1. The Structure of the Advertising Industry:
Chapter 2
The Structure of the Advertising Industry:
Advertisers, Agencies, and Support Organizations

2. The Ad Industry in Transition: Trends and Transformations
Consolidation and globalization
Budget fragmentation
Interactivity
Media evolution
Media clutter
New Communication/
distribution channels
Ch 2: The industry 2

3. The Worldwide Advertising Industry
U.S expenditures:
$250 billion
Global expenditures:
$450 billion
Ch 2: The industry 3

4. Structure of the Advertising Industry
Ch 2: The industry 4

5. Advertisers Manufacturers and Service Firms Trade Resellers Government
Procter & Gamble, MCI
Trade Resellers
Sears, McDonald’s
Government
Federal, State, Local
Social Organizations
United Way, Nature Conservancy
Ch 2: The industry 5

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

7. Agencies Full-Service Creative Boutique Interactive In-House
Media Buying and Planning Services
Promotion Agencies
Direct Marketing
E-commerce
Sales Promotion Agencies
Event Planning Agencies
Design Firms
Public Relations Firms
Ch 2: The industry 7

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

9. Full Service Agency Account Services Marketing Research Services
Creative and Production Services
Media Planning and Buying Services
Administrative Services
Ch 2: The industry 9

10. Agency Compensation Commissions: around 15% of airtime fees.
Markup Charges: production cost + fixed %.
Fee Systems: hourly rates, or by project.
Pay-for-Results: tightly-specified objectives.
Ch 2: The industry 10

11. External Facilitators
Marketing and Advertising Research Firms
Consultants
Production Facilitators
Information Intermediators
Software Firms
Ch 2: The industry 11

12. 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
Ch 2: The industry 12