Chapter 4 The Scope of Advertising: From Local to Global William F. Arens Michael F. Weigold Christian Arens McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Introduces the people and groups who work in advertising Chapter Overview Introduces the people and groups who work in advertising
Chapter Objectives Identify the various groups in advertising and their relationships Describe what advertisers do and detail org structure Define the main types of ad agencies Explain what people do in ad agencies Discuss how agencies get clients, make money Explain how the media and suppliers help Describe stages in agency/client relationship Describe factors that affect agency/client relationship
Q. 1. What are the four distinct groups in the advertising business?
The Advertising Industry: Organizations Advertisers Agencies Suppliers Media
The Advertising Industry: People Most often employed by advertisers, not clients: Researchers Artists Sales personnel Writers Managers Photographers Accountants Musicians Computer scientists Performers Attorneys Cinematographers
Q. 2. What is Local Advertising?
Advertisers: Local Advertising done by local businesses in a particular city or county targeting customers in their geographic area
Advertisers: Local An ad for Rubio’s Baja Grill showcases its unique products
Advertisers: Local Typical structure of small advertisers with high volumes of work
Q. 3. What are the four types of Local Advertisers?
Advertisers: Local Franchisees and dealers Specialty businesses Sellers of branded merchandise Government and nonprofits
Q. 4. What are the three types of Local Advertising?
Types of Local Advertising Product Institutional Classified Regular price-line, sale, or clearance Create favorable image, increase awareness, foster goodwill Recruit employees, offer services, sell merchandise Ads can be created locally using local experts or ads can be created cooperatively
Q. 5. What are the two kinds of Cooperative Advertising?
Advertisers: Cooperative Vertical Co-op Horizontal Co-op Manufacturer provides complete ad & shares costs Firms in the same business or part of town advertise jointly National brand association Expands advertising budget Professional quality ads
Q. 6. Define Regional Advertisers and National Advertisers.
Advertisers: Regional and National Regional: one or several states National: several regions or entire country
Advertisers: Regional and National Insert ex. 4-2, p. 103 Top 10 U.S. Advertisers Position = 2.9” horiz, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi Top 10 advertisers in the U.S. by total U.S. advertising in 2005 http://adage.com/datacenter/datapopup.php?article_id=127910
Advertisers: Regional and National Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2006 http://www.marketingcharts.com/wp/wp-content/uploads/2009/09/tns-mi-top-10-advertisers-h1-2009.jpg
Advertisers: Regional and National
Q. 7. What are the differences between Regional and National Advertisers?
Advertisers: Regional and National
Centralized Department Structure
Decentralized Department Structure
Transnational Advertising Structure Divisions are responsible for their own product lines, marketing, and profits Each division has an advertising department to coordinate sales and promotion across brands The corporate advertising department provides information and guidance
Global Advertising Strategy Assumption that product use and needs are universal Standardized approach in all countries Extensive research to ensure ad is basic and universal Appeal to basic human emotions and interests
Q. 8. Define an Advertising Agency.
Advertising Agency An independent organization of creative people and businesspeople who specialize in developing and preparing marketing and advertising plans, advertisements and other promotional tools.
Roles of Ad Agencies Ad Agency Independent Business staff; creative staff Contracts for media space and time Client oriented Understands global marketing
Q. 9. What are the different types of agencies?
Agencies: Types Reach Range of Services Specialty Local National Regional Global International Range of Services Consumer BTB Specialty Boutiques Media Buyers Interactive
Q. 10. What are the various departments in an agency?
Agencies: People Account Research and Planning Traffic Management Administration Account Management Other Services Advertising Production Media Planning and Buying Creative Concepts
Ad Agency Structure
Q. 11. What is the compensation structure in an ad agency?
Agencies: Compensation Media Commissions Ad rate card price: $100,000 Agency buys ad at 15% discount: $85,000 Agency bills client full ad amount: $100,000 Agency keeps $15,000 difference
Agencies: Compensation Markups Agency buys materials for campaign Materials cost $85,000 Agency bills for materials plus a 17.65% markup Agency bills $100,000 (cost plus markup)
Agencies: Compensation Fees Fee-commission combination Straight-fee (retainer) method Incentive system
Agencies: In-House Pros Cons May save money Lower creative quality Less experience and talent Loss of objectivity Cons May save money Allows tighter control May allow greater attention to the brand
Q. 12. How do agencies get clients?
Agencies: Client Relationships Finding and Attracting New Clients Presentations Referrals Solicitation Community relations and networking
Q. 13. What are the stages in the Client/Agency relationship?
Client-Agency Relationship Stages Pre- relationship Development Maintenance Termination
Client/Agency Relationship Factors Chemistry Communication The Four Cs Conduct Changes
Q. 14. Who are some of the suppliers in advertising?
Suppliers Art studios and web designers Printers and related specialists Film and video houses Research companies
Q. 15. What are the various categories of media?
Media Print Electronic Digital interactive Social Out-of-home Direct mail Other
Media Around the World McDonald’s honors an Islamic observance