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At U.C. Berkeley's Haas School of Business, here is Marketing 101.

All marketing is composed of three primary elements: advertising directed at the consumers, promotions directed at consumers, and trade incentives targeted at channel partners. Together, these are the tools we use to build brands, and this has been the case for a long, long time. This model is broken because advertising is being diminished while trade incentives are soaring to unjustified and unsustainable levels in almost all sectors.

This chart shows total marketing spending in 2002:

Total Marketing Spending 2002 (billions)
Advertising	$211.7	24.0%
Consumer Promotion	$233.7	26.5%
Trade Promotion	$436.6	49.5%
Total	$882.0	100%

Source: PROMO and the PMA 2003 Annual Promotion Trends

Note that advertising is at 24 percent.

Fifteen years ago, advertising was 50percent, and trade promotion was twenty-five percent. This is the most pernicious development hitting the marketing world. It destroys brands. Trade promotions are crack cocaine that do nothing long-term to build a brand. The American automotive industry is putting down 3000 or 4000 dollars per car. "Money on the Hood," they call it: cash incentives.

That doesn't build brands, but it does push out some inventory before the new model year.

What I see coming: With the technologies I've been discussing, we will soon have the ability to take advertising back up to 50percent, and bring trade incentives down to 25 percent.

If the chart above is where we are today, the chart below is my fervent plea for where we should be in ten years:

Marketing Renaissance for 2010
2005
Advertising	24%
Consumer Promotion	26%
Trade Promotion	50%
2010
Advertising	50%
Consumer Promotion	25%
Trade Promotion	25%

Everybody reading this has a stake in getting advertising back up to 50 percent.

Procter & Gamble's Jim Stengel was kind enough to invite me out to address their North American marketing group. I got my start in marketing at that great institution, and here was the focus of my presentation: "You, P&G, have to help lead this advertising back to 50 percent. We have got to, as marketers, begin to build brand equity and specialize in creating desire for our products, rather than focusing on temporary price discounts." Doing this is the single greatest challenge that faces marketing at the present time.

The good news is that the 10 trends I have been discussion will, I think, make that happen.

Sealey's Four Rules

I want to wind up this discussion with four rules for good marketing:

Rule #1: Attention is money; always has been, always will be

Rule #2: Incumbents are in peril in a period of discontinuity -- they resist destroying their current business models. Just look at U.S. Airways and American Airlines.

Rule #3: Whatever is technologically possible will occur -- despite obstacles, legal or otherwise. You cannot stop technology.

Rule #4: Advertising is going to remain at two and a half percent of the gross domestic product of this country. $275 billion.

That last rule is the good news, but I'm talking about a different type of advertising.

This new advertising will be enabled by the 10 trends I've discussed: the mega-trends, the media sub-trends, an entertainment revolution in the way product is distributed, internet protocol television, performance based marketing, the demise of ad supported television as we know it, VoIP, a new accurate ratings systems, the combination of Ad-ID and RFID, all leading to a marketing renaissance.

It is going to be a glorious, glorious time.

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