1. Chapter 4 The Scope of Advertising: From Local to Global
William F. Arens Michael F. Weigold Christian Arens
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Introduces the people and groups who work in advertising
Chapter Overview
Introduces the people and groups
who work in advertising

3. Chapter Objectives
Identify the various groups in advertising and their relationships
Describe what advertisers do and detail org structure
Define the main types of ad agencies
Explain what people do in ad agencies
Discuss how agencies get clients, make money
Explain how the media and suppliers help
Describe stages in agency/client relationship
Describe factors that affect agency/client relationship

4. Q. 1. What are the four distinct groups in the advertising business?

5. The Advertising Industry: Organizations
Advertisers
Agencies
Suppliers
Media

6. The Advertising Industry: People
Most often employed by advertisers, not clients:
Researchers
Artists
Sales personnel
Writers
Managers
Photographers
Accountants
Musicians
Computer scientists
Performers
Attorneys
Cinematographers

7. Q. 2. What is Local Advertising?

8. Advertisers: Local
Advertising done by local businesses in a particular
city or county targeting customers in their
geographic area

9. Advertisers: Local
An ad for Rubio’s Baja Grill showcases its unique products

10. Advertisers: Local
Typical structure of small advertisers with high volumes of work

11. Q. 3. What are the four types of Local Advertisers?

12. Advertisers: Local Franchisees and dealers Specialty businesses
Sellers of branded merchandise
Government and nonprofits

13. Q. 4. What are the three types of Local Advertising?

14. Types of Local Advertising
Product
Institutional
Classified
Regular price-line, sale, or clearance
Create favorable image, increase awareness, foster goodwill
Recruit employees, offer services, sell merchandise
Ads can be created locally using local experts or
ads can be created cooperatively

15. Q. 5. What are the two kinds of Cooperative Advertising?

16. Advertisers: Cooperative
Vertical Co-op
Horizontal Co-op
Manufacturer provides complete ad & shares costs
Firms in the same business or part of town advertise jointly
National brand association
Expands advertising budget
Professional quality ads

17. Q. 6. Define Regional Advertisers and National Advertisers.

18. Advertisers: Regional and National
Regional: one or several states
National: several regions or entire country

19. Advertisers: Regional and National
Insert ex. 4-2, p. 103
Top 10 U.S. Advertisers
Position = 2.9” horiz, 1.5” vertical
Size = 5.7” WIDE
Resolution = 300 dpi
Top 10 advertisers in the U.S. by total U.S. advertising in 2005

20. Advertisers: Regional and National
Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2006

21. Advertisers: Regional and National

22. Q. 7. What are the differences between Regional and National Advertisers?

23. Advertisers: Regional and National

24. Centralized Department Structure

25. Decentralized Department Structure

26. Transnational Advertising Structure
Divisions are responsible for their own product lines, marketing, and profits
Each division has an advertising department to coordinate sales and promotion across brands
The corporate advertising department provides information and guidance

27. Global Advertising Strategy
Assumption that product use and needs are universal
Standardized approach in all countries
Extensive research to ensure ad is basic and universal
Appeal to basic human emotions and interests

28. Q. 8. Define an Advertising Agency.

29. Advertising Agency
An independent organization of creative people and businesspeople who specialize in developing and preparing marketing and advertising plans, advertisements and other promotional tools.

30. Roles of Ad Agencies Ad Agency Independent
Business staff; creative staff
Contracts for media space and time
Client oriented
Understands global marketing

31. Q. 9. What are the different types of agencies?

32. Agencies: Types Reach Range of Services Specialty Local National
Regional
Global
International
Range of Services
Consumer
BTB
Specialty
Boutiques
Media Buyers
Interactive

33. Q. 10. What are the various departments in an agency?

34. Agencies: People Account Research and Planning Traffic Management
Administration
Account Management
Other Services
Advertising Production
Media Planning and Buying
Creative Concepts

35. Ad Agency Structure

36. Q. 11. What is the compensation structure in an ad agency?

37. Agencies: Compensation
Media Commissions
Ad rate
card
price:
$100,000
Agency
buys ad
at 15%
discount:
$85,000
Agency
bills client
full ad
amount:
$100,000
Agency keeps $15,000
difference

38. Agencies: Compensation
Markups
Agency
buys
materials
for
campaign
Materials
cost
$85,000
Agency
bills for materials plus a
17.65%
markup
Agency bills $100,000
(cost plus markup)

39. Agencies: Compensation
Fees
Fee-commission combination
Straight-fee (retainer) method
Incentive system

40. Agencies: In-House Pros Cons May save money Lower creative quality
Less experience
and talent
Loss of objectivity
Cons
May save money
Allows tighter control
May allow greater
attention to the brand

41. Q. 12. How do agencies get clients?

42. Agencies: Client Relationships
Finding and Attracting New Clients
Presentations
Referrals
Solicitation
Community relations and networking

43. Q. 13. What are the stages in the Client/Agency relationship?

44. Client-Agency Relationship Stages
Pre- relationship
Development
Maintenance
Termination

45. Client/Agency Relationship Factors
Chemistry
Communication
The Four Cs
Conduct
Changes

46. Q. 14. Who are some of the suppliers in advertising?

47. Suppliers Art studios and web designers
Printers and related specialists
Film and video houses
Research companies

48. Q. 15. What are the various categories of media?

49. Media Print Electronic Digital interactive Social Out-of-home
Direct mail
Other

50. Media Around the World
McDonald’s honors an Islamic observance