McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 The Scope of Advertising: From Local to Global

4-2 Chapter Overview Introduces the people and groups who work in advertising

4-3 Chapter Objectives Explain how advertisers organize Define the main types of ad agencies Discuss how agencies get clients, make money Explain what people do in ad agencies Debate the pros/cons of an in-house agency Examine factors that affect agency-client relationships Describe the various groups in advertising and their relationships Explain how the media and suppliers help

4-4 The Advertising Industry: Organizations Advertisers Agencies Media Suppliers

4-5 The Advertising Industry: People Sales Research Accounting Management Most often employed by agencies: Computer science Writers Artists Musicians Photographers Performers LegalCinematographers

4-6 Advertisers: Local Directed to customers in the same geographic area Independent businesses Govt. & nonprofits Franchisees and dealers Chain retailers

4-7 Advertisers: Local An ad for Rubio’s Baja Grill showcases its unique products

4-8 Advertisers: Local Typical structure of small advertisers with high volumes of work

4-9 Regular price- line, sale, or clearance Types of Local Advertising Create favorable image, increase awareness, foster goodwill Recruit employees, offer services, sell merchandise ClassifiedInstitutional Product

4-10 Advertisers: Cooperative Vertical Co-opHorizontal Co-op Firms in the same business or part of town advertise jointly National brand association Manufacturer provides complete ad & shares costs Professional quality ads Expands advertising budget

4-11 Advertisers: Regional and National Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2008

4-12 Advertisers: Regional and National Regional: one or several states National: several regions or entire country

4-13 Advertisers: Regional and National Comparison of national and local advertising

4-14 Centralized Department Structure

4-15 Decentralized Department Structure

4-16 Decentralized International Structure Divisions are responsible for their own product lines, marketing, and profits Each division has an advertising dept. to coordinate sales and promotion across brands The corporate advertising dept. provides information and guidance

4-17 Centralized Global Structure Assumption that product use and needs are universal Standardized approach in all countries Extensive research to ensure ad is basic and universal

4-18 Agencies: Defined Agency Roles Develop marketing & ad plans Develop ads & promotions Purchase ad space and time

4-19 Agencies: Types Specialty Boutiques Media Buyers Interactive Full Service Consumer BTB Reach LocalNational Regional Global Internatl

4-20 Agencies: People Traffic Control Administration Media Management Account Management Other Services Creative Concepts Research, Acct planning Production

4-21 Agencies: Compensation 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 Media Commissions

4-22 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)

4-23 Agencies: Compensation Fees Fee- commission combination Straight-fee (retainer) method Incentive system

4-24 Agencies: In-House Pros May save money Allows tighter control May allow greater attention to the brand Lower creative quality Less experience and talent Loss of objectivity Cons

4-25 Agencies: Client Relationships Referrals Presentations Community relations & networking Solicitation Finding and Attracting New Clients

4-26 Suppliers Art studios & web designers Printers & related specialists Film & video houses Research companies

4-27 Media Out-of-home Digital interactive Electronic Print Direct mail Other

4-28 Media Around the World McDonald’s honors an Islamic observance