1 Seminar : Advertising Dr. Teri Shaffer

2 Introduction to Advertising n Types of advertising n Advertising industry n Advertising trends

3 What Is Advertising? n Paid, nonpersonal communication n Identified sponsor n Using mass media n To inform, persuade, or remind n An audience

4 Interactive Advertising Interactive Advertising Public Service Advertising Public Service Advertising Institutional Advertising Institutional Advertising Business-to- Business Advertising Business-to- Business Advertising Brand Advertising Brand Advertising Retail or Local Advertising Retail or Local Advertising Political Advertising Political Advertising Direct-Response Advertising Direct-Response Advertising Directory Advertising Directory Advertising Types of Advertising

5 Brand Advertising

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8 Retail Advertising & Institutional Advertising

9 Retail Advertising & Brand Advertising

10 Retail Advertising

11 Retail Advertising

12 Political Advertising

13 Directory Advertising

14 Direct-Response Advertising

15 B2B

16 Institutional Advertising

17 Institutional Advertising

18 Public Service Advertising (PSA) or Advocacy Advertising

19 Public Service Advertising

20 Interactive Advertising

21 Comparative Advertising

22 Advertising & Demand n Competitive brand advertising n Comparative advertising n Build secondary demand n Pioneering advertising n Build primary demand

23 Pioneering Advertising

24 Pioneering Advertising

25 Advertising Industry n US Government Statistics Us Bureau of Labor Statistics n 395,200 people employed in US n $300 billion globally

26 Five “Players” of Advertising –Advertiser –Advertising Agency –Media –Vendors –Target Audience

27 1 st Player The Advertiser

28 Advertising Age n n Leading National Advertisers n Major brands with ad spending > $94.4 million in 1998

29 Leading National Advertisers (1998) n General Motors Corp. n Proctor & Gamble Co. n Phillip Morris Cos. n DaimlerChrysler n Sears, Roebuck, & Co. n Ford Motor Co. n AT&T Corp. n Walt Disney Co. n PepsiCo n Diageo

30 Domestic Spending by Category (1999) n Automotive n Retail n Movies & media n Financial n Medicines & pharmaceuticals n Telecommunications n Food n Restaurants & fast-food n Airline & ship travel; hotels & resorts n Direct response companies

31 Top Advertisers in Austria (1998) n Proctor & Gamble Co. n Unilever n BML-Konzern n SPAR n Mobilkom Austria AG n Mars Inc. n Henkel n Volkswagen n Max. MobilTelekom Service n Ost. Lotterien

32 Top Global Marketers (1999) n Proctor & Gamble Co. n Unilever n Nestle n Volkswagen n Ford Motor Co. n General Motors Corp. n Toyota Motor Co. n Coca-Cola Co. n Peugeot Citroen n L’Oreal

33 2 nd Player The Advertising Agency

34 Advertising Agency n Account management n Creative department n Media n Research & strategic planning

35 Account Management n Represents agency to client n Client relationship n Knowledge of client’s business –Competitive actions –Consumer trends n Helps set goals & budget n Coordinates day to day work

36 Creative Department n Creates ideas, images, & words make up commercials and ads n Copywriters n Art directors n Oversee print or broadcast production

37 Media Department n Planning –Plan media schedule n Buying –Execute media plan

38 Research n Strategic planning n Consumer research n How does consumer interact with brand? n How does brand fit into consumer lifestyle? n Pretest and posttests

39 Example n 1995 campaign for California Milk Processors Advisory Board n Declining sales from 1980 to 1993 n Result? n Increased sales

40 Paying the Agency n Commission system n Fees

41 Commission n Rebates offered by media advertising agencies (15%)

42 Commission System n Agency creates commercial for advertiser n Agency contacts TV station for air time n TV station bills ad agency Cost of air time $ 10,000 Less 15% (1,500) Due $ 8,500 n Agency bills advertiser $10,000

43 Fee-based Compensation n May vary according to departments or levels of salary n Or flat hourly rate n Charges for out-of-pocket expenses, travel, etc. n Media charges are net of commissions

44 Advertising Age (1998) Charges Over Time n 1982 n 71% commissions n 8% fees n 21% combination n 1997 n 35% commissions n 58% fees n 7% combination

45 Full Service Agencies n Four major staff functions – Account management – Creative – Media planning and buying – Research

46 Top Ten Agency Brands (1999) n Grey Advertising (NY) n J.Walter Thompson Co. (NY) n McCann-Erickson Worldwide (NY) n FCB Worldwide (NY) n Leo Burnett USA (Chicago) n Euro RSCG Worldwide (NY) n Young & Rubicam Inc. (NY) BBDO Worldwide (NY) n DDB Worldwide Communications (NY) n Ogilvy & Mather Worldwide (NY)

47 World Top Advertising Organizations (1999) n Omnicom (NY) n Interpublic Group of Cos. (NY) n WPP Group (London) n Havas Advertising (France) n Dentsu (Tokyo) n B Com3 Group (Chicago) n Young & Rubicam Inc. (NY) n Grey Advertising (NY) n True North (Chicago) n Publicis SA (Paris)

48 Agencies on the Internet n TBWA/Chiat/Day – n Fallon McElligott – n Bozell Worldwide –

49 Agencies On The Internet n A comprehensive list of ad agencies can be found at the following address – adagencies.html

50 Limited Service Agencies or Specialized Agencies Functions – Creative, media buying, etc. n Audiences – Minority, youth, etc. n Industries – Healthcare, computers, B2B, etc. n Communication Tool – Direct marketing, interactive, etc.

51 Top 100 US Interactive Agencies (1999) n MarchFirst n Digitas n iXL n Grey Interactive n Sapient Corp. n Modern Media n Aspen Interactive n OglivyInteractive n Luminant Worldwide Corp. n AppNet

52 In-House Agencies n Perform most of the functions of outside agency n Example: Large retailers

53 Why an In-House Agency? n Savings n Faster response n Specialization n Control

54 Problems with In-House? n Lack of initiative due to noncompetitive environment n Inability to keep up with marketplace n Less objective

55 From The Internet n The Advertising Agency Contract -- sbs/arts/cwa4.htm

56 3 rd Player The Media

57 The Media n Channels of communication that carry message from advertiser to audience

58 Media Organizations n Sell space in print media n Sell time in broadcast media n Sell space/time in electronic media n Assist in media selection and analysis n Help w/ad production

59 Top Leading Media Co. (1998) n Time Warner (NY) AT&T Corp. (NY) n CBS Corp. (NY) n Walt Disney Co. (NY) NBC TV (General Electric, Fairfield, Conn) n News Corp. (Sydney)

60 4 th Player Vendors

61 Vendors n Freelancers/consultants n Market researchers n Freelance copywriters and graphic artists n Photographers n Songwriters n Printers n Direct-mail production houses n Telemarketers n Public relations consultants

62 5 th Player The Target Audience

63 Target Audience n Kellogg cereal? n Consumer n Purchaser

64 Current Issues n Interactive advertising n Integrated marketing communications n Globalization n Consumer power, relationship marketing, permission marketing, and customization

65 Examples n Peapod n Mass customization –Levi’s Original Spin