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The Business of Advertising
Chapter 03
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
• LO1 List the various groups in the advertising business and explain their relationship to one another.
• LO2 Discuss the differences between local, national, and transnational advertisers.
• LO3 Explain how advertisers organize themselves to manage their advertising both here and abroad.
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Learning Objectives
• LO4 Define the main types of advertising agencies.
• LO5 Explain the range of tasks people perform in an ad agency and an in-house advertising department.
• LO6 Discuss how agencies get new clients and how they make money
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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
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Advertisers
Differences between Local & National AdvertisersNational Local
Focus BrandMarket ShareStrategiesMarkets
LocationVolumeTacticsConsumers
Time Long-Term campaigns Short-Term ads
Resources $5-$10 million +Many specialists
Less than $1 millionA few generalists
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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
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Agencies
• Geographic Scope of Agencies– Local Agencies– Regional Agencies– National Agencies– International
AgenciesMcDonald’s helps to celebrate an Islamic observance. Sensitivity to the diversity of worldwide cultures &beliefs is important for a global advertiser’s success
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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
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Agencies
• Types of Agencies– Business-to-Business Agencies
• focus on clients in the B2B 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
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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
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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
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Suppliers
• Suppliers– Art Studios & Web Designers– Printers – Film & Video Houses– Research Companies
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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.
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Media
• 6 Categories of Media– Print– Electronic– Digital interactive– Out-of-home– Direct mail– Other media
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