chapter 4 The Scope of Advertising: From Local to Global Introduces the people and groups who work in advertising Chapter Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Contemporary Advertising, 11e

4-3 Chapter 4 Objectives Explain how advertisers organize Define the main types of ad agencies Discuss how agencies get clients and make money Explain what people do in ad agencies Debate the pros and cons of in-house agencies Examine agency-client relationships Describe the various groups in advertising Explain how the media and suppliers help

4-4 The Advertising Industry: Organizations Advertisers (Clients) Agencies Media Suppliers

4-5 The Advertising Industry: People Sales Technology Research Accounting Communication Arts Management Law Most are employed by advertisers, not clients

4-6 Advertisers: Local Directed to customers in the same geographic area Independent businesses Govt. & nonprofits Franchisees and dealers Chain retailers

4-7 Advertisers: Local Ad for Rubio’s Baja Grill showcases its unique products Insert photo 4.2, p. 99 Baja Grill Burrito Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

4-8 Advertisers: Local Department structure for small advertisers with high volumes of work Insert ex. 4-1, p. 100 Department structure for small advertisers Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

4-9 Create favorable image, increase awareness, foster goodwill Recruit employees, offer services, sell merchandise Regular price-line, sale, or clearance Advertisers: Local Types of local advertising Classified Product Institutional

4-10 Advertisers: Local Local institutional ad from the Art Center College of Design Insert photo 4.5, p. 105 Man with child’s bicycle Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

4-11 Advertisers: Cooperative Vertical Co-opHorizontal Co-op Firms in the same business or part of town advertise jointly National brand association Manufacturer provides complete ad & shares costs Professional quality ads Expand advertising budget

4-12 Advertisers: Regional and National Honda’s national Civic Nation ad

4-13 Advertisers: Regional and National Top 10 advertisers in the U.S. by total U.S. advertising in 2005 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

4-14 Advertisers: Regional and National Regional: one or several states National: several regions or entire country

4-15 Advertisers: Regional and National Comparison of national and local advertising Insert ex. 4-3, p. 104 National and Local Advertising Position = 2.9” horiz, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi

4-16 Advertisers: Regional and National Centralized department structure Insert ex. 4-4, p. 106 Centralized Ad Dept Position = 2.9” horiz, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi

4-17 Decentralized department structure Advertisers: Regional and National Insert ex. 4-5, p. 107 Decentralized Ad Dept Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi

4-18 Sony’s Walkman targets a specific regional market Insert photo 4.7, p. 108 Sony Walkman Ad Position = 2.9” horiz., 1.5” vertical Size = 4.6” TALL Resolution = 300 dpi Advertisers: Regional and National

4-19 Advertisers: Transnational Decentralized international structure Divisions have ad agencies to handle product lines Brands within a line handled by own managers Category managers for brand in each market

4-20 Advertisers: Global Standardized approach in all countries Extensive research to ensure ad is basic & universal Centralized global structure

4-21 Agencies: Definition Agency roles Develop marketing & ad plans Develop ads & promotions Purchase ad space and time

4-22 Agencies Mad Dogs and Englishmen’s front door doubles as an ad

4-23 Agencies: Types Reach Full-Service Specialty BoutiquesMedia Buyers Interactive Consumer BTB LocalNational Regional Global Internatl

4-24 Account management Research & account planning Media buying & planning Production Creative concepts Traffic control Other services Admin Agencies: People

4-25 Agencies: People Many departments contributed to Honda’s dealer kit

4-26 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 $15,000 difference is kept by the agency

4-27 Agencies: Compensation  Media commissions  Markups Agency buys materials for campaign Materials cost $85,000 Agency bills for materials plus a 17.65% markup Agency bills $100,000 which is costs plus markup

4-28 Agencies: Compensation  Media commissions  Markups  Fees Fee- commission combination Straight-fee (retainer) method Incentive system

4-29 Agencies: In-House Pros May save money Allows tighter control May permit greater attention to the brand Lower creative quality Less experience and talent Loss of objectivity Cons

4-30 Agencies: Client Relationships Referrals Presentations Community relations & networking Soliciting for new business How agencies reach & attract new clients

4-31 Development Agencies: Client Relationships Prerelationship Termination Maintenance Stages in the client-agency relationship

4-32 Suppliers Art studios & web designers Printers & related specialists Film & video houses Research companies

4-33 Out-of-home Media Digital interactive Electronic Print Direct mail

4-34 Mag-Lite ad with globally resonant imagery Insert photo 4.18, p. 130 Mag-Lite ad Position = 2.9” horiz, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi Media Around the World