Mc Graw-Hill Irwin 2004 The Mc Graw-Hill Companies

Mc. Graw-Hill/Irwin © 2004 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Chapter 4 The Scope of Advertising: From Local to Global Introduce the people and groups who work in advertising

Objectives Explain how advertisers organize Define the main types of ad agencies Explain what people do in agencies Discuss how agencies get clients and make money Examine agencyclient relationships Debate the pros and cons of in-house agencies

The Advertising Industry l Organizations in advertising include: Advertisers Agencies Media Suppliers

People in Advertising Computer Science Research Sales Accounting Communication Arts Law Management

Local Advertising: Where the Action is l Types of local advertisers: Dealers or local franchises of national companies Stores Government/ nonprofits Specialty Businesses

Typical Department Structure for a Small Advertiser

Types of Local Advertising Product Advertising Promotes a specific product or service Stimulates short-term action while building awareness

Types of Local Advertising Product Advertising Regular price-line advertising Sales advertising Clearance advertising

Types of Local Advertising Institutional Advertising Create favorable impression of the business as a whole Makes the public aware of what the business stands for Builds long-term good will

Types of Local Advertising Classified Advertising Recruit employees Offer services Lease or sell merchandise

Types of Local Advertising Cooperative Advertising Wholesalers, manufacturers, trade associations often provide local advertisers with ad materials Or share ad costs

Types of Local Advertising Cooperative Advertising Purposes of co-op advertising: Build a manufacturers brand image Help distributors, dealers, or retailers to increase sales

Types of Local Advertising Cooperative Advertising Types of co-op advertising Vertical Horizontal

Regional and National Advertisers Regional Advertisers National Advertisers Operate severalstate Or in one Operate in several regions or nationwide

How National and Local Advertisers Differ

How Large Companies Manage their Advertising l Large advertisers use some mix of two management structures: centralized and decentralized Decentralized Centralized

Transnational Advertisers Growing Multinationals May invest in many countries Global marketers use a standardized approach to create global brands

The Advertising Agency Roles Develop marketing and advertising plans Develop advertisements and other promotions Purchase advertising space and time

The Advertising Agency Types Local Regional National International

The Advertising Agency Types Full-service agencies General Consumer BTB

The Advertising Agency Types Specialized agencies Creative boutiques Media-buying services Interactive agencies

What People in an Agency Do Account Management Account executives Account supervisors

What People in an Agency Do Research and planning Research Account planning

What People in an Agency Do Creative Concepts Copywriter Art director Creative director

What People in an Agency Do Advertising production Media planning and buying Traffic management Additional services

How Agencies are Compensated l Media Commissions Ad rate card price: $100, 000 Agency buys ad at 15% discount: $85, 000 Agency bills client full ad amount: $100, 000 $15, 000 difference Is kept By the agency

How Agencies are Compensated l Media Commissions l Markups Agency buys materials for campaign Materials cost $85, 000 Agency bills for materials plus a 17. 65% markup Agency bills $100, 000 which is costs plus markup

How Agencies are Compensated l Media Commissions l Markups l Fees Agency charges a basic fee for services Agency keeps media com missions

How Agencies are Compensated l Media Commissions l Markups l Fees INCENTIVES Agency compensation is calculated after determining whether campaign objectives have been met

In-House Agency Pros May save money Allows tighter control Agency operated by an advertiser May permit greater attention to the brand

In-House Agency Cons Pros Lower creative quality Less experience and talent Loss of objectivity Agency operated by an advertiser

Client/Agency Relationship l How agencies get clients Referrals Presentations Soliciting for new business Networking and community relations

Stages in the Client/Agency Relationship Prerelationship Development Regular working relationship Termination