The document discusses the evolution of advertising and its economic and social impacts. It begins by defining advertising and distinguishing it from other forms of marketing communication. It then explains advertising's role in business and how it evolved from the preindustrial age to the current global interactive age. The document also discusses the functions and effects of advertising in a free market economy. While advertising stimulates economic growth, the document notes there are ongoing debates about its social and ethical impacts, such as whether it is deceptive or manipulative. It concludes by outlining US regulations and agencies that aim to protect consumers and competition in the advertising industry.

1. The Evolution of Advertising
Chapter 01

2. ABOUT THE RESOURCE PERSON
Mohammad is a self taught Graphic artist, Brand expert and ad campaign designer.
He has been living and breathing design from very early age. At the age of 17 he joined the production
team of first 3d animation in south Asian sub continent. in 2001 he started a BD-UK joint venture
interactive presentation design company named 'Digital Show reel Solutions‘.
He has worked with numerous European celebrities which includes John Mark sorum, Murtz, Adrienne
Bailon and many more.
Gradually he ventured out in advertising design
He has designed advertising campaigns for Xbox, Kellogg's, SAFA, DAE (GOB) and many more.
He designed all the ad campaigns in GCC countries for 'Project Natal' AKA 'Kinect'. While working with X
Box during his stay in U.A.E, he designed promotional campaign for Department of Economic
Development (Government of Dubai) and also worked as a part time curator at Basta Art Café.
He has also Designed many brand Identities including D.net, Future Leaders, University of central
MOHAMMAD BAHARU ALAM California.
He has also made two documentary films for Channel-i.
His street photography of middle eastern cities was published in National Geographic Magazine in 2010.
In last ten years he has delivered lectures at NSU, AIUB, NIMCO, South Asian Institute of Photo graphy,
IRM & BIBM.
Presently he is working With Themever and a regular resource person at DevsTeam Institute.
2

3. Learning Objectives
• LO1: Define advertising; distinguish it from other
forms of marketing communications
• LO2: Explain the role advertising plays in business
and marketing
• LO3: Illustrate the functions of advertising in a free
market economy
• LO4: Discuss how advertising evolved
• LO5: Describe the impact of advertising on society
1-3

4. Obama 2008
• Campaign position:
change
• McCain’s maverick status
neutralized
• Ad spending record: $310
million
• Online media raised cash to
fund traditional media
1-4

5. What is Advertising?
• Advertising
– A type of marketing communication
– The structured, composed, nonpersonal
communication of information, usually paid
for and persuasive in nature, about
products by identified sponsors through
various media
1-5

6. Role of Advertising in Business
• Business typically organize along 3 broad
divisions
– Operations (production/manufacturing)
– Finance/administration
– Marketing
• Marketing alone has a primary role of bringing
in revenue
1-6

7. What is Marketing?
• Marketing is a function
and set of processes for
creating, communicating,
and delivering value to
customers and for
managing customer
relationships in a
beneficial way
1-7

8. The 4 P’s
• Product
• Price
• Place
• Promotion
1-8

9. Advertising and the Marketing
Process
• Advertising is one activity that falls under the
promotion component of the marketing mix
1-9

10. Economics: The need for
Advertising
• Free Market Principles
– Competition guided by 4
principles
• Self-interest
• Complete information
• Many buyers and sellers
• Absence of externalities
1-10

11. Functions and Effects of
Advertising in a Free Economy
• Advertising attempts to:
1. Identify products and their source
• It does this by differentiating the
product from others
• This is often accomplished through
branding
1-11

12. Functions and Effects of
Advertising in a Free Economy
• For a given brand, advertising also strives to:
2. Communicate information it
3. Induce consumers to try or reuse it
4. Stimulate distribution
5. Increase its use
6. Build value, preference, and loyalty
7. Lower the overall cost of sales
1-12

13. Evolution of Advertising
• Preindustrial Age
• Industrializing Age
• Industrial Age
• Postindustrial Age
• Global Interactive Age
1-13

14. Society and Ethics: The Effects of
Advertising
• Advertising stimulates sales
– This encourages productivity
– Raises worker standards of
living
– Matches the consumer with the
product that best suits needs
and aspirations
1-14

15. Society and Ethics: The Effects of
Advertising
• Advertising serves other social
needs as well
– Free media rely on income from ads
• Independence from government
promotes free speech
– Public Service Announcements
(PSAs)
• Promote social issues and causes
1-15

16. Society and Ethics: The Effects of
Advertising
• But critics note that:
– Truthfulness and ethics are a concern
– Responses to misleading and deceptive
practices:
• Government action
– Pure Food and Drug Act
– Federal Trade Commission Act
• Industry action
– Association of National Advertisers
– American Advertising Federation
1-16

17. But debates continue about
• Puffery
• Advertising to children
• Advertising unhealthful
products
• Advertising ethics
1-17

18. The Economic, Social, and
Regulatory Aspects of
Advertising
Chapter 02

19. Learning Objectives
• LO1: Describe advertising’s impact on the economy.
• LO2: Examine the validity of various social criticisms of
advertising.
• LO3: Explain differences between social responsibility & ethics
in advertising.
• LO4: Describe how government agencies regulate advertising to
protect both consumers & competitors.
• LO5: Discuss the activities of nongovernment organizations in
fighting fraudulent & deceptive advertising.
2-19

20. Corn Flakes & Michael Phelps
• Issue: Phelps was photographed engaging in an
illegal activity
– Some Companies rescinded
sponsorships others did not.
– Which companies did the
right thing?
2-20

21. Issues in Advertising
• Many Controversies about Advertising
– Advertising is a highly visible
activity.
– Companies risk public criticism
& attack if their advertising is
offensive or the products don’t
measure up.
2-21

22. The Economic Impact of Advertising
• Advertising accounts for 2% of the US’s GDP
– The level of advertising investment in a country is
directly proportional to its standard of living.*
• Advertising sets up a chain
reaction of economic events
– The effect is like a break
shot in billiards: hard to
predict, affecting many.
2-22

23. The Effect on the Value of Products
• Advertising gives brands added value
• Advertising creates associations that
help consumers satisfy needs & wants
• FTC/Supreme Court: Advertising
increases competition & helps
lower prices
• Advertising can stimulate demand
• Advertising doesn’t restrict competition
2-23

24. The Effect on Prices
• Important points on advertising costs & pricing
– Advertising is a small part of a product’s cost.
– Advertising enables mass-production, which lowers the cost
per unit of products.
– Regulated industries see no price increase associated with
advertising. When deregulated, advertising often causes lower
prices.
– In retail, advertising contributes to both higher & lower prices.
2-24

25. The Effect on
Consumers & Businesses
– Primary Demand
for a product category
– Secondary Demand
for a specific brand
2-25

26. The Social Impact of Advertising
• Advertising is visible & gets criticized
frequently
– Is advertising deceptive and/or manipulative?
– Does advertising degrade our value system?
– Is there too much Advertising?
– Does advertising propagate stereotypes?
– Is some advertising unnecessarily offensive?
2-26

27. Social Responsibility
& Advertising Ethics
• Where laws and regulation end, ethics begin
– Ethical Advertising means doing what the
advertiser and advertiser’s peers believe is right
– Social Responsibility means doing what society
views as best for the welfare of the people or
specific community
2-27

28. U.S. Regulatory Advertising Issues
• Freedom of Commercial Speech
– Commercial speech is protected.
• The Tobacco Industry
• Advertising to Children
– Advertising should not intentionally deceive children.
• Consumer Privacy
– Increased interactive advertising has made this a
growing consumer concern.
2-28

29. Federal Regulation
of the Advertising Industry
• Many government agencies protect consumers
– FTC (Federal Trade Commission)
– FCC (Federal Communications Commission)
– ATF (Bureau of Alcohol, Tobacco, and Firearms)
– USPS (US Postal Service)
– FDA (Food & Drug Administration)
– LOC (Library of Congress)
– US Patent and Trademark Office
• Many state & local governments also regulate
2-29

30. State & Local Regulation
of the Advertising Industry
• All states have “little FTC acts”
– State legislation for advertising is often based on the
truth-in-advertising statute developed by Printer’s Ink.
– Any maker of an ad found to contain “untrue, deceptive, or misleading”
material is guilty of a misdemeanor.
– Often states work together to investigate & prosecute
violations
– Many localities also have consumer protection agencies.
2-30

31. Nongovernment Regulation
• The Better Business Bureau (BBB)
• Media Regulation
• The National Advertising Review Council (NARC)
• Consumer Advocate Groups
• Self-Regulation
2-31

32. International Advertising
Regulation
– Foreign Governments often regulate differently than
the United States
– Most countries are more restrictive
– Different countries have different legal environments
2-32

33. CATCH YOU
IN NEXT CLASS
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