© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 1 Joseph R. Dominick University of Georgia--Athens

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 2 Part IV Specific Media Professions

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 3 Chapter 14 Advertising  Defining Advertising Defining Advertising  A Brief History of Advertising A Brief History of Advertising  Organization of the Consumer Advertising Industry Organization of the Consumer Advertising Industry  Advertising Online Advertising Online  Producing Advertising Producing Advertising  Economics Economics  Business-to-Business Advertising Business-to-Business Advertising  Advertising Advertising Chapter Outline

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 4 Advertising is any form of non-personal presentation and promotion of ideas, goods, and services usually paid for by an identified sponsor. Defining Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 5  Four basic functions of advertising  Marketing – helps companies sell products  Educational – teaches people about products  Economics – allows competition that lowers prices  Social – encourages a climate of free enterprise Defining Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 6 Defining Advertising Elements of Advertising Target audience specific people to whom product appeals Consumer advertising sells products for personal use Business-to-business advertising sells products for business use Geographic focus targets specific geographical regions Purpose advertising accomplishes a distinct goal Primary demand advertising promotes product category, not specific brand Selective demand advertising promotes a particular product brand Direct action ad promotes specific buying behavior for quick results Indirect action ad promotes long-term brand recognition

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 7 Marketing consists of the development, pricing, distribution, and promotion of ideas, goods, and services. Advertising is part of the general promotion process, along with personal selling, sales promotions, and public relations. Defining Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 8  Ancient Babylonian clay tablets – shoe making services  English handbill (1480) – prayer book  Ben Franklin’s classified ads – white space and large headlines  Industrial Revolution – mass production, mass markets, mass consumption A Brief History of Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 9  Critical mass achieved (1865 – 1900)  Railroads throughout the continent  US population doubled  New communication media  Telephone  Typewriter  High-speed printing press  Motion pictures  National magazines  Photography  Rural mail delivery  More economic production and disposable income A Brief History of Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 10  Birth of the advertising agency  Volney Palmer in Philadelphia (1842) – space brokerage  N. W. Ayer and Son (late 19 th C) – full ad campaigns  1920s – Radio makes national ads a reality  1929 crash and WW II slow industry  Cold and Korean Wars  distrust of advertising  The Hidden Persuaders A Brief History of Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 11  Vast changes in 1960s – 1980s  Media environment  Transportation  Internationalization of marketplace  Cultural diversity  1990s+  Internet ads fall short  Internet bubble  Advent of PVRs A Brief History of Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 12 Ad Industry Organization of the Consumer Advertising Industry Advertisers Advertising Agencies Media

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 13  Advertisers  National – brand names, product, service  Local – prices, sales, local stores  Basic advertising activities  Plan ads  Determine how and where the ads will appear  Budget appropriate funds for advertising  Coordinate ads inside the company  Supervise outside ad agency  Follow-up on effectiveness Organization of the Consumer Advertising Industry

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 14  Agencies  Trend is towards global mega-agencies  Full-service agency  Handles all campaign phases  Studies market  Studies product  Presents findings  Launches execution phase  Follows-up  Provides other marketing services (trade shows, etc)  Media buying service  Buys, resells, monitors television and radio slots  Creative boutique  Creates imaginative ads and ad campaigns Organization of the Consumer Advertising Industry

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 15 Organization of the Consumer Advertising Industry [Insert Table 14-1 here] Figure 14-1 Top Five Advertising Agencies, 2002

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 16  Media  Finding the right people involves mass media skill  Four dimensions are important  ReachHow many people can get the message?  FrequencyHow often will the message be received?  SelectivityWill the medium reach the right people?  EfficiencyHow much does it cost to reach a certain number of people?  Also important: creative/technical nature of the medium Organization of the Consumer Advertising Industry

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 17 Organization of the Consumer Advertising Industry [Insert Table 14-2 here] Figure 14-2 Advertising Expenditures in Various Media, 1999 (Dollar figures are in billions)

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 18  1994 – HotWired’s website with ads  Roller-coaster success since, but 2004 revival:  Lower ad prices  Better ad technology  People online more  Selection of effective ad techniques (e.g., pop-ups)  Changing methods of paying for ads  2002 – online ads were 3% of U.S. ad dollars Advertising Online 

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 19 Banner ads Pop-ups Pop-unders Splash pages Skyscrapers Advertising Online Sponsored chat rooms Floating ads Mousetrapping Product-specific web sites Type of Online Ads

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 20  Four major departments  Creative servicesproduce the ads  Account servicesclient-agency relationship  Marketing servicesmedia expertise; promotions  Administrationday-to-day administration Producing Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 21 Producing Advertising An advertising campaign consists of a large number of advertisements, all stressing the same major theme or appeal, that appear in a number of media over a specified time.

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 22 Six phases to an ad campaign 1)Choose the strategy 2)Select the theme 3)Translate the theme into media 4)Produce the ads 5)Buy space and time 6)Execute and evaluate Producing Advertising Positioning Minute Maid orange juice McDonald’s and Justin Timberlake Nissan’s “Shift” campaign “Shift_dreams” Variety with consistency Saab’s theme, “state of independence” 6 TV ads 5 Radio ads 4 Print ads Curvy mountain roads Print media production -- Rough thumbnail sketches -- Rough layouts (actual size) -- Comprehensive layout Radio media production -- Script with dialog, music, FX -- Recording -- Postproduction -- Master tape Television media production -- Storyboard and feedback -- Filming -- Special effects -- Use of outside specialists Seasonal (suntan lotion, snowmobiles) Non-seasonal Run the ads Monitor sales data Consumer testing

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 23  Advertising Research  Formative research(before campaign starts)  Guides creative efforts  Audience defining (demographics)  Audience profiling  Identifies attitudes, motivation, lifestyles  Message research  Stage 1: pre-test ads  Stage 2: screen ad prototypes and refine ads  Tracking studies (post-campaign effects) Producing Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 24  $218B spent on advertising in U.S. (2002)  Agency compensation  Commissions  15% commission on time and space from media  Pay-for-performance gradually taking over  Agency charges  Fees Economics

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 25 Economics [Insert Figure 14-1 here] Figure 14-1 Advertising Expenditures in Various Media, 2002

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 26  Selling products to other businesses  Four main categories of B2B advertising: 1)Trade: Advertising goods and services to wholesalers and retailers 2)Industrial: Advertising items used in production of goods and services 3)Professional: Advertising services aimed at doctors, nurses, teachers, and other professionals 4)Agricultural: Advertising goods and services aimed at farmers Business-to-Business Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 27  Consumer vs. B2B advertising  B2B: much smaller target audience  Business products and corresponding ads tend to be technical, complicated, and high priced  Business buyers are professional purchasing agents  Purchases based on reason and research  Decisions often made in-committee  Personal selling more important in B2B  Ad efforts tend to support the seller, not do the selling Business-to-Business Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 28  Media  Small audience + personal selling  personalized media  Trade magazines, trade papers, brochures  Direct mail  Trade catalogs  Specialized cable channels and programs  Horizontal publications aim at particular job function  Vertical publications cover entire single industry Business-to-Business Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 29  Appeals  Business ad copy  Long, fact-filled, detailed, technical, accurate, complete  Little, if any, emotional appeal  Common business ad formats  Testimonials  Case histories  New-product news  Demonstrations  Recent developments in warming up B2B ads Business-to-Business Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 30  Employment down 16% (2000  2003)  Entry-level  Creative  Junior copywriter  Creative trainee  Junior art director  Production assistant  Business  Courses in advertising and business; marketing  Assistant media buyer  Research assistant  Junior account executive  Account service trainee Advertising

© 2005 The McGraw-Hill Companies, Inc. All rights reserved. Slide 31  Upward Mobility  Excellent advancement opportunities  Creative  Senior copywriter  Creative director  Senior art director  Business  Media director  Research director  Account executive  Management supervisor Advertising