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. 3-2

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 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 NationalLocal FocusBrand Market Share Strategies Markets Location Volume Tactics Consumers TimeLong-Term campaignsShort-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 McDonald’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 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 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 – Art Studios & Web Designers – Printers – Film & Video Houses – Research Companies 3-12

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