1. 1 Seminar 228.443: Advertising Dr. Teri Shaffer

2. 2 Introduction to Advertising n Types of advertising n Advertising industry n Advertising trends

3. 3 What Is Advertising? n Paid, nonpersonal communication n Identified sponsor n Using mass media n To inform, persuade, or remind n An audience

4. 4 Interactive Advertising Interactive Advertising Public Service Advertising Public Service Advertising Institutional Advertising Institutional Advertising Business-to- Business Advertising Business-to- Business Advertising Brand Advertising Brand Advertising Retail or Local Advertising Retail or Local Advertising Political Advertising Political Advertising Direct-Response Advertising Direct-Response Advertising Directory Advertising Directory Advertising Types of Advertising

5. 5 Brand Advertising

6. 6

7. 7

8. 8 Retail Advertising & Institutional Advertising

9. 9 Retail Advertising & Brand Advertising

10. 10 Retail Advertising

11. 11 Retail Advertising

12. 12 Political Advertising

13. 13 Directory Advertising

14. 14 Direct-Response Advertising

15. 15 B2B

16. 16 Institutional Advertising

17. 17 Institutional Advertising

18. 18 Public Service Advertising (PSA) or Advocacy Advertising

19. 19 Public Service Advertising

20. 20 Interactive Advertising

21. 21 Comparative Advertising

22. 22 Advertising & Demand n Competitive brand advertising n Comparative advertising n Build secondary demand n Pioneering advertising n Build primary demand

23. 23 Pioneering Advertising

24. 24 Pioneering Advertising

25. 25 Advertising Industry n US Government Statistics Us Bureau of Labor Statistics n 395,200 people employed in US n $300 billion globally

26. 26 Five “Players” of Advertising –Advertiser –Advertising Agency –Media –Vendors –Target Audience

27. 27 1 st Player The Advertiser

28. 28 Advertising Age n http://www.adage.com n Leading National Advertisers n Major brands with ad spending > $94.4 million in 1998

29. 29 Leading National Advertisers (1998) n General Motors Corp. n Proctor & Gamble Co. n Phillip Morris Cos. n DaimlerChrysler n Sears, Roebuck, & Co. n Ford Motor Co. n AT&T Corp. n Walt Disney Co. n PepsiCo n Diageo

30. 30 Domestic Spending by Category (1999) n Automotive n Retail n Movies & media n Financial n Medicines & pharmaceuticals n Telecommunications n Food n Restaurants & fast-food n Airline & ship travel; hotels & resorts n Direct response companies

31. 31 Top Advertisers in Austria (1998) n Proctor & Gamble Co. n Unilever n BML-Konzern n SPAR n Mobilkom Austria AG n Mars Inc. n Henkel n Volkswagen n Max. MobilTelekom Service n Ost. Lotterien

32. 32 Top Global Marketers (1999) n Proctor & Gamble Co. n Unilever n Nestle n Volkswagen n Ford Motor Co. n General Motors Corp. n Toyota Motor Co. n Coca-Cola Co. n Peugeot Citroen n L’Oreal

33. 33 2 nd Player The Advertising Agency

34. 34 Advertising Agency n Account management n Creative department n Media n Research & strategic planning

35. 35 Account Management n Represents agency to client n Client relationship n Knowledge of client’s business –Competitive actions –Consumer trends n Helps set goals & budget n Coordinates day to day work

36. 36 Creative Department n Creates ideas, images, & words make up commercials and ads n Copywriters n Art directors n Oversee print or broadcast production

37. 37 Media Department n Planning –Plan media schedule n Buying –Execute media plan

38. 38 Research n Strategic planning n Consumer research n How does consumer interact with brand? n How does brand fit into consumer lifestyle? n Pretest and posttests

39. 39 Example n 1995 campaign for California Milk Processors Advisory Board n Declining sales from 1980 to 1993 n Result? n Increased sales

40. 40 Paying the Agency n Commission system n Fees

41. 41 Commission n Rebates offered by media advertising agencies (15%)

42. 42 Commission System n Agency creates commercial for advertiser n Agency contacts TV station for air time n TV station bills ad agency Cost of air time $ 10,000 Less 15% (1,500) Due $ 8,500 n Agency bills advertiser $10,000

43. 43 Fee-based Compensation n May vary according to departments or levels of salary n Or flat hourly rate n Charges for out-of-pocket expenses, travel, etc. n Media charges are net of commissions

44. 44 Advertising Age (1998) Charges Over Time n 1982 n 71% commissions n 8% fees n 21% combination n 1997 n 35% commissions n 58% fees n 7% combination

45. 45 Full Service Agencies n Four major staff functions – Account management – Creative – Media planning and buying – Research

46. 46 Top Ten Agency Brands (1999) n Grey Advertising (NY) n J.Walter Thompson Co. (NY) n McCann-Erickson Worldwide (NY) n FCB Worldwide (NY) n Leo Burnett USA (Chicago) n Euro RSCG Worldwide (NY) n Young & Rubicam Inc. (NY) BBDO Worldwide (NY) n DDB Worldwide Communications (NY) n Ogilvy & Mather Worldwide (NY)

47. 47 World Top Advertising Organizations (1999) n Omnicom (NY) n Interpublic Group of Cos. (NY) n WPP Group (London) n Havas Advertising (France) n Dentsu (Tokyo) n B Com3 Group (Chicago) n Young & Rubicam Inc. (NY) n Grey Advertising (NY) n True North (Chicago) n Publicis SA (Paris)

48. 48 Agencies on the Internet n TBWA/Chiat/Day –http://www.chiatday.com/ n Fallon McElligott –http://www.fallon.com/ n Bozell Worldwide –http://www.bozell.com/

49. 49 Agencies On The Internet n A comprehensive list of ad agencies can be found at the following address –http://www.digitaldirectory.com/ adagencies.html

50. 50 Limited Service Agencies or Specialized Agencies Functions – Creative, media buying, etc. n Audiences – Minority, youth, etc. n Industries – Healthcare, computers, B2B, etc. n Communication Tool – Direct marketing, interactive, etc.

51. 51 Top 100 US Interactive Agencies (1999) n MarchFirst n Digitas n iXL n Grey Interactive n Sapient Corp. n Modern Media n Aspen Interactive n OglivyInteractive n Luminant Worldwide Corp. n AppNet

52. 52 In-House Agencies n Perform most of the functions of outside agency n Example: Large retailers

53. 53 Why an In-House Agency? n Savings n Faster response n Specialization n Control

54. 54 Problems with In-House? n Lack of initiative due to noncompetitive environment n Inability to keep up with marketplace n Less objective

55. 55 From The Internet n The Advertising Agency Contract --http://www.smartbiz.com/ sbs/arts/cwa4.htm

56. 56 3 rd Player The Media

57. 57 The Media n Channels of communication that carry message from advertiser to audience

58. 58 Media Organizations n Sell space in print media n Sell time in broadcast media n Sell space/time in electronic media n Assist in media selection and analysis n Help w/ad production

59. 59 Top Leading Media Co. (1998) n Time Warner (NY) AT&T Corp. (NY) n CBS Corp. (NY) n Walt Disney Co. (NY) NBC TV (General Electric, Fairfield, Conn) n News Corp. (Sydney)

60. 60 4 th Player Vendors

61. 61 Vendors n Freelancers/consultants n Market researchers n Freelance copywriters and graphic artists n Photographers n Songwriters n Printers n Direct-mail production houses n Telemarketers n Public relations consultants

62. 62 5 th Player The Target Audience

63. 63 Target Audience n Kellogg cereal? n Consumer n Purchaser

64. 64 Current Issues n Interactive advertising n Integrated marketing communications n Globalization n Consumer power, relationship marketing, permission marketing, and customization

65. 65 Examples n Peapod n Mass customization –Levi’s Original Spin