1. Advertising
Chapter 19

2. Advertising Media 19.1 After finishing this section you will know:
The concept and purpose of advertising
The different types of advertising media

3. Advertising and Its Purpose
Promotional advertising- advertising designed to increase sales
Institutional advertising- attempts to create a favorable impression and goodwill for a business or organization
Allows large numbers of people to see the advertiser’s message

4. Advertising Drawbacks
Cannot focus on individual needs because the same message is conveyed to all customers
Some forms of advertising can be too expensive- TV
Advertising can be inefficient—not everyone who reads a magazine is a potential customer

5. Types of Media
Media- the agencies, means, or instruments used to convey advertising messages to the public
There are four general categories of advertising media:
Print media
Broadcast media
Online advertising
Specialty media

6. Print Media
Print media- written advertising that may be included in newspapers, magazines, direct mailings, signs, and billboards

7. Print Media-Newspaper
Newspaper advertising- main form of print media for most businesses
Advantages of newspaper advertising:
Large readership
High level of reader involvement
Relatively low cost, ads are timely
Advertisers can easily change ads up to 24 hours before printing
55% of US adults read a newspaper every day

8. Print Media-Newspaper
Limitations of newspaper advertising:
Wasted circulation—sent to more than target market
Short advertising life—papers are thrown away
Black and white format is less appealing

9. Print Media-Magazine
Magazine advertising- can be classified as local, regional, national, as well as weekly, monthly, and quarterly

10. Print Media-Magazine Advantages of magazine advertising:
Can target audience because they know the circulation and characteristics of their readers
Longer life span and are often read more slowly and thoroughly than newspapers
Information in a magazine ad is more likely to be remembered
Print quality is better
Magazines are kept longer—increasing the chances that the ads will be reread
Variation of presentation formats—full page, two-page spreads, or heavy stock inserts

11. Print Media-Magazine Drawbacks to magazine advertising:
Less mass appeal within a geographical area
More expensive than newspapers
Deadlines for submitting ads are months in advance

12. Print Media-Direct Mail
Direct-mail advertising- sent by businesses directly through the mail to prospective customers
Types of direct-mail advertising include: newsletters, catalogs, coupons, samplers, price lists, circulars, and invitations to special events

13. Print Media-Direct Mail
Mailing lists:
Assembled by the advertiser from current customer records
Can be purchased from a direct-mail specialty firm
Must be accurate, or using them is useless

14. Print Media-Direct Mail
Advantages of direct mail:
Highly selective about who receives mailing
Control timing and prevent competitors from seeing the initial mailing
Wide choice of sizes and formats
Can easily incorporate coupons or incentives
Customers can order directly by using an order form or toll-free number

15. Print Media-Direct Mail
Disadvantages of direct-mail advertising:
Low level of response—less than 1%
Customers see it as “junk mail”
Dated customer lists
Cost is high

16. Print Media-Directory
Directory advertising- an alphabetical listing of houses and businesses
Example: telephone directories- white pages (houses) yellow pages (businesses)

17. Print Media-Directory
Advantages of directory advertising:
Relatively inexpensive
Can be used with all demographic groups
Disadvantage of directory advertising- printed yearly- advertisers cannot change prices or sales for over a year

18. Print Media-Outdoor
Outdoor advertising- used by both local and national businesses
Nonstandardized outdoor signs- used by local firms at their places of business or around their community
Standardized outdoor signs- available to local, regional, or national advertising companies in standard sizes and placed near highly traveled roadways where there is high visibility

19. Print Media-Outdoor Three types of standardized outdoor signs:
Posters- pre-printed sheets put up like wallpaper on outdoor billboards which are changed 3 to 4 times per year
Painted bulletins- painted billboards that are changed about every 6 months to a year
Spectaculars- outdoor advertising signs which use lights or moving parts and are suited in high traffic areas

20. Print Media-Outdoor Advantages of outdoor signs:
Highly visible
Relatively inexpensive
24 hour a day message
Disadvantages of outdoor signs:
Some states have banned billboard advertising because they distract viewers
Size restrictions and spacing requirements

21. Print Media-Transit
Transit advertising- uses public transportation facilities to bring advertising message to people
Advantages of transit advertising:
Reaches a wide captive audience
Defined market

22. Print Media-Transit Disadvantages of transit advertising:
Unavailable in smaller towns and cities
Subject to defacement
Restricted to predetermined travel routes
E-billboards- video screens used to advertise products popular in bus stops, train stations, and gas stations

23. Broadcast Media Broadcast media- includes radio and television
The average person spends:
10 years watching television
6 years listening to the radio

24. Broadcast Media-Television
Television advertising- ultimate advertising medium for many businesses because it can communicate a message with sound, motion, and color
Prime time- between 8 and 11 p.m. when millions of viewers are watching
Television commercial advertisements seconds long
Infomercials- 30 minute advertisements

25. Broadcast Media-Television
Advantages of television advertising:
Can be directed to an audience with a specific interest
News, comedy, history, movies, sports, or science
Messages can be adapted to holidays, season changes, or special events programming

26. Broadcast Media-Television
Disadvantages of television advertising:
Highest production costs of any advertising media
Prime-time costs prohibit smaller companies from using television advertising
Actual audience size is not assured
Television commercials are seen as an opportunity to leave the room

27. Broadcast Media-Radio
Radio advertising- it is estimated that radio reaches 95% of all people age 12 and over in a given week
Best radio advertising times- when people are going to and from work
15, 30, or 60-second time period commercials

28. Broadcast Media-Radio
Advantages of radio advertising:
Can select an audience
More flexible than print media because messages can be changed easily
Mobile medium that can be taken just about anywhere

29. Broadcast Media-Radio
Disadvantages of radio advertising:
Messages have a short life span
Lack of visual involvement causes listeners to become easily distracted and miss the message

30. Online Advertising
Online advertising- placing advertising messages on the Internet
Banner ad- a wide shallow rectangle seen at the top or bottom of Web pages which takes the user to the advertiser’s Web page if clicked with a mouse
Banner ads use rich media- animation, sound, and video
Interstaitial ads- screens pop up to interrupt Web surfing

31. Online Advertising Advantages of online advertising:
Easily measure effectiveness by the number of click throughs
Bold colors, top-of-page placement increase the number of click throughs
Disadvantages of online advertising:
People see online advertisements as an annoyance or distraction
Concerned by privacy or reliability issues

32. Specialty Media
Specialty media- relatively inexpensive, useful items with an advertiser’s name printed on them
Items given away with no obligation attached to receiving and keeping them

33. Specialty Media To be successful items must be:
Practical
Subject to frequent use
Placed in locations with high visibility
Limitations of specialty items:
Distribution of items
Items given to people who would never consider buying the product

34. Other Advertising Media
Other advertising media- businesses are constantly creating innovative means of transmitting messages to potential customers
Examples: sports arena billboards, airplanes pulling advertising banners

35. Selection of Promotional Media
The advertising medium used depends on the product being advertised
To determine the type of promotional media to use advertisers need to address three basic questions:
Does the medium have the ability to present the product and the appropriate business image?
Does the medium have the ability to target the desired customers?
Does the medium have the ability to obtain the desired response rate?

36. Assignment
Page 344
Reviewing Key Terms
Thinking Critically
# 1-6

37. Media Rates 19.2 After finishing this section you will know:
How various media rates are set
The costs of print media
The standards for selecting promotional media

38. Media Costs
Advertising uses a set format that is defined in terms of time or space
Media costs vary greatly with the type of media and geographical location

39. Media Costs
Standard Rate and Data Service- publishes rate cards for most major media according to general categories
Audit Bureau of Circulation- print media publishers subscribe to ABC to have it verify their circulation figures
Important because advertising rates for print media are based on circulation

40. Newspaper Rates Newspaper rates- classified into two categories
Classified ad- grouped or classified into specific categories, such as help wanted, real estate, and auto sales

41. Newspaper Rates
Display ad- involve creative illustration of the product being advertised
A mix of art, photographs, headlines, copy, and logo of the product or business
Generally larger than classified ads and cost is based on the amount of space used
Quoting display ads- price per column inch- one column wide by one inch deep

42. Newspaper Rates
Run of paper rate- allows the newspaper to choose where to run an ad in the paper
Color ads run at a higher rate than those which run in black and white

43. Newspaper Rates
Open rate- a.k.a. non-contract rate, the basic charge for a minimum amount of advertising space
Open rate varies depending upon when the ad will appear in the paper
Contract rate- business who advertise regularly get a rate discounted from the open rate

44. Newspaper Rate
Bulk space contract- guarantees that a minimum number of column inches within a 12 month period
Cost per thousand (CPM)- the media cost of exposing 1,000 readers to an ad
Cost of the ad X 1,000/circulation = cost per thousand

45. Magazine Rates
Magazine rates- based on circulation, quality of readership, and production technique

46. Magazine Rates
In order to determine the cost of magazine ads, one needs to become familiar with the following terms:
Bleed- half or full page ads are printed to the very edge of the page, leaving no white border
Magazines generally charge between 15-20% more for bleeds

47. Magazine Rates Color rates- offered for color ads
Full color- four color advertisements which cost the most
Premium position- where ads are placed in the magazine on the back cover or inside the first page
Frequency discounts- advertisers who run the same ad several times during the year
The rate per issue decreases as the frequency increases

48. Magazine Rates
Commission- a percentage of sales given by the magazine to the advertising agency for placing the ad for the advertiser—typical 15%
Cash discount- offered for paying the bill earlier than its due date

49. Online Rates
Online rates- based upon the type of format the customer desires
Barter arrangements- each advertiser agrees to run banner ads for the other
Lead to more traffic for each business’s Web sites

50. Radio Rates
Radio rates- when purchasing radio time, businesses need to determine which type of advertising to use
Network radio advertising- broadcast from a studio to all affiliated radio stations throughout the country
Broadcast ads simultaneously to several markets

51. Radio Rates
National spot ratio advertising- used by national firms to advertise on a local station-by-station basis
Used to target select markets
Local radio advertising- done by a local business for its target market
Limited to a specific geographical area

52. Television Rates Television rates- vary with time of day
Class AA time- during the hours of 8 and 11 p.m.
Class A, B, C, D- lower based on diminishing viewer-ship

53. Cooperative Advertising
Cooperative advertising- a cost-sharing arrangement whereby both a supplier and a local advertiser pay for advertising

54. Promotional Budget
There are four common promotional budgeting methods:
Percentage of anticipated sales- budget is decided on a percentage of past or anticipated sales
All you can afford method- turns all monies to promotional activity only after all other company expenses are paid

55. Promotional Budget
Following the competition- the competitor’s promotional expenditures are matched or spending is planned in proportion to market share
Objective and task- the company determines goals, considers the necessary steps to meet goals, and determines the cost for these promotional activities

56. Assignment
Page 350
Reviewing Key Terms
# 1-5