© 2009 South-Western, a part of Cengage Learning Chapter 2 The Structure of the Advertising Industry: Advertisers, Agencies, Media Companies, and Support Organizations PPT 2-1

Trends Affecting the Advertising and Promotion Industry  The “Undoing” of Agency Consolidation and Globalization—or not  Media Proliferation, Consolidation, and “Multiplatform” Media Organizations  Media Clutter and Fragmentation  Consumer Control: Blogs and TiVos  Web 2.0 PPT 2-2

Scope of the Advertising Industry U.S. Advertising Spending >$300 B Worldwide Advertising Spending>$600B PPT 2-3

Structure of the Advertising Industry (text Ex. 2.5) PPT 2-4

Advertisers Trade Resellers Sears, McDonald’s Manufacturers and Service Firms Procter & Gamble, Verizon Social/Not-for-profit Organizations United Way, Nature Conservancy Government Federal, State, Local PPT 2-5

PPT 2-6 In addition to companies, the government makes extensive use of advertising. Ad in Context Example

The Role of the Advertiser in IBP  Describe the value that the firm’s brand provides  Describe the brand’s position in the market Describe the firm’s objectives for the brand in the near-term and long-term  Identify the target market(s) that are most likely to respond favorable to the brand  Identify and manage the supply chain/distribution system that will most effectively reach the targets  Be committed to using advertising and other promotional tools to grow the brand PPT 2-7

Agencies Advertising Agencies:  Full-Service  Creative Boutique  Interactive  In-House  Media Specialists Promotion Agencies:  Direct Marketing/ Database  E-commerce  Sales Promotion  Event Planning  Design Firms  Public Relations Firms PPT 2-8

Full Service Agency Services  Account Services  Marketing Research Services  Creative and Production Services  Media Planning and Buying Services  Administrative Services PPT 2-10

Agency Compensation  Commissions: – around 15% of airtime fees—in flux – 16 2/3 percent for outdoor media – web media is all negotiated  Markup Charges: – production cost + fixed %  Fee Systems: – hourly rates, or by project  Pay-for-Results: – tightly-specified objectives PPT 2-11

External Facilitators  Consultants –Creative, Media, Database  Production Facilitators  Software Firms –Web tracking, fulfillment PPT 2-12

Media Organizations  Broadcast –TV, radio  Print –Magazines, direct mail, –Newspapers, specialty  Interactive Media –Internet, interactive broadcast, –iPod, Cell Phone  Support Media –Outdoor, directories, sponsorship, –Point-of-purchase, branded entertainment  Media Conglomerates –Time Warner, Disney, Turner PPT 2-13

Target Audiences  Household Consumers  Businesses  Professionals  Government Organizations PPT 2-14