Financing and Shaping the Media: Advertising, Public Relations, and Marketing Communications Week Three

THE ADVERTISING INDUSTRY ADVERTISING – the activity of explicitly paying for media space or time in order to direct favorable attention to certain goods or services ADVERTISING AGENCIES – companies that specialize in the creation of ads for placement in media that accept payment for exhibiting those ads AGENCY HOLDING COMPANIES – firms that own full-service advertising agencies, specialty agencies, direct-marketing firms, research companies, and even public relations agencies

TABLE 4.1 Advertising Spending by Media Industry, 2010 vs. 2005* *Numbers for traditional media industries include online advertising activities within these industries. **Includes digital revenues for firms (e.g., Salon) with no traditional media counterpart. ***Includes billboards, kiosks, mall boards, transit ads, and other outdoor vehicles. ****Includes cinema advertising, in-game video game advertising, and advertising on film, music, video game, and consumer book websites. Does not include advergaming or product placement in video games; these are considered marketing services, not advertising. ADVERTISING SPENDING 2O1O VS. 2005

AD AGENCIES Issues related to Ad agencies - CLIENT CONFLICTS are situations that occur when agencies serve companies that compete with one another Ad agencies can be described along four dimensions 1.BUSINESS-TO-BUSINESS vs. CONSUMER AGENCIES 2.GENERAL AGENCIES vs. SPECIALTY AGENCIES 3.TRADITIONAL AGENCIES vs. DIRECT-MARKETING AGENCIES 4.AGENCY NETWORKS vs. STAND-ALONE FIRMS

TABLE 4.2 The “Big Eight” Marketing Agency Holding Companies, 2011 THE “BIG EIGHT”, 2011

TABLE 4.3 Top 10 Agency Networks, Ranked by 2012 Worldwide Network Revenue TOP 10 AGENCY NETWORKS

THREE BASIC FUNCTIONS OF AD WORK CREATIVE PERSUASION – the set of imaginative activities involved in producing and creating advertisements MARKET RESEARCH – research whose end goal is gathering information that will help an organization sell more products or services MEDIA PLANNING AND BUYING – A function of advertising involving purchasing media space and/or time on strategically selected outlets that are deemed best-suited to carry a client’s ad message

PRODUCTION IN THE ADVERTISING AGENCY ACCOUNT EXECUTIVE CREATIVES/CREATIVE PERSONNEL MARKET SEGMENTATION SALES PITCH BRANDING

FIGURE 4.1 Structure of a Typical Advertising Industry ADVERTISING AGENCY STRUCTURE

DISTRIBUTION IN THE ADVERTISING INDUSTRY MEDIA PLANNERS PSYCHOGRAPHIC DATA MEDIA PLAN IN-STORE MEDIA COST PER THOUSAND (CPM) Questions media planners ask What is the outlet’s reach with respect to (ad planners use the term “against”) the target audiences? That is, what percentage of the entire target audience (say, teenage girls) will the outlet reach? Considering the costs of running an ad there, how efficient is the outlet in reaching that target audience compared with other outlets?

EXHIBITION IN THE ADVERTISING INDUSTRY AD CAMPAIGN – the entire set of advertisements using a particular theme to promote a certain product for a certain period of time LOCATION-BASED ADVERTISING – the process of sending commercial messages to people based on their geographic location

PUBLIC RELATIONS PUBLICITY – the process of getting people or products mentioned in the news and entertainment media in order to get members of the public interested in them MEDIA RELATIONS – all dealings with reporters and other members of media organizations who might tell a story about a client Prominent Public Relations Activities Corporate Communications Financial Communications Health Care Public Affairs Crisis Management

TABLE 4.4 Major PR Firms Owned by Large Agency Holding Companies THE BIG FOUR The largest agency holding companies

TABLE 4.5 Examples of Ways Public Relations Agencies May Influence Media Content

PRODUCTION, DISTRIBUTION AND EXHIBITION IN THE PR INDUSTRY PRESS RELEASE – a short essay that is written in the form of an objective news story PUBLICITY OUTLET – a media vehicle that has in the past been open to input from PR practitioners INFORMATION SUBSIDIES – the time and money that PR people provide media practitioners that helps the latter get their work done PRODUCTION DISTRIBUTION EXHIBITION

MARKETING COMMUNICATION INTEGRATED MARKETING COMMUNICATION (IMC)/MARKETING COMMUNICATION – a type of PR, the goal of which is to blend (integrate) historically different ways to communicate to an organization’s various audiences and markets BRANDED ENTERTAINMENT – the act of linking the firm or product’s name (and personality) with an activity that the target audience enjoys EVENT MARKETING – creating compelling circumstances that command attention in ways that are relevant to the product or firm

FIGURE 4.2 Shares of Spending on Consumer Event Marketing, 2009 SPENDING SHARES ON CONSUMER EVENT MARKETING

OTHER FORMS OF MARKETING EVENT SPONSORSHIP PRODUCT PLACEMENT BARTER PRODUCT INTEGRATION DIRECT MARKETING DATABASES DATABASE MARKETING RELATIONSHIP MARKETING

MEDIA LITERACY ISSUES RELATED TO ADVERTISING AND PR Advertising and commercialism COMMERCIALISM HIDDEN CURRICULUM The exploitation of children Destruction of the global environment Truth and hidden influence in public relations

TARGETING BY ADVERTISING AND PR FIRMS TAILORING – the capacity to aim media content and ads at particular individuals SELECTABILITY – ability to reach an individual with entertainment, news, information, and advertising based on knowledge of the individual’s background, interests, and habits ACCOUNTABILITY TO ADVERTISERS – the ability to trace an individual’s response to a particular ad INTERACTIVITY – the ability to cultivate a rapport with, as well as the loyalty of, individual consumers