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The Structure of the Advertising Industry:

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Presentation on theme: "The Structure of the Advertising Industry:"— Presentation transcript:

1 The Structure of the Advertising Industry:
Chapter 2 The Structure of the Advertising Industry: Advertisers, Agencies, and Support Organizations

2 The Ad Industry in Transition: Trends and Transformations
Consolidation and globalization Budget fragmentation Interactivity Media evolution Media clutter New Communication/ distribution channels Ch 2: The industry 2

3 The Worldwide Advertising Industry
U.S expenditures: $250 billion Global expenditures: $450 billion Ch 2: The industry 3

4 Structure of the Advertising Industry
Ch 2: The industry 4

5 Advertisers Manufacturers and Service Firms Trade Resellers Government
Procter & Gamble, MCI Trade Resellers Sears, McDonald’s Government Federal, State, Local Social Organizations United Way, Nature Conservancy Ch 2: The industry 5

6 In addition to companies, the Government Makes extensive use of advertising

7 Agencies Full-Service Creative Boutique Interactive In-House
Media Buying and Planning Services Promotion Agencies Direct Marketing E-commerce Sales Promotion Agencies Event Planning Agencies Design Firms Public Relations Firms Ch 2: The industry 7

8 Advertising agencies make extensive use of advertising to acquire new clients

9 Full Service Agency Account Services Marketing Research Services
Creative and Production Services Media Planning and Buying Services Administrative Services Ch 2: The industry 9

10 Agency Compensation Commissions: around 15% of airtime fees.
Markup Charges: production cost + fixed %. Fee Systems: hourly rates, or by project. Pay-for-Results: tightly-specified objectives. Ch 2: The industry 10

11 External Facilitators
Marketing and Advertising Research Firms Consultants Production Facilitators Information Intermediators Software Firms Ch 2: The industry 11

12 Media Organizations Broadcast Print Interactive Media Support Media
TV, radio Print Magazines, direct mail, newspapers Interactive Media CD-ROMs, online shopping Support Media Outdoor, directories, Sponsorship Media Conglomerates AOL Time Warner, Viacom, AT&T Ch 2: The industry 12

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