Advertising and Public Relations Lamb, Hair, McDaniel Chapter 17 Advertising and Public Relations 2012-2013 CHAPTER 17 Advertising and Public Relations General Motors, Procter & Gamble, and Time Warner each spend almost $10 million a day on national advertising in the United States alone. © Richard Levine/Alamy

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Learning Outcomes 1 Discuss the effects of advertising on market share and consumers Identify the major types of advertising Discuss the creative decisions in developing an advertising campaign Describe media evaluation and selection techniques Discuss the role of public relations in the promotional mix 2 3 4 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

Discuss the effects of advertising on market share and consumers Chapter 17 Advertising and Public Relations The Effects of Advertising Discuss the effects of advertising on market share and consumers 1 © 2013 by Cengage Learning Inc. All Rights Reserved.

The Effects of Advertising Chapter 17 Advertising and Public Relations In 2009, 30 companies spent more than $1 billion each 1.4 million people work in various marketing positions including media advertising such as newspapers, magazines, television, radio, and internet media. More than 100 companies spend over $300 million annually on advertising. Notes: Advertising, defined as any form of impersonal, paid communication in which the sponsor is identified, is a popular form of promotion especially for consumer packaged goods and services. Advertising expenditures were almost $125.3 billion in 2009. The top five spenders on advertising are Procter & Gamble, Verizon, AT&T, General Motors, and Pfizer. 1 © 2013 by Cengage Learning Inc. All Rights Reserved.

Advertising and Market Share Chapter 17 Advertising and Public Relations Advertising and Market Share New brands with a small market share spend proportionally more for advertising and sales promotion than those with a large market share. Beyond a certain level of spending, diminishing returns set in. New brands require higher spending to reach a minimum level of exposure needed to affect purchase habits. Notes: Advertising is utilized for maintaining brand awareness and market share. New brands with a small market share tend to spend proportionately more for advertising than those with a large market share. Why? First, beyond a certain level of spending, diminishing returns set in. Sales or market share decrease no matter how much is spent on advertising and sales promotion. This is called the advertising response function. Second, new brands tend to require higher spending to maintain a certain minimum level of exposure to measurably affect purchase habits. 1 © 2013 by Cengage Learning Inc. All Rights Reserved.

The Effects of Advertising on Consumers Chapter 17 Advertising and Public Relations The Effects of Advertising on Consumers Advertising may change a consumer’s negative attitude toward a product, or reinforce a positive attitude. Advertising can affect consumer ranking of a brand’s attributes. Notes: The influence of advertising on the U.S. socioeconomic system has been the subject of extensive debate in nearly all corners of society. Discussion/Team Activity: Discuss advertisements that are memorable. What makes them stand out? 1 © 2013 by Cengage Learning Inc. All Rights Reserved.

Identify the major types of advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Identify the major types of advertising 2 © 2013 by Cengage Learning Inc. All Rights Reserved.

Major Types of Advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Institutional Advertising Enhances a company’s image rather than promote a particular product. Product Touts the benefits of a specific good or service. Notes: The firm’s promotional objectives determines the type of advertising it uses. Institutional advertising is used to build up the image of the company. In contrast, product advertising is used to enhance the sales of a specific good or service. 2 © 2013 by Cengage Learning Inc. All Rights Reserved.

Major Types of Advertising Chapter 17 Advertising and Public Relations Major Types of Advertising Corporate identity Pioneering Competitive Comparative Product Advertising Institutional Advocacy advertising Notes: Institutional advertising promotes the corporation as a whole and is designed to establish, change, or maintain the corporation’s identity. A form of institutional advertising is advocacy advertising, typically used to safeguard against negative consumer attitudes and to enhance the company’s credibility among consumers who already favor its position. Discussion/Team Activity: Discuss examples of institutional advertising and the industries that frequently use this form. 2 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Product Advertising Pioneering Stimulates primary demand for new product or category Used in the PLC introductory stage Competitive Influences demand for brand in the growth phase of the PLC Often uses emotional appeal Comparative Compares two or more competing brands’ product attributes Used if growth is sluggish, or if competition is strong Online Pizza Hut vs. Papa John’s Can you find evidence of comparative advertising on either Pizza Hut’s or Papa John’s Web site? Notes: The product’s stage in its life cycle often determines which of the above types of product advertising is selected. Pioneering advertising is used during the introductory stage of the PLC. Competitive advertising is used during the growth phase of the PLC as competition increases. Comparative advertising compares competing brands. Before the 1970s, comparative advertising was allowed only if the competing brand was unidentified. Care should be used with comparative advertising approach in global markets due to government regulations and cultural/social value sensitivity. 2 © 2013 by Cengage Learning Inc. All Rights Reserved.

in developing an advertising campaign Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Discuss the creative decisions in developing an advertising campaign 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions in Advertising Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Advertising Campaign A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions in Advertising Chapter 17 Advertising and Public Relations Creative Decisions in Advertising Determine the advertising objectives Make creative decisions Make media decisions Evaluate the campaign Notes: Advertising strategies are organized around an advertising campaign. An ad campaign is a series of related ads focusing on a common theme, slogan, and set of advertising appeals. Before creative work can begin, advertising goals or objectives are established. The DAGMAR approach (described on the next slide) is one method of setting objectives. Once objectives are defined, creative work can begin, with the advertising campaign often following the AIDA model. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Setting Objectives: The DAGMAR Approach Chapter 17 Advertising and Public Relations Setting Objectives: The DAGMAR Approach Define target audience Define desired percentage change Define the time frame for change Notes: According to the DAGMAR (Defining Advertising Goals for Measured Advertising Results) approach, all advertising objectives should precisely define the target market, the desired percentage change in some specified measure of effectiveness, and the time frame in which that change is to occur. Once objectives are defined, creative work can begin on the advertising campaign. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Creative Decisions Identify product benefits Chapter 17 Advertising and Public Relations Creative Decisions Develop and evaluate advertising appeals Execute the message Evaluate the campaign’s effectiveness Identify product benefits Notes: Creative decisions include identifying product benefits, developing and evaluating advertising appeals, executing the message, and evaluating the effectiveness of the campaign. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Identify Product Benefits Chapter 17 Advertising and Public Relations Identify Product Benefits “Sell the Sizzle, not the Steak” Sell product’s benefits, not its attributes A benefit should answer “What’s in it for me?” Ask “So?” to determine if advertising offers attributes or benefits Notes: A well-known rule of thumb in advertising is to “sell the sizzle, not the steak” by advertising a product’s benefits instead of its attributes. A benefit is what consumers will receive or achieve by using the product. A quick test to determine whether you are offering attributes or benefits is to ask “So?”. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Identify Product Benefits Chapter 17 Advertising and Public Relations Identify Product Benefits Attribute “With just 10 calories per serving, Propel hydrates and contains Vitamins C & E, B Vitamins, and antioxidants. Propel is conveniently available in both ready-to-drink and powder form.” “So?” Benefit “Propel fuels real women who are energized and empowered by physical activity and understand their need to replenish, energize, and protect in all aspects of their lives.” Notes: An example of an attribute and benefit are shown on this slide. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Exhibit 17.1 Common Advertising Appeals Chapter 17 Advertising and Public Relations Exhibit 17.1 Common Advertising Appeals Notes: Common advertising appeals are listed in Exhibit 17.1. Choosing the best appeal normally requires market research. The appeal must make a positive impression on the target market, while being unique, distinguishable from the competitors’ messages, and believable. Discussion/Team Activity: Discuss advertisements that use these appeals. How effective are the advertisements? Why? © 2013 by Cengage Learning Inc. All Rights Reserved.

Unique Selling Proposition Chapter 17 Advertising and Public Relations Unique Selling Proposition Unique Selling Proposition A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Notes: The advertising appeal selected for the campaign becomes its unique selling proposition, usually becoming the campaign’s slogan. Effective slogans become easily recognizable to the consumer. Discussion/Team Activity: Give the class a slogan or jingle, and have them name the product. Historical and current products may be used, demonstrating the lasting value of good advertising appeals. 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

Exhibit 17.2 Eleven Common Executional Styles for Advertising Chapter 17 Advertising and Public Relations Exhibit 17.2 Eleven Common Executional Styles for Advertising Notes: Message execution is the way an advertisement portrays its information. The AIDA plan is a good means of executing an advertising message. An ad should immediately get attention, and hold consumers’ interest, create desire for the good, and motivate an action of purchase. Exhibit 17.2 lists examples of executional styles used by advertising. Executional styles often dictate the type of media utilized. Postcampaign evaluation can be the most demanding task facing advertisers.

Describe media evaluation and selection techniques Chapter 17 Advertising and Public Relations Media Decisions in Advertising Describe media evaluation and selection techniques 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Media Decisions in Advertising Chapter 17 Advertising and Public Relations Media Decisions in Advertising Monitored Media Unmonitored Media Newspapers Direct Mail Trade Exhibits Cooperative Advertising Brochures Coupons Catalogs Special Events Magazines Radio Television Notes: The choice of medium is a major decision for advertisers. Monitored media includes those media shown above and monitored by national reporting services. U.S. advertisers spend roughly $300 billion annually on monitored media. Unmonitored media is shown on this slide. Traditional mass-market media are declining in usage and more targeted media are growing. Internet Outdoor Media 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Major Advertising Media Chapter 17 Advertising and Public Relations Major Advertising Media Newspapers Magazines Radio Television Outdoor Media Internet Notes: Advertising media are channels that advertisers use in mass communication. The six major advertising media are listed on this slide. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Newspapers Advantages Disadvantages Geographic selectivity Short-term advertiser commitments News value and immediacy Year-round readership High individual market coverage Co-op and local tie-in availability Short lead time Limited demographic selectivity Limited color Low pass-along rate May be expensive Notes: Advantages and disadvantages of major advertising media are summarized in Exhibit 17.3. The following slides show a close-up of each media type. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Cooperative Advertising Chapter 17 Advertising and Public Relations Cooperative Advertising Cooperative Advertising An arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand. Notes: The main sources of newspaper ad revenue are local retailers, classified ads, and cooperative advertising. Cooperative advertising encourages retailers to devote more effort to the manufacturer’s lines. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Magazines Advantages Disadvantages Good reproduction Demographic selectivity Regional/local selectivity Long advertising life High pass-along rate Long-term advertiser commitments Slow audience build-up Limited demonstration capabilities Lack of urgency Long lead time Notes: Compared to the cost of other media, the cost per contact in magazine advertising is usually high. Although magazine cost per contact may be higher than other media, ads reach specialized audiences and thus more potential customers. One of the main advantages of magazine advertising is market selectivity. Discussion/Team Activity: Name magazines that appeal to a specialized audience. If you have copies available, review the publication to identify the advertisers. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Radio Advantages Disadvantages Low cost Immediacy of message Short notice scheduling No seasonal audience change Highly portable Short-term advertiser commitments Entertainment carryover No visual treatment Short advertising life High frequency to generate comprehension and retention Background distractions Commercial clutter Notes: Local advertisers are the most frequent users of radio advertising. Radio also lends itself well to cooperative advertising. The ability to target specific demographic groups is a major selling point for radio stations. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Media Decisions: The Radio Chapter 17 Advertising and Public Relations Media Decisions: The Radio For small companies that cannot afford television or endorsements, radio advertising can help raise brand exposure and drive sales. Carbonite, which provides data-storage services, discovered that web traffic driven by radio ads was 40 percent more likely to end in a sale. A local market test run on a radio ad can cost as little as $10,000-$30,000 per month. Source: Nitasha Tiku, “On-Air Endorsements,” Inc., June 1, 2010. Available at http://www.inc.com/magazine/20100601/on-air-endorsements.html (accessed November 8, 2010). © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Television Advantages Disadvantages Wide, diverse audience Low cost per thousand Creative opportunities for demonstration Immediacy of messages Entertainment carryover Demographic selectivity with cable Short life of message Consumer skepticism High campaign cost Little demographic selectivity with stations Long-term advertiser commitments Long lead times for production Commercial clutter Notes: Advertising on television can be very expensive. First-run prime-time shows command rates of $300,000 to $500,000 for a 30-second spot. A 30-second spot during the Super Bowl starts at $3 million. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

History Will Be Made (In Marketing?) Chapter 17 Advertising and Public Relations History Will Be Made (In Marketing?) The NHL sparked a massive viral movement when it released its 2010 Stanley Cup television ads—a series of iconic clips from past Stanley Cups played in reverse, asking the question “What if this had never happened?” Fans jumped on board by creating their own versions, which quickly spread across the Internet, drawing more attention to the playoffs in progress. The NHL built of this success, creating more videos using events from games only hours after they’d been played. Source: Mike Barber, “NHL ads are history in the making,” Vancouver Sun, June 5, 2010. http://www.vancouversun.com/sports/hockey/vancouver-canucks/history+making/3117950/story.html?id=3117950 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Internet Advantages Disadvantages Difficult to measure ad effectiveness and ROI Ad exposure relies on “click through” from banner ads Not all consumers have access to Internet Fast growing Ability to reach narrow target audience Short lead time Moderate cost Notes: With ad revenues exceeding $22 billion annually, the Internet has become a solid advertising medium. One of the most popular approaches for Internet advertising is search engine ads. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Outdoor Media Advantages Disadvantages Repetition Moderate cost Flexibility Geographic selectivity Short message Lack of demographic selectivity High “noise” level Notes: Examples of outdoor or out-of-home advertising include: Billboards Skywriting giant inflatables mini-billboards signs in sports arenas lighted moving signs in bus and airport terminals ads painted on the sides of vehicles, objects, and even living people! 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Google’s AdWords (Ads Work!) Chapter 17 Advertising and Public Relations Google’s AdWords (Ads Work!) Google's total revenue in 2008 was $21.8 billion and of this, $21.1 billion was derived from advertising. At the end of its third quarter in 2009, the company’s total revenue was $16.9 billion, $16.4 billion from advertising. To appreciate just how much Google has grown, consider this—in 2003 the company's total revenue was $1.46 billion with advertising revenue representing $1.42 billion. Source: http://investor.google.com/fin_data.html last visited November 12, 2009 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Alternative Media Shopping Carts Advertainments Computer Screen Savers Cell Phone Ads Subway Tunnel Ads Floor Ads Video Game Ads DVDs and CDs Interactive Kiosks Notes: Advertisers are using new media vehicles to cut through the clutter of traditional advertising media. Companies perceive large growth potential in mobile advertising. Ads before Movies 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Media Selection Considerations Chapter 17 Advertising and Public Relations Media Selection Considerations Cost Per Contact Target Audience Considerations Reach Medium Flexibility Frequency Noise Level Medium Life Span Notes: The media mix is the combination of media to be used for a promotional campaign. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Qualitative Factors in Media Selection Chapter 17 Advertising and Public Relations Qualitative Factors in Media Selection Attention to the commercial and the program Involvement Program liking Lack of distractions Other audience behaviors Notes: Advertisers also evaluate the qualitative factors involved in media selection. The factors shown above affect the likelihood that a commercial message is being seen and absorbed. An audience must pay attention to the ad for it to be effective. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

Media Scheduling Continuous Media Schedule Chapter 17 Advertising and Public Relations Media Scheduling Continuous Media Schedule Advertising is run steadily throughout the period. Flighted Media Schedule Advertising is run heavily every other month or every two weeks. Pulsing Media Schedule Advertising combines continuous scheduling with flighting. Notes: After choosing the media for the campaign, advertisers must schedule the ads. The media schedule designates the medium or media to be used, the specific vehicles (such as the TV show), and the insertion dates of the advertising. Continuous media schedule: Examples are Ivory soap and Charmin toilet tissue. Flighted media schedule: Examples: Movie ads on Wednesday and Thursday nights. Pulsing media schedule: Examples are Thanksgiving, Christmas, and back-to-school sales. Seasonal media schedule: Examples are cold medication and suntan lotion. Recency planning is the theory of scheduling television advertising for frequently purchased products, such as Coca-Cola and Tide detergent. Its main premise is to influence the brand choice of people who are ready to buy. Seasonal Media Schedule Advertising is run only when the product is likely to be used. 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Public Relations Discuss the role of public relations in the promotional mix 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

© 2013 by Cengage Learning Inc. All Rights Reserved. Chapter 17 Advertising and Public Relations Public Relations Public Relations The element in the promotional mix that: evaluates public attitudes identifies issues of public concern executes programs to gain public acceptance Notes: Marketing managers plan public relations campaigns that fit into the overall marketing plans and focus on targeted audiences. Publicity is the effort to capture media attention and is initiated through a press release that furthers the public relations plans. 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

Functions of Public Relations Chapter 17 Advertising and Public Relations Functions of Public Relations Press relations Product publicity Corporate communication Public affairs Lobbying Employee and investor relations Crisis management 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

Public Relations Tools Chapter 17 Advertising and Public Relations Public Relations Tools New product publicity Product placement Consumer education Sponsorship Notes: This slide lists the major tools used by public relations professionals. Company Web sites 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

Managing Unfavorable Publicity Chapter 17 Advertising and Public Relations Managing Unfavorable Publicity Crisis Management A coordinated effort to handle the effects of unfavorable publicity or an unexpected unfavorable event. Notes: Crises do happen. Companies must have a communication policy firmly in hand before a disaster occurs because timing is uncontrollable. Discussion/Team Activity: Identify other corporate crises and discuss how the public relations was handled. Examples: Wal-Mart’s low wages and sparse benefits, Exxon Valdez oil spill, Tylenol capsules cyanide poisoning. 5 © 2013 by Cengage Learning Inc. All Rights Reserved.

Chapter 17 Videos Ogden Publications Chapter 17 Advertising and Public Relations Chapter 17 Videos Ogden Publications Bryan Welch discusses advertising and its function in Ogden Publication’s magazines. He also discusses advertisers’ views of Ogden readers and how that affects who advertises in the magazines. http://www.cengage.com/marketing/book_content/9781133190110_lamb/videos/ch17.html © 2013 by Cengage Learning Inc. All Rights Reserved.