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Chapter 4 The Scope of Advertising: From Local to Global

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1 Chapter 4 The Scope of Advertising: From Local to Global
William F. Arens Michael F. Weigold Christian Arens McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Introduces the people and groups who work in advertising
Chapter Overview Introduces the people and groups who work in advertising

3 Chapter Objectives Identify the various groups in advertising and their relationships Describe what advertisers do and detail org structure Define the main types of ad agencies Explain what people do in ad agencies Discuss how agencies get clients, make money Explain how the media and suppliers help Describe stages in agency/client relationship Describe factors that affect agency/client relationship

4 Q. 1. What are the four distinct groups in the advertising business?

5 The Advertising Industry: Organizations
Advertisers Agencies Suppliers Media

6 The Advertising Industry: People
Most often employed by advertisers, not clients: Researchers Artists Sales personnel Writers Managers Photographers Accountants Musicians Computer scientists Performers Attorneys Cinematographers

7 Q. 2. What is Local Advertising?

8 Advertisers: Local Advertising done by local businesses in a particular city or county targeting customers in their geographic area

9 Advertisers: Local An ad for Rubio’s Baja Grill showcases its unique products

10 Advertisers: Local Typical structure of small advertisers with high volumes of work

11 Q. 3. What are the four types of Local Advertisers?

12 Advertisers: Local Franchisees and dealers Specialty businesses
Sellers of branded merchandise Government and nonprofits

13 Q. 4. What are the three types of Local Advertising?

14 Types of Local Advertising
Product Institutional Classified Regular price-line, sale, or clearance Create favorable image, increase awareness, foster goodwill Recruit employees, offer services, sell merchandise Ads can be created locally using local experts or ads can be created cooperatively

15 Q. 5. What are the two kinds of Cooperative Advertising?

16 Advertisers: Cooperative
Vertical Co-op Horizontal Co-op Manufacturer provides complete ad & shares costs Firms in the same business or part of town advertise jointly National brand association Expands advertising budget Professional quality ads

17 Q. 6. Define Regional Advertisers and National Advertisers.

18 Advertisers: Regional and National
Regional: one or several states National: several regions or entire country

19 Advertisers: Regional and National
Insert ex. 4-2, p. 103 Top 10 U.S. Advertisers Position = 2.9” horiz, 1.5” vertical Size = 5.7” WIDE Resolution = 300 dpi Top 10 advertisers in the U.S. by total U.S. advertising in 2005

20 Advertisers: Regional and National
Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2006

21 Advertisers: Regional and National

22 Q. 7. What are the differences between Regional and National Advertisers?

23 Advertisers: Regional and National

24 Centralized Department Structure

25 Decentralized Department Structure

26 Transnational Advertising Structure
Divisions are responsible for their own product lines, marketing, and profits Each division has an advertising department to coordinate sales and promotion across brands The corporate advertising department provides information and guidance

27 Global Advertising Strategy
Assumption that product use and needs are universal Standardized approach in all countries Extensive research to ensure ad is basic and universal Appeal to basic human emotions and interests

28 Q. 8. Define an Advertising Agency.

29 Advertising Agency An independent organization of creative people and businesspeople who specialize in developing and preparing marketing and advertising plans, advertisements and other promotional tools.

30 Roles of Ad Agencies Ad Agency Independent
Business staff; creative staff Contracts for media space and time Client oriented Understands global marketing

31 Q. 9. What are the different types of agencies?

32 Agencies: Types Reach Range of Services Specialty Local National
Regional Global International Range of Services Consumer BTB Specialty Boutiques Media Buyers Interactive

33 Q. 10. What are the various departments in an agency?

34 Agencies: People Account Research and Planning Traffic Management
Administration Account Management Other Services Advertising Production Media Planning and Buying Creative Concepts

35 Ad Agency Structure

36 Q. 11. What is the compensation structure in an ad agency?

37 Agencies: Compensation
Media Commissions Ad rate card price: $100,000 Agency buys ad at 15% discount: $85,000 Agency bills client full ad amount: $100,000 Agency keeps $15,000 difference

38 Agencies: Compensation
Markups Agency buys materials for campaign Materials cost $85,000 Agency bills for materials plus a 17.65% markup Agency bills $100,000 (cost plus markup)

39 Agencies: Compensation
Fees Fee-commission combination Straight-fee (retainer) method Incentive system

40 Agencies: In-House Pros Cons May save money Lower creative quality
Less experience and talent Loss of objectivity Cons May save money Allows tighter control May allow greater attention to the brand

41 Q. 12. How do agencies get clients?

42 Agencies: Client Relationships
Finding and Attracting New Clients Presentations Referrals Solicitation Community relations and networking

43 Q. 13. What are the stages in the Client/Agency relationship?

44 Client-Agency Relationship Stages
Pre- relationship Development Maintenance Termination

45 Client/Agency Relationship Factors
Chemistry Communication The Four Cs Conduct Changes

46 Q. 14. Who are some of the suppliers in advertising?

47 Suppliers Art studios and web designers
Printers and related specialists Film and video houses Research companies

48 Q. 15. What are the various categories of media?

49 Media Print Electronic Digital interactive Social Out-of-home
Direct mail Other

50 Media Around the World McDonald’s honors an Islamic observance

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