitive, all you’ll have to do is protect your share.’

Gates grasped that concept pretty quickly and went back to Seattle – to double his advertising budget. (Source: Chuck Pettis, Technobrands, p145).

Whether marketing myth or truth, here’s one fact not in dispute - BusinessWeek and Interbrand recently released their annual list of the world's top brands. Coca-Cola retains the number one spot and Microsoft is in the number 2 position, with a brand value of more than $58.7 billion dollars.

After reviewing the list, there are some surprising omissions such as Procter & Gamble and Wal-Mart; however Interbrand explains it this way – they consider many factors when ranking a value of a brand and to qualify, each brand must derive at least a third of its earnings outside its home country, be recognizable outside of its base of customers and have publicly available marketing and financial data. Those criteria eliminate heavyweights like Visa, which is privately-held, and Wal-Mart (WMT ), which sometimes operates under different brand names internationally. Interbrand only ranks the strength of individual brand names, not portfolios of brands, which is why Procter & Gamble (PG ) doesn't show up.

A truly modern TV spot
The new US Sprint Ahead television advertising campaign is a great example of how a simple idea, uniquely executed in a compelling way, can cut through our crowded and over stimulated media world to reach us and make an impression.

Supporting the SprintSpeed™ service, we watch folks drag a light source around frame to create finger paintings made of light - of our home, our friends, our dreams. In the end, we’ve watched the spot with childlike wonder – and Sprint has succeeded in avoiding us fast forwarding through it on our PVR or TiVO in order to get back to the game. It’s mesmerizing in its simplicity. Watch the spots or get in on the action and send your own e-Card– it’s a hoot!

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