Chapter Three The Business of Advertising Arens|Schaefer|Weigold Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

3-2 Learning Objectives List the various groups in the advertising business and explain their relationships Discuss the differences between local, national, and transnational advertisers Explain how advertisers organize themselves to manage their advertising both here and abroad

3-3 Learning Objectives Define the main types of advertising agencies Describe the range of tasks people perform in an ad agency and an in - h ouse advertising department Relate how agencies get new clients and how they make money

3-4 Organizations in Advertising Advertisers Advertising agencies SuppliersMedia

3-5 Local Advertising Advertising by businesses within a city or county directed toward customers within the same geographic area Types of local advertisers – Dealers or franchisees of national companies – Stores that sell a variety of branded merchandise – Specialty businesses and services – Governmental and nonprofit organizations

3-6 Local Advertising Advertising manager : Performs all the administrative, planning, budgeting, and coordinating functions Types – Product advertising – Sale advertising – Institutional advertising – Classified advertising

3-7 Local Advertising Local advertisers and IMC – Integrated marketing communications (IMC) : Building and reinforcing mutually profitable relationships with the stakeholders and general public Developing and coordinating a strategic communications program via various media Local advertisers and social media – Connecting with a local community through social media can be very effective

3-8 Exhibit Differences Between Local and National Advertisers

3-9 Transnational Advertisers Multinational corporations : Operate and invest throughout many countries and make decisions based on availabilities worldwide – Global marketers : Use a standardized approach to marketing and advertising in all countries Localized approach – Adaptation of products, packages, and advertising campaigns to suit each market

3-10 Types of Agencies : Geographic Scope Local agenciesRegional agencies National agencies International agencies

3-11 Types of Agencies : Range of Services Full - service advertising agency General consumer agency Business - to - business B2B agency

3-12 Types of Agencies : Specialized Services Creative boutiques Media - buying service Interactive agency

3-13 Tasks Performed in an Agency Account management Research and account planning Media planning and buying Creative concepts Advertising production Traffic management Additional services Agency administration

3-14 Compensations Received by Agencies Media commission : Paid by a medium to recognized advertising agencies for advertising placed with it Markup : Source of agency income gained by adding some amount to a supplier’s bill Fees – Fee - commission combination, straight - fee method, and incentive system

3-15 Methods Used to Gain Clients ReferralsPresentations Networking and community relations Soliciting and advertising for new business