1. © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. Chapter 4 The Scope of Advertising: From Local to Global Introduce the people and groups who work in advertising

3. Objectives Explain how advertisers organize Define the main types of ad agencies Discuss how agencies get clients and make money Explain what people do in agencies Debate the pros and cons of in-house agencies Examine agency- client relationships

4. The Advertising Industry Advertisers Agencies Suppliers Media Organizations in advertising include:

5. People in Advertising Sales Computer Science Research Accounting Communication Arts Management Law

6. Local Advertising: Where the Action is Dealers or local franchises of national companies Stores Government/ nonprofits Specialty Businesses Types of local advertisers:

7. Typical Department Structure for a Small Advertiser

8. Types of Local Advertising Product Advertising Promotes a specific product or service Stimulates short-term action while building awareness

9. Types of Local Advertising Product Advertising Regular price-line advertising Sales advertising Clearance advertising

10. Institutional Advertising Types of Local Advertising Create favorable impression of the business as a whole Makes the public aware of what the business stands for Builds long-term good will

11. Classified Advertising Types of Local Advertising Recruit employees Offer services Lease or sell merchandise

12. Cooperative Advertising Types of Local Advertising Wholesalers, manufacturers, trade associations often provide local advertisers with ad materials Or share ad costs

13. Cooperative Advertising Types of Local Advertising Purposes of co-op advertising: Build a manufacturers brand image Help distributors, dealers, or retailers to increase sales

14. Cooperative Advertising Types of Local Advertising Types of co-op advertising Vertical Horizontal

15. Or several Regional and National Advertisers Regional Advertisers Operate in one state National Advertisers Operate in several regions or nationwide

16. How National and Local Advertisers Differ

17. How Large Companies Manage their Advertising Large advertisers use some mix of two management structures: centralized and decentralized Centralized Decentralized

18. Growing Multinationals Transnational Advertisers May invest in many countries Growing Multinationals Global marketers use a standardized approach to create global brands

19. The Advertising Agency Roles Develop marketing and advertising plans Develop advertisements and other promotions Purchase advertising space and time

20. The Advertising Agency Types Local Regional National Inter- national

21. The Advertising Agency Types Full-service agencies General Consumer BTB

22. The Advertising Agency Types Specialized agencies Creative boutiques Media-buying services Interactive agencies

23. What People in an Agency Do Account Management Account executives Account supervisors

24. Research and planning What People in an Agency Do Research Account planning

25. Creative Concepts What People in an Agency Do Copywriter Art director Creative director

26. Advertising production Media planning and buying What People in an Agency Do Traffic management Additional services

27. How Agencies are Compensated Media Commissions Ad rate card price: $100,000 Agency buys ad at 15% discount: $85,000 Agency bills client full ad amount: $100,000 $15,000 difference Is kept By the agency

28. How Agencies are Compensated Media Commissions Markups Agency buys materials for campaign Materials cost $85,000 Agency bills for materials plus a 17.65% markup Agency bills $100,000 which is costs plus markup

29. How Agencies are Compensated Media Commissions Markups Fees Agency charges a basic fee for services Agency keeps media com- missions

30. How Agencies are Compensated Media Commissions Markups Fees INCENTIVES Agency compensation is calculated after determining whether campaign objectives have been met

31. In-House Agency Agency operated by an advertiser Pros May save money Allows tighter control May permit greater attention to the brand

32. In-House Agency Agency operated by an advertiser Pros Cons Lower creative quality Less experience and talent Loss of objectivity

33. Client/Agency Relationship How agencies get clients Referrals Presentations Networking and community relations Soliciting for new business

34. Stages in the Client/Agency Relationship Prerelationship Development Regular working relationship Termination