Chapter 15 - Advertising

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Chapter 15 - Advertising

  1. 1. 1 Advertising Chapter 15 © 2009, The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. 2 CHAPTER OUTLINE • Defining Advertising • A Brief History of Advertising • Advertising in the Digital Age • Organization of the Consumer Advertising Industry • Producing Advertising • Economics • Business-to-Business Advertising
  3. 3. 3 DEFINING ADVERTISING • Simple definition of advertising – Nonpersonal presentation/promotion of ideas, goods, or services – Paid for by identified sponsor • This definition has become blurry – Many practitioners believe differentiating advertising from other forms of marketing is no longer useful
  4. 4. 4 Functions of Advertising • Marketing • Education • Economic – Reduces cost of personal selling and distribution • Social
  5. 5. 5 Types of Advertising • Advertising can be classified in several ways – Target audience (consumer or business) – Geographic focus (international, national, or local/retail) – Purpose (sell a specific product/service or improve company’s image/influence public opinion) – Primary or selective demand – Direct or indirect action
  6. 6. 6 A BRIEF HISTORY OF ADVERTISING(1 of 3) • Examples date back thousands of years • Printing press allowed creation of new ad media – Posters, handbills, newspaper ads (like today’s classified ads) • 1800s – Consumer evolution – Railroad across US – US population doubled – New communication media – More disposable income
  7. 7. 7 A BRIEF HISTORY OF ADVERTISING(2 of 3) • Magazines enabled truly national advertising • Advertising agencies appeared • 1920s – radio advertising; sponsors supplied programs • Depression curtailed growth in advertising • Advertising fortunes parallel social mood of the times
  8. 8. 8 A BRIEF HISTORY OF ADVERTISING(3 of 3) • Contemporary advertising – Coping with technological and social change • Consumer taking more control over media choices – Traditional advertising model harder to justify – Guerilla marketing: non-traditional marketing techniques – Online advertising • Not as effective as initially hoped • Becoming more targeted, more interactive, more engaging • As Internet advertising becomes more effective, more ad dollars will be spent online
  9. 9. 9 ADVERTISING IN THE DIGITAL AGE • Birth of online advertising – 1994, HotWired web site, banner ads
  10. 10. 10 Audience Control • Audience continues to take control over media choices – Avoid advertising • Advertisers reach audiences in other ways – Product placement – Viral advertising – Target search marketing – Buzz marketing
  11. 11. 11 New Channels • Digital revolution opens up new advertising avenues – Blogs – Podcasts – Cell phones – Web sites use ads more creatively
  12. 12. 12 User-Generated Content • User-generated content popular with advertisers • Consumers submit home-made commercials – No cost to company – Consumers engage with product – Can create buzz
  13. 13. 13 ORGANIZATION OF THE CONSUMER ADVERTISING INDUSTRY • Three main components of advertising industry
  14. 14. 14 Advertisers • Two main types of advertisers – National – Retail (local) • Basic advertising activities – Plan ads – Budget funds – Coordinate across the organization – Supervise outside agencies, if used – Follow up
  15. 15. 15 Agencies • Independent business organization to develop, prepare, place advertising • Agencies can be classified by the range of services they offer – Full-service agencies – Media buying services – Creative boutiques • The top 5 mega-agencies are Omnicom, WPP Group, Interpublic, Publicis, Dentsu
  16. 16. 16 Media • Four important dimensions vary by medium – Reach – Frequency – Selectivity – Efficiency • Must consider the inherent characteristics of each medium
  17. 17. 17 PRODUCING ADVERTISING • A variety of people work to produce advertising
  18. 18. 18 Departments and Staff • Creative services • Account services – Account executive (AE) • Marketing services • Administration
  19. 19. 19 The Advertising Campaign(1 of 2) • Chose market strategy – Positioning • Select main appeal or theme • Translate theme into various media
  20. 20. 20 The Advertising Campaign(2 of 2) • Produce ads – Print: rough layout; comprehensive layout – TV: Storyboard – Web: splash pages, skyscraper ads, floating ads, wallpaper ads; short versions of TV ads • Buy space/time • Execute/evaluate campaign
  21. 21. 21 Advertising Research • Formative research – Audience definition – Audience profiling • Message research • Tracking studies
  22. 22. 22 ECONOMICS • We will examine the economics of the overall industry, then look at how an ad agency makes money
  23. 23. 23 Advertising Volume in Various Media • About $280 billion spent in US on advertising in 2006 • TV & newspapers account for about half the total amount spent
  24. 24. 24 Agency Compensation • Media commissions • Agency charges • Fees
  25. 25. 25 BUSINESS-TO-BUSINESS ADVERTISING • Multi-billion dollar industry, with advertising directed at business rather than general consumers • Four categories – Trade – Industrial – Professional – Agricultural
  26. 26. 26 Consumer Versus Business-to- Business Advertising • Target audience much smaller • Products are technical, complex, expensive • Buyers are professional purchasing agents – Base decisions on reason and research • Personal selling plays greater role
  27. 27. 27 Media • Personalized media are best • Business/trade publications account for about 60% of advertising dollars – Horizontal trade magazines – Vertical trade magazines • Other selective channels also effective – Direct mail & e-mail; trade catalogs, web sites, mass media (well-placed ads)
  28. 28. 28 Appeals • Business ad copy is long, fact-filled, detailed, technical, accurate, complete – Little, if any, emotional appeal – Testimonials, case histories, new-product news, demonstrations – Some ads use humor, warmth, creativity

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