Advertising Agencies and their Functions Why do I need their help?

Why Employ an Advertising Agency? u Specialized Services and Help i.e., professionals u Negotiation Skills with the Media u Coordination of Advertising and Marketing Efforts

What are the Negatives of Going Outside the Firm for Ad Support? u lack of control u small company size may yield neglect u agencies can be inefficient in buying media u agencies are often compensated through a commission system the rewards high cost purchases

Role of the Advertising Agency u creative services u media services u research services u account management

Agency Compensation u Commissions from Media Purchases u 15% initially u can be lowered to 10% after first $10 million is spent u Hourly Fees u Markups on Cost of Services and Media

Media Functions u Media Planners u perform strategic functions: when, where, frequency u Media Buyers u negotiate best prices, keep up to date info on audience profiles u availability and costs researched

Vehicles vs. Media u Media u general channels of communication u i.e., newspapers, magazines, TV, radio u Vehicles u specific placement choices u i.e., Roseanne, ER, Seinfeld, Vogue, NPR programming

Major Media Categories u TV u Radio u Newspapers u Magazines u Out-of-Home

The Print Media Why Should I Spend My Money Here?

What Are My Options? u Magazines u examples: Good Housekeeping, Time, Life u Newspapers u Local: The Tennessean u National: The Wall Street Journal

Magazines- Advantages u Flexibility in readership- regional, national interest areas u Color - excellent reproduction of high quality u Authority and Credibility - can include alot of information as well as glitter u Permanence - longest shelf life of all outlets u Prestige - image of the magazine rubs off on the product!

More Advantages u Audience Selectivity - most targeted option available to marketers u Selling Power - results have been documented u Cost Efficiency - minimized wasted coverage u Reader Loyalty u Pass-Along Circulation

Magazines - Disadvantages u Inability to deliver mass audiences u Long Lead Times u Clutter u High CPM u Declining Circulations u Frequency Problems u Shallow Geographic Coverage

Circulation Factors u Guaranteed Circulation - number expect to circulate u Primary Circulation - number people buy through subscription or newsstand u Secondary or Pass along - give it away!

Circulation u Paid Circulation u must pay the subscription price to receive the magazine u Controlled Circulation u receive if can have an influential role for the advertised products

Newspaper Advertising u Pros u Mass Medium u Comprehensive Scope u Geographic Selectivity u Timeliness u Credibility u Selective Attention u Creative Flexibility u Active Medium u Cons u Lack of Selectivity u Short Life Span u Low Production Quality u Clutter u Must pay for preferred position to guarantee placement u Overlapping Circulation

Types of Newspaper Ads u Display Advertising u includes copy, illustrations, photographs, graphics, etc. u Classified Ads u copy only u Co-op Advertising u share responsibility between channel members u Public Notices u Preprinted Inserts u sales promotions, coupons, contests, etc.

Out-of-Home u Oldest Form of Advertising - often referred to as ‘outdoor advertising’ u Delivery Modes include: billboards, blimps, transit ads, etc. u Expenditures are approaching $1.7 billion

Billboards u Pros u Poster Panels vs. Painted Bulletins u Panels are silk screened - ranging in size from 6’2” by 12’’2” to 12’3” by 24’6” u Painteds- directly painted and leased for 1-3 years u broad reach/high frequency u Geographic Flexibility u Low CPM u Can be a last reminder for products like fast food, shopping venues, etc. u product identification is easy!

Out-of-Home Negatives u nonselectivity u minimal exposure time u difficulty in measuring audience u environmental concerns u limited use of copy

The Broadcast Mediums u Television u cable u network u National vs. Local u Radio u FM u AM u National vs. Local

Television u Broadcast TV (Network) Stations u UHF u VHF u Cable TV u Examples: BET, CNN, MTV, superstations u Who’s Advertising Here? u Proctor and Gamble u GM, Philip Morris

Television Advantages u reach the masses u can be both local or national u most dramatic form of advertising u best suited for products that require demonstration or stimulation of emotion

More TV Advantages u Prestige u highly visible firms use this medium u Impact u immediacy, demos, sound and color interaction u Creativity u Some Selectivity u Low Cost

Disadvantages of TV u Very High Cost of Production u Media Time at a Premium u Selectivity and targeting Difficult u Brevity of Message u Clutter u Zipping and Zapping

Pros and Cons of Cable TV u Selectivity u Younger, more affluence audience, more innovative u Very low cost u Flexibility u time for infomercials u Testability u Limited Reach u Fragmentation u Quality u Zipping and Zapping

Types of TV Advertisements u Network Advertising u 4 major networks, erosion of audiences u convenient and efficient coverage u can buy spots, participations or sponsor u Cable Advertising u interconnect for regional coverage u syndicated programs, infomercials u Local TV Spots

How Do I Buy TV? u Dayparts u decide on the time of day to air commercial u viewing highest during primetime u must choose vehicle u Dayparts u Daytime 9 a.m. - 4 p.m.. u Late Fringe 11:00p.m. - 1:00 a.m. u Remainder Early Fringe

Radio u Who Listens? 96% of U.S. population u Youth the greatest audience! u Often a distraction or background noise u FM or AM u AM audiences growing faster than FM u Talk Radio!

Pros and Cons of Radio u Image Transfer u Selectivity u Cost Efficient u Timely Medium u Geographically Flexible u Reach and Frequency u listen average 3x a day u No Visuals! u Segmented Audiences over Stations with Similar Formats u Distraction u Clutter u Push Button!

Buying Radio Time u Networks u lack of flexibility and choice of stations u national coverage u Local Radio u spots: live or taped u local personalities can assist in credibility u Dayparts: Morning and Evening Drive Time Desirable (6-10 a.m.; 3-7 p.m.)

Interactive Advertising Media u Entails reciprocal behavior u CD-Rom u Virtual Reality u The Internet u Interactive 800 numbers u Kiosks

Alternatives for the Interactive Soul u CD-Rom - limited by households with the PC capability great for tourism u Virtual Reality - can visualize the product and its demonstration in 3D u Internet - growing access to the WEB - can promote products, catalogs, firms here to catch surfers