1. 2
The Ad Industry

2. Objectives Know Current Intustry Trends Industry Structure
Role of Agencies/Compensation
Identify External Players
Role of Media Conglomerates

3. Trends Affecting the Advertising & Promotion Industry
The “Undoing” of Agency Consolidation & Globalization
Media Proliferation & Consolidation
Media Clutter & Fragmentation
Consumer Control: e-Search, Blogs & DVRs (e.g.,TiVo)

4. Google Gives us Power?

5. The Worldwide Advertising Industry
U.S expenditures:
>$250 billion
Global expenditures:
$550 billion

6. Structure of the Advertising Industry

7. Advertisers Trade Resellers Government Social Organizations
Manufacturers & Service Firms
Procter & Gamble, MCI
Trade Resellers
Sears, McDonald’s
Government
Federal, State, Local
Social Organizations
United Way, Nature Conservancy

8. In addition to companies, the Government Makes extensive use of advertising

9. The Role of the Advertiser in IBP
Describe the value that the firm’s brand provides
Describe the brand’s position in the market Describe the firm’s objectives for the brand in the near-term & long-term
Identify the target market(s) that are most likely to respond favorable to the brand
Identify & manage the supply chain/distribution system that will most effectively reach the targets
Be committed to using advertising & other promotional tools to grow the brand

10. Agencies Advertising Agencies: Promotion Agencies: Full-Service
Creative Boutique
Interactive
In-House
Media Specialists
Promotion Agencies
Direct Marketing
Promotion Agencies:
Direct Marketing/ Database
E-commerce
Sales Promotion
Event Planning
Design Firms
Public Relations Firms

11. Advertising agencies make extensive use of advertising to acquire new clients

12. Full Service Agency Services
Account Services
Marketing Research Services
Creative & Production Services
Media Planning & Buying Services
Administrative Services

13. Agency Compensation Commissions: around 15% of airtime fees—in flux
Markup Charges: production cost + fixed %
Fee Systems: hourly rates, or by project
Pay-for-Results: tightly-specified objectives

14. External Facilitators
Marketing & Advertising Research Firms
Consultants: Creative, Media, Database
Production Facilitators
Software Firms: web tracking, fulfillment

15. Media Organizations Broadcast Print Interactive Media Support Media
TV, radio
Print
Magazines, direct mail, newspapers
Interactive Media
CD-ROMs, online shopping
Support Media
Outdoor, directories, Sponsorship
Media Conglomerates
AOL Time Warner, Viacom, AT&T

16. Target Audiences Household consumers Businesses Professionals
Government Organizations

17. Review/?s Know Current Industry Trends Industry Structure
Role of Agencies/Compensation
Identify External Players
Role of Media Conglomerates