The Business of Advertising Chapter 03 Mc. Graw-Hill/Irwin Copyright © 2012 by The Mc. Graw-Hill Companies, Inc. All rights reserved.
Learning Objectives • LO 1 List the various groups in the advertising business and explain their relationship to one another. • LO 2 Discuss the differences between local, national, and transnational advertisers. • LO 3 Explain how advertisers organize themselves to manage their advertising both here and abroad. 3 -2
Learning Objectives • LO 4 Define the main types of advertising agencies. • LO 5 Explain the range of tasks people perform in an ad agency and an in-house advertising department. • LO 6 Discuss how agencies get new clients and how they make money 3 -3
The Advertising Industry • The advertising Industry has four distinct groups – Advertisers • companies that sponsor advertising – Advertising Agencies • organizations that specialize in advertising – Suppliers • those who supply photography, design, etc – Media • newspapers, TV & radio stations, etc 3 -4
Advertisers Differences between Local & National Advertisers National Local Focus Brand Market Share Strategies Markets Location Volume Tactics Consumers Time Long-Term campaigns Short-Term ads Resources $5 -$10 million + Many specialists Less than $1 million A few generalists 3 -5
Advertisers • How large companies manage their advertising – Centralized • single department often located at corporate HQ – Decentralized • separate departments for different brands, products, etc • separate departments by region 3 -6
Agencies • Geographic Scope of Agencies – Local Agencies – Regional Agencies – National Agencies – International Agencies Mc. Donald’s helps to celebrate an Islamic observance. Sensitivity to the diversity of worldwide cultures &beliefs is important for a global advertiser’s success 3 -7
Agencies • Types of Agencies – Full Service Agencies • provide advertising & non-advertising IMC services – General Consumer Agencies • focuses on consumer accounts • Includes agency groups and entrepreneurial agencies 3 -8
Agencies • Types of Agencies – Business-to-Business Agencies • focus on clients in the B 2 B market – Creative Boutiques • creative specialists that work for advertisers and agencies – Media Buying • specialize in purchasing and packaging radio & TV time – Interactive Agencies • specialize in advertising in digital interactive media 3 -9
Agencies • What People do in an Agency – Creative Concepts & Advertising Production • Turning the creative concepts into visual, verbal and written communication that help deliver the advertising message – Traffic Management • Ensuring deadlines is met and project management works smoothly – Additional Services • in full-service agencies: PR, sales promotions, etc 3 -10
Agencies • In-House Agencies – Agency owned by an advertiser as a subsidiary • • • Saves money more control over advertising faster turnaround may be less creative potential loss of objectivity 3 -11
Suppliers • Suppliers – Art Studios & Web Designers – Printers – Film & Video Houses – Research Companies 3 -12
Media • Media – The medium carries an advertiser’s message. – It’s a vital connection between advertiser and consumer – Media refers to both the channels of advertising communication & other communication vehicles. 3 -13
Media • 6 Categories of Media – Print – Electronic – Digital interactive – Out-of-home – Direct mail – Other media 3 -14
The Advertising Industry • Current Trends – Industry Consolidation – Changes in Compensation – New Media – Economic Issues – Category Overlap 3 -15
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